To: Jeffrey EpsteinUeevacationagmail.comj
From: Jeffrey Epstein
Sent Fri 7/6/2012 11:01:24 AM
The IRS has advanced many theories to challenge the gift and estate tax savings occasioned by
the use of family entities and grantor trusts in estate planning. Until recently, most IRS arguments
had been rather unsuccessful. However, the IRS discovered a potent weapon in IRC § 2036(a),
which provides that the value of the gross estate includes the value of all property to the extent
the decedent has made a transfer but has retained (i) the possession or enjoyment of, or the right
to income from, the property, or (ii) the right, either alone or in conjunction with any person, to
designate the persons who shall possess or enjoy the property or the income therefrom.
The IRS has been successful in arguing that IRC § 2036(a) requires the inclusion in the
decedent's estate of (i) partnership assets if the decedent continued to derive benefits from the
partnership, or of (ii) trust assets, if the decedent continued to receive distributions, disguised in
the form of a note, from assets sold to a "defective" grantor trust. The IRS has been most
successful where the transactions with not imbued with a sufficient quantum of non-tax
objectives, or the economics of the transaction were questionable, most often because the grantor
had not left himself with sufficient assets to live according to his accustomed standard without
receiving partnership (or trust) distributions.
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