Archive - October 2014
CCA 201442053 – Partnership Freeze Gone Awry October 23, 2014
The IRS released a few days ago the above-mentioned CCA, which illustrates the gory pitfalls of Sec. 2701. In this ruling, the IRS had to opine whether the recapitalization of a family partnership would be subject to Sec. 2701. The parties here attempted a partnership freeze. This is an estate planning technique whereby the older generation retains a fixed interest in the partnership and transfers future profits to the younger generation. Thereafter, the older generation could gift portions of the retained interest annually within the limits of the annual gift exclusion. Alternatively, the...