2004-64 Sparks Applause But Leaves Questions

The intentionally defective grantor trust1 is a mainstay of many estate plans. Yet, for more than a decade, the IRS has struggled with the transfer tax consequences of the grantor's income tax payments. Since 1994, the IRS has sent conflicting messages in private letter rulings. On July 6, the IRS released Revenue Ruling 2004-64,2 providing welcome and consistent guidance. Specifically, the IRS confirms

The intentionally defective grantor trust1 is a mainstay of many estate plans. Yet, for more than a decade, the IRS has struggled with the transfer tax consequences of the grantor's income tax payments. Since 1994, the IRS has sent conflicting messages in private letter rulings. On July 6, the IRS released Revenue Ruling 2004-64,2 providing welcome and consistent guidance. Specifically, the IRS confirms that the grantor's income tax payment attributable to an income tax

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