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The IRS continues to question the substance of Crummey trust arrangements being used to take advantage of annual gift tax exclusions under IRC section 2503(b) despite recent decisions unfavorable to the IRS. Unlike other trust interests, a Crummey trust interest qualifies for the gift tax exclusion because the limited withdrawal right offered the beneficiary results in the interest being considered a present interest. The IRS has argued for proof of donative intent, but the Tax Court ruled in Estate of Cristofani that contingent remainder interests are sufficient under Crummey.
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