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Tax Notes Quotes Beth Kaufman on Adequate Disclosure on Gift Tax Returns

January 31, 2020, Tax Notes

The IRS appears to be increasingly taking taxpayers to task for not adequately disclosing transactions on gift tax returns and then using that as leverage in estate and gift tax settlement negotiations.

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Several of the practitioners who spoke with Tax Notes stressed that there’s nothing inappropriate about the IRS going after inadequate disclosure on gift tax returns.

Regardless of whether the IRS has the ability to flag returns, digging through prior gift tax returns during an estate tax audit “is not a crazy or nefarious strategy . . . especially when sky-high exemption levels mean many gift tax filers will never owe any gift or estate tax in any event,” said Beth Shapiro Kaufman of Caplin & Drysdale.

If anything, it’s a sensible strategy for the cash-strapped agency to focus its audit efforts on taxpayers who are in the estate tax range, or have gift tax returns showing taxable gifts, Kaufman said. “All of which indicates that practitioners should be very careful to satisfy the adequate disclosure requirements on their gift tax returns,” she said.

For the full article, please visit Tax Notes’ website (subscription required).

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