Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, March 20, 2010

Recognizing No Income From an Irrevocable Trust at the Grantor's Death

Article1Mitchell M. Gans (professor of law, Hofstra University) and Jonathan G. Blattmachr (attorney, New York) have published their article entitled No Gain at Death, Trusts & Estates, Feb. 2010, at 34.

An excerpt from the article is below:

In a 2002 article, we examined at length the income-tax effects of the termination of a grantor trust by reason of the death of the grantor in the context of an installment sale.  Acknowledging then that the law was unsettled, we considered the plausibility of various approaches.  Still, we reached firm conclusions about two critical issues: first, that gain is not recognized at the time of the grantor's death; and second, that the income in respect of a decedent (IRD) regime, largely contained in Internal Revenue Code Section 691, cannot apply.

We continue to believe that these conclusions are correct. 

For an article offering a counter-argument, see Carol A. Cantrell, Gain Is Realized at Death, Trusts & Estates, Feb. 2010, at 20, discussed here

https://lawprofessors.typepad.com/trusts_estates_prof/2010/03/mitchell-m-gansprofessor-of-law-hofstra-universityand-jonathan-g-blattmachr-attorney-new-yorkhave-published-their-art.html

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