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What do the new regulations say about which lifetime gratuitous transfers do or do not constitute “inclusion events”?

I am doing my estate planning and want to know what to think about when it comes to my Opportunity Zone investments.


Answers
  • John Wegmann
    August 10, 2019

    According to the regulations, a gift generally constitutes an inclusion event, but a transfer to a grantor trust does not constitute an inclusion event.

  • Darryl Steinhause
    August 05, 2019

    “Accordingly, except as provided in these proposed regulations, transfers by gift will be inclusion events for purposes of section 1400Z-2(b)(1) and proposed §1.1400Z2(b)-1(c).”

  • Blake Christian
    August 01, 2019

    Gifts of a QOF interest is an inclusion event that can trigger all or a portion of the deferred gain. Transfers to a grantor trust are exempted from triggering the gain. Basically you cannot shift the gain recognition (in 2016) and 10-year exemption to another taxpayer unless you transfer it upon death. Then the beneficiary will step into your shoes for future gain recognition and ultimate exemption.

  • Matthew Rappaport
    August 02, 2019

    Gifts are inclusion events. Transfers to grantor trusts are generally not inclusion events. There is some creative estate planning you can do with disregarded entities. Some estate planning strategies are available, and some will result in acceleration of the deferred capital gain. You need to consult a legal and/or tax advisor to sort this through.

  • Brad Cohen
    August 01, 2019

    There is great estate plan idea that superchargers the q zone benefits, if you properly hold the investment.