ARE ANNUAL EXCLUSIONS AVAILABLE?
By Lawrence M. Lipoff, CEBS, CPA, Rogoff & Company, P.C. For the last few years, one of the most common wealth preservation techniques has been gifts of interests in limited partnerships. In addition to valuation discounts for gifts of minority interests and lack of marketability, the tax-exclusive nature of the gift tax as opposed to the tax-inclusive nature of the estate tax can lead to significant tax savings. Furthermore, state partnership law allows asset protection features. Until recently, both commentators and the IRS appeared to be in agreement that another benefit would be available. Specifically, a gift of a limited partnership interest would entitle the transferor to the $10,000 annual gift tax exclusion. In Technical Advice Memorandum (TAM) 9751003, an agent asked whether “the gifts of limited partnership interests made by the donor qualify for the annual exclusion provided for in IRC section 2503(b).” Should the answer be “no,” most of the transfer tax benefits of limited
