{"id":16544,"date":"2023-06-07T18:53:09","date_gmt":"2023-06-07T18:53:09","guid":{"rendered":"http:\/\/rossyanglaw.com\/site\/?p=16544"},"modified":"2023-06-07T18:54:18","modified_gmt":"2023-06-07T18:54:18","slug":"federal-estate-taxes-distributee-liability","status":"publish","type":"post","link":"https:\/\/rossyanglaw.com\/site\/federal-estate-taxes-distributee-liability","title":{"rendered":"Federal estate taxes \u2013 Distributee liability"},"content":{"rendered":"<p><strong>Summary:<\/strong>\u00a0Persons who hold estate property or receive it on or after the date of death are personally liable for unpaid estate taxes on that property.<\/p>\n<p>Cite as No. 21-55197<br \/>\nFiled May 17, 2023<br \/>\nU.S. Court of Appeals, Ninth Circuit<\/p>\n<p>Allen died with a $200 million trust estate and over $10 million in unpaid estate taxes were owed.\u00a0 After entering into an installment payment plan with the IRS, the trustee was removed and after an installment payment was missed the IRS terminated the installment payment plan.\u00a0 Distributions were made (by multiple trustees) before and after the termination.\u00a0 Under federal law, the United States sued heirs that were trustees and heirs who had received estate property.\u00a0 It also sued some heirs under the California Probate Code.\u00a0 The District Court granted motions to dismiss under federal law as to trustees and those defendants not in possession of estate property on date of death, and denied motions to dismiss on state law claims.<\/p>\n<p>The Ninth Circuit Court of Appeals reversed and remanded as to the federal claims, without reaching state law claims. \u00a0The Internal Revenue Code requires an executor to pay the tax liabilities of a decedent\u2019s taxable estate.\u00a0 It further imposes a lien on the gross estate and imposes personal liability on six listed categories of persons \u201cwho receive or have estate property.\u201d \u00a0The six categories are (i) spouses, (ii) transferees (not including bona fide purchasers), (iii) trustees, (iv) surviving tenants, (v) persons in possession by way of exercise of power of appointment, and (vi) beneficiaries.\u00a0 The Circuit Court interpreted the statute to impose personal liability on persons who have estate property on date of death, and who receive estate property on or after date of death, for the amount of unpaid estate tax on such property.<\/p>\n<p>Judge Ikuta dissented, noting that it is illogical to accept a statutory interpretation wherein a distributee\u2019s personal liability for estate taxes could exceed the current value of the property received, such as in the instance of later-received depreciated property.\u00a0 Thus, the statute should be limited to imposing personal liability only on those persons who receive or hold estate property on the date of death.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Persons who hold estate property or receive it on or after the date of death are personally liable for unpaid estate taxes on that property.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[],"_links":{"self":[{"href":"https:\/\/rossyanglaw.com\/site\/wp-json\/wp\/v2\/posts\/16544"}],"collection":[{"href":"https:\/\/rossyanglaw.com\/site\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rossyanglaw.com\/site\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rossyanglaw.com\/site\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/rossyanglaw.com\/site\/wp-json\/wp\/v2\/comments?post=16544"}],"version-history":[{"count":2,"href":"https:\/\/rossyanglaw.com\/site\/wp-json\/wp\/v2\/posts\/16544\/revisions"}],"predecessor-version":[{"id":16546,"href":"https:\/\/rossyanglaw.com\/site\/wp-json\/wp\/v2\/posts\/16544\/revisions\/16546"}],"wp:attachment":[{"href":"https:\/\/rossyanglaw.com\/site\/wp-json\/wp\/v2\/media?parent=16544"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rossyanglaw.com\/site\/wp-json\/wp\/v2\/categories?post=16544"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rossyanglaw.com\/site\/wp-json\/wp\/v2\/tags?post=16544"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}