This Week's Topic: Limited Partnerships and Gifts of Automobiles

A recent Tax Court case held that a family limited partnership that held marketable securities was entitled to discounts totaling 40%. The IRS was arguing for a 15% discount, but the Court was persuaded by the expert witness for the taxpayer. Thus, a million dollar transfer discounted by 40% turns into a taxable gift of $600,000, well within the $675,000 exemption in 2001. If the $400,000 discount was included in a large estate taxable at 50%, the family would pay an additional estate tax of $200,000, and this analysis does not include any appreciation on the assets transferred that might occur in the future.

This case, among others, is evidence that the family limited partnership, if properly structured, can yield excellent results for taxpayers who properly plan and execute their estate planning strategies. It may still be possible to establish your limited partnership for 2001 in order to use this year and early next year for gift giving at substantial discounts. Do not procrastinate. See your Attorney and/or CPA immediately.

Also, with respect to last charitable contributions of used autos, the following was recently published in The Kiplinger Tax Letter: