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Part III. Administrative, Procedural, and Miscellaneous
Guidance on Private Trust Companies
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I. Overview and Purpose
This notice sets forth the contents of a proposed revenue ruling concerning the income, estate, gift, and generation-skipping transfer tax consequences in situations in which family members create a private trust company to serve as the trustee of trusts having family members as grantors and beneficiaries.
This notice solicits public comments regarding the proposed revenue ruling. The IRS and the Treasury Department anticipate issuing a final revenue ruling after the comments have been considered. The IRS and the Treasury Department intend that the revenue ruling, once issued, will confirm certain tax consequences of the use of a private trust company that are not more restrictive than the consequences that could have been achieved by a taxpayer directly, but without permitting a taxpayer to achieve tax consequences through the use of a private trust company that could not have been achieved had the taxpayer acted directly. Comments are specifically requested as to whether or not the draft revenue ruling will achieve that intended result.
II. Proposed Revenue Ruling
Part I
Section 2036.-Transfers With Retained Life Estate
26 CFR 20.2036-1: Transfers with retained life estate.
(Also: § 2038, § 20.2038-1, § 2041, § 20.2041-1, § 2501, § 2511, § 25.2511, § 2601, § 26.2601-1, § 671, § 672(c), § 674, § 675, § 677, § 678.)
Rev. RuI. [XXXX-XX]
ISSUES
(1) If the private trust company (PTC) described in Situation 1 or Situation 2 is appointed and serves as the trustee of a trust, will the value of the trust assets be included in a grantor's gross estate under § 2036(a) or 2038(a)?
(2) If the PTC described in Situation 1 or Situation 2 is appointed and serves as the trustee of a trust, will the value of the trust assets be included in a beneficiary's gross estate under § 2041?
(3) If the PTC described in Situation 1 or Situation 2 is appointed and serves as the trustee of a trust that provides the trustee with the discretionary power to distribute income and/or principal to the grantor's child or descendants, will the grantor's transfer to that trust constitute a completed gift?
(4) Does the appointment and service of a...