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Course Details

Course Information
  • smart_display Format

    Live Online with Live Q&A

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Estate Planning

Date & Time
  • event Date

    Wednesday, May 28, 2025

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

$297.00

This CLE/CPE course will provide estate planning counsel with a comprehensive and practical guide to structuring defined value formula clauses to avoid gift tax consequences on asset transfers. The panelist will provide specific guidance on making formula allocations to withstand IRS scrutiny, identify conditions in transfer structures that trigger gift tax imposition, and discuss recent developments impacting the use of these formula clauses in trusts and estate planning.

Faculty

Lawrence M. Lipoff
Director
CohnReznick LLP

With more than 30 years of experience, Mr. Lipoff specializes in the delivery of domestic and international private client services to enable high-net-worth individuals and families to maximize their new or generational wealth. He provides strategic advice to his clients and their closely held businesses in the areas of income tax planning and compliance, estate planning and administration services, as well as family structure consulting. Through many years in practice, he synthesized the work of various related professionals, and their firms integrate several planning strategies into solutions that maximize value. Mr. Lipoff is a frequent lecturer and author of articles published through professional forums on topics including domestic and international - estate planning and fiduciary income taxation including constructive attribution rules for foreign trusts, Forms 3520 & 3520-A, Graegin Loans, business succession, generation-skipping transfers, Chapter 14 and carried interest estate planning for private investment fund principals, preferred freeze partnerships, and private placement life insurance.

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Dhar Kalsi
Partner, Valuation Advisory Services
CohnReznick LLP

Mr. Kalsi provides valuation advisory services for gift and estate tax, financial reporting, litigation support, strategic planning, and other purposes. His focus includes preparing valuations of debt and equity investments in partnerships engaged in the business of developing real estate projects financed with tax credits (e.g., Low Income Housing Tax Credits – IRC Section 42, New Market Tax Credits -IRC Section 45D, Historic Tax Credits – IRC Section 47, etc.). 

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Description

The use of defined value clauses to mitigate gift tax impact on the transfer of hard to value assets has long been an item of IRS scrutiny. While the Service lost several tax court challenges to defined value clauses, it continues to take an adverse audit position and seek suitable new cases to take to court.

Several defined value clauses have withstood IRS scrutiny, utilizing both formula allocations and price adjustment clauses. Proper implementation of the transfer is critical to structuring a defined value clause, and there must be no pre-arrangement between the transferor and the transferee.

In the current environment with an increased exemption amount, estate planning advisers should protect lifetime transfers from unintended gift tax with a well-designed defined value clause. Because the Service will continue to scrutinize the construction and implementation of defined value clauses, estate planners must carefully draft and strictly implement the provisions according to their terms.

Listen as our panel provides comprehensive guidance to structuring defined value clauses that will withstand IRS scrutiny and challenges and recent developments impacting the use of these formula clauses in trusts and estate planning. The panel will review specific language designed to be as robust as possible if challenged yet flexible enough to be used in multiple contexts.

Outline

  1. Types of defined formula value approaches
    • Formula allocation clause based on a subsequent agreement of involved parties
    • Formula allocation clause based on final values as determined for gift tax purposes
    • Price adjustment clauses
  2. Impact of recent cases
  3. Exercising substitution powers using a defined value clause
  4. Traps to avoid

Benefits

The panelist will review these and other noteworthy issues:

  • What are the grounds for IRS challenges of defined value clauses?
  • What types of defined value clauses have failed to withstand IRS challenges?
  • How to best structure defined value clauses
  • How to structure defined value clauses involving non-taxable transfers other than to public charities
  • Engaging the right valuation expert to avoid resizing of transfers
  • Reviewing valuations for reports

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Understand the grounds for IRS challenges of defined value clauses
  • Recognize what types of defined value clauses have failed to withstand IRS challenges
  • Ascertain methods best structure defined value clauses for mitigating taxes
  • Understand how to structure defined value clauses involving non-taxable transfers other than to public charities

  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization preparing moderate-to-complex tax forms and schedules. Specific knowledge of estate tax rules and reporting; basic familiarity with gift tax concepts, exemption calculations, generation skipping taxes and portability of spousal lifetime exclusions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.