IRS wins again – LLC interests fail to qualify for gift tax exclusion
The courts have ruled again that gifts of interests in an LLC do not qualify for the annual gift tax exclusion if the interests transferred are not present interests because of restrictions on the interests that preclude a present economic benefit.1 The court found that any potential distribution of profits was subject to contingencies, all of which were within the sole discretion of the general manager.
1 Fisher v. U.S. (2010, DC IN) AFTRCOVER 2010-600; also see “No annual gift tax exclusion of LP interests where there’s no present economic benefit” in the March 2010 issue of Elder Client Planner