IRS Issues PLR Extending Time to Elect Out of Automatic GST Exemption Allocation

The IRS has issued a private letter ruling on I.R.C. §§2632 and 2642 and Treas. Reg. §26.2642 granting taxpayer a 120 day extension to elect out of automatic generation-skipping transfer (GST) exemption allocation under I.R.C. §2632 for transfers made to annuity trusts over multiple years. The taxpayer’s accountant failed to understand the automatic allocation rules and did not advise the taxpayer of the ability to make the election. The IRS determined that the taxpayer acted reasonably and in good faith by relying on qualified tax professional advice despite the professional’s misunderstanding of the GST exemption automatic allocation requirements. The extension ...