Read the Proposed Regulations Changes on Fractional Gifts

As reported early this week, Sen Charles Schumer of NY was introducing a bill that would change the deduction period on fractional gifts from 10 years to 20 years. The ten year period along with restrictions on the gifts were made less attractive in the Pension Protection Act bill passed in 2006 with annual appraisals and potential for reductions in values. This bill introduced goes back and amends the IRS tax code from 1986.

To read the full S. 1605 bill, click HERE.

The bill states in part:

(iii) in the case of an initial fractional contribution, the contribution is made pursuant to a written binding contract which requires the donor--

`(I) to contribute not less than 20 percent of all interests in the property on or before the date that is 11 years after the date of the initial fractional contribution, and

`(II) to contribute all of the interests in such property to the donee (or if such donee is no longer in existence, to any person described in subsection (c)) on or before the earlier of the date of the death of the donor or the date which is 20 years after the date of the initial fractional contribution, and

`(iv) if the value of the tangible personal property with respect to which the undivided portion of the taxpayer's entire interest relates is greater than $1,000,000 (or such greater amount as determined by the Secretary), the taxpayer attaches to the return for the taxable year in which such contribution is made a statement of value obtained from the Internal Revenue Service.