Avoiding Gift and Estate Audit Triggers: Anticipating Audit Issues, IDRs, and Appeals

A live 110-minute CPE webinar with interactive Q&A

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Wednesday, September 28, 2022 (in 2 days)

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

or call 1-800-926-7926
Course Materials

This course will guide advisers filing gift and estate returns in understanding how to prepare for and handle IRS audits of Forms 706 and 709. The panel will also address issues to expect when appraisals are necessary, dealing with unreported gifts, and the current state of the IRS initiative in this area.

Description

An estate or gift tax audit is different from an income tax audit. Anticipating these unique issues and knowing how to handle a 706 or 709 audit is critical to avoid additional estate or gift tax liability or a reduction in a taxpayer's unified credit. Moreover, properly prepared gift tax returns set the stage for later estate tax savings on death. Although the total number of IRS audits continues to drop, the likelihood of an estate or gift tax return audit is much higher than other returns. In 2019 over 20 percent of estates valued at 10 million or greater were audited.

Finding out that an estate is officially closed and not subject to audit allows the preparer, executor, and beneficiaries to breathe sighs of relief. Advisers and executors can take on every gift and estate return to mitigate the chance of audit and better prepare a return with sticky issues for audit. A thorough internal review can avoid many audit triggers. Missing documentation, vague descriptions, and discrepancies between the will and the 706 can be corrected before the return is submitted. Other triggers, valuation, minority and marketability discounts for closely held businesses, reporting of adjusted taxable gifts, and special elections require more consideration before reporting.

At the onset of an audit, the practitioner must respond to the IDR (Information Document Request). IRC Section 7491 allows the shifting of the burden of proof to the IRS for taxpayers meeting its requirements. These requirements include cooperating with the IRS and its IDRs, which can sometimes be impracticable. Often the next consideration is whether to allow an extension of the statute--what do you give up, and when is this in the taxpayer's best interest? When the taxpayer and IRS disagree, the taxpayer can initiate an appeals conference. When is an appeals conference advisable, and what are the odds of coming ahead in appeals?

Listen as our expert conveys first-hand knowledge of IRS audits of estate and gift tax returns, including issues to expect during 706 and 709 examinations, how to reduce the likelihood of being selected, and how the IRS audit process works.

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Outline

  1. Issues to expect
  2. Avoiding audit triggers
  3. Protecting the burden of proof
  4. Extending the statute
  5. The appeals process
  6. The current state of the IRS initiative

Benefits

The panelist will review these and other key issues:

  • How to lessen the chances of being selected for a gift or estate return audit
  • Selection of appraisers and communication for the most effective valuation reports
  • Complying with the all-important adequate disclosure requirements with gift tax returns
  • Internal steps to prepare for 706 and 709 audits
  • When to permit the extension of the statute of limitations with gift tax audits
  • Hot issues that trigger estate and gift tax audits
  • How to best communicate with the IRS

Faculty

Abel, Mallory
Mallory Abel

Attorney
Willkie Farr & Gallagher

Ms. Abel is an associate in Willkie’s Private Clients Group. Her practice includes the drafting of wills, trusts,...  |  Read More

Alt, Justin
Justin D. Alt

Counsel
Willkie Farr & Gallagher

Mr. Alt is counsel in the Private Clients Group, based in Los Angeles. A trusts and estates attorney with a strong...  |  Read More

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