ESTATES AND TRUSTS

February 2000

LIMITED PARTNERSHIPS: ANOTHER TAM REGARDING PRESENT INTERESTS

By Lawrence M. Lipoff, CPA, CEBS, Deloitte & Touche LLP

The January 1999 CPA Journal article entitled "Gifting Limited Partnership Interests: Are Annual Exclusions Available?" analyzed Technical Advice Memorandum (TAM) 9751003, in which the IRS ruled that the transfer of a limited partnership interest would not entitle the transferor to the $10,000 annual gift tax exclusion. Uncertainty resulted because this ruling was contrary to most estate and trust practitioners' understanding. In the article, the commentator concluded, "unless unusually drafted, as in TAM 9751003, donors of limited partnership interests should be entitled to the $10,000 annual gift tax exclusion." However, the IRS did not issue subsequent commentary.

Recently, the IRS released TAM 199944003, which discussed a limited partnership agreement. In this TAM, the IRS agreed that the transferor was entitled to the $10,000 annual gift tax exclusion. Although TAMs may not be quoted to establish precedent under IRC section 6110(j)(3), the author believes that the position published in The CPA Journal has received informal agreement. *