Under Construction: I will add links to other articles. Please check back soon. – For a log of updates that I made since first publishing this page, see below.
While discussing Revenue Ruling 2023-2, a colleague made the following request: "Please send me the link to the Blattmachr article. He’s written so much I’m not sure which one to look at."
Below, you will find a link to Blattmachr's article. You will also find other articles that discuss Rev. Rul. 2023-2. Alan Gassman's article in Forbes is particularly noteworthy because it provides background on the debate that prompted the revenue ruling.
Jeffrey Pennell, Basis of Grantor Trust Assets Before the Grantor's Death, Jan. 20, 2019 (SSRN link) ("The government’s Priority Guidance Plan includes an item whether §1014 new-basis-at-death should apply when the status of a grantor trust changes at the grantor’s death. The unstated assumption appears to be that assets transferred from a grantor to the grantor’s trust will have a carryover of the grantor’s basis prior to the grantor’s death. This essay addresses that notion, and whether a grantor’s transfer of assets into a grantor trust in what purports to be a sale or exchange transaction (that is, not a gift) causes the trust to instead have a basis equal to fair market value rather than a carryover basis. The shocking reality is that this question is not clearly addressed in the Code or Regulations, nor by jurisprudence, leaving unresolved the proper application of the basis rules and spawning no small amount of abuse or aggressive transactions.").
Griffin Bridgers, Step-Up in Basis for Assets in a Grantor Trust: The Mystery is Solved?, State of Estates, March 30, 2023 ("This is not a surprising analysis, and in my opinion the Service got it right. . . . Of course, it should be noted that this is just a statement of the Service’s position. . . . However, this does not mean that the Tax Court or some other court would agree. So, if you or a client has the stomach for it, perhaps you can press the issue.").
IRS rules on basis adjustment for assets in grantor trust that were not in decedent's gross estate, Ernst & Young, April 4, 2023: Reviews the facts, rules, application of the rules, and conclusion of Rev. Rul. 2023-2, and then it gives the implications of the revenue ruling. Specifically, it discusses that practitioners can no longer point to PLR 201245006 (which applied IRC § 1014 to foreign grantor trusts) to take a position that assets in a defective grantor trust receive a basis step-up under IRC § 1014(b)(9)(C).
Paul Hood On Revenue Ruling 2023-2: No Basis Adjustment Under IRC Section 1014 for Property in a Grantor Trust Not Otherwise Includible in the Decedent's Gross Estate, Steve Leimberg's Income Tax Planning Newsletter, April 10, 2023.
Martin Dasko, Taxes on Generational Wealth Just Changed: Here's What You Should Know, GO Banking Rates, Aug. 6, 2023 (Apple News link): Hani's thoughts: Unfortunately, this article isn't good because it doesn't distinguish irrevocable trusts that aren't included in the grantor's gross estate for federal estate tax purposes (which the revenue ruling addresses) and those that typically are (such as Medicaid qualifying trusts).