Can somebody give me an example of how these would be utilized? I understand the reasoning to not use valuation discounts (ie maximize your tax deduction), but am basically clue less as to when you would want to apply them? Thank you.
you would want to apply them for things like GRATs cuz that will minimize your cost base and therefore minimize taxes for charitable lead and remainder trusts you don’t want to use a valuation discount becuase, as you pointed out, you want to maximize your charitable contribution which isn’t subject to tax as well as maximizing your charitable receit.
I guess I still don’t understand. Are you saying that when you fund a GRAT, the grantor is taxed on the amount trasferred into the Trust? If that is the case, then I suppose I understand.
jimmylegs Wrote: ------------------------------------------------------- > I guess I still don’t understand. Are you saying > that when you fund a GRAT, the grantor is taxed on > the amount trasferred into the Trust? If that is > the case, then I suppose I understand. i believe grantor is taxed on PV of assets - PV of annuity. So if you minimize PV of assets through valuation disocunts you will pay less tax
Thank you csk… that does make sense.
something ike that - in my limited knowledge of the tax code basically by doing it through a GRAT you minimize the tax assocaited with transfering the assets relative to having you die and then having the estate transfer the assets and the associated estate taxes.