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Expert Legal Insights for Taxpayers Navigating IRS Revenue Ruling 2023-2

Lamarre Law Group, P.A. June 28, 2024

Hello, readers! Today, we’re going to discuss a recent development in tax law that could have significant implications for your estate planning: IRS Revenue Ruling 2023-2. This ruling addresses the tax implications of transferring assets to an irrevocable trust. But don’t worry, we’ll break it down in plain language so you can understand how it might affect you.

What Is IRS Revenue Ruling 2023-2?

The IRS issued Revenue Ruling 2023-2 to clarify which assets transferred by a decedent to a beneficiary receive the coveted step-up in basis to fair market value under Sec. 1014 and which do not. The ruling specifically addresses a scenario where a grantor makes a lifetime gift of certain assets to an Intentionally Defective Grantor Trust (IDGT) established for the benefit of family members.

What Does This Mean for You?

In simple terms, the IRS has confirmed that the gifted assets, while taxable to the grantor for income tax purposes, are not eligible for a step-up in basis upon the grantor’s death. This means that if you transfer assets to an irrevocable trust, those assets will not receive a step-up in basis, potentially resulting in higher capital gains taxes for the beneficiaries when they sell the assets.

Why Is This Important?

This ruling might carry an unpleasant surprise for a trust’s beneficiaries. Before clients revise their estate plans, they should understand the effect that this revenue ruling might have on their heirs. It’s crucial to consider the potential tax implications of your estate planning decisions.

How Can Lamarre Law Group, P.A. Help?

At Lamarre Law Group, P.A., we specialize in helping individuals and families navigate the complex world of tax law. Our team of expert tax attorneys can help you understand how IRS Revenue Ruling 2023-2 might impact your estate planning strategy and work with you to minimize potential tax liabilities.

If you have any questions about IRS Revenue Ruling 2023-2 or any other tax-related matters, don’t hesitate to contact us. You can contact us via our website or call us at Lamarre. We’re here to help you make sense of the tax laws so you can make informed decisions about your financial future.

Remember, the tax law is complex, but you don’t have to navigate it alone. Let the experts at Lamarre Law Group, P.A. guide you through the process. We look forward to working with you!

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Always consult with a qualified tax attorney before making any decisions about your personal tax situation.