New York Estate Planning & Elder Law Blog
New York State Department of Taxation and Finance (“DTF”) announcement that it will investigate President Donald Trump’s estate comes at a time when the federal Internal Revenue Service (“IRS”) is pursuant of accurate reporting information about the presidential family’s wealth. Trump’s lawyers cite the 3-year federal and New York state statute-of-limitations in response to recent allegations that the estate aggressively undervalued properties on state and federal tax record. Properties reported on a gift or estate tax return form to the IRS and the state, however, make it unlikely additional disclosure will be required, and not after the statute runs out.
The Presidential Audit
A New York Times report suggests Donald Trump gave Fred Trump a $15.5 million stake in a Trump Palace development in exchange for forgiveness of loans to his son – an amount subject the federal 55% gift tax rate. Fred Trump apparently never reported the gift at the individual-level, nor is it reflected on the estate tax return, and this has the potential to involve Donald Trump an investigation due to his role as an executor of the estate. In 2000, the Fred and Mary Trump estate was audited. The audit included gift tax returns that had been audited in the 1990s, making any further investigation impossible as those records could not be reopened.
New York Tax Rules
According to New York laws of taxation, omissions or intentional misstatements in preparation of an estate or gift tax return may result in civil penalties. This includes incorrect valuation of properties for purposes of investment or loan collateral reflected in transactions between Trump family members. How those transactions were reported on the Fred and Mary Trump estate tax return might have impact on the case. Issues such as no repayment of loans, or interest charged would require disclosure of those gifts on the estate’s tax return.
Exception of Limitations
The Trump estate, say some legal specialists, may be met with a statute of limitations exception. In other words, rules that would otherwise protect the family from further investigation may lifted if the court proceeding finds any reason for discovery. The New York State DTF has already opened an investigation into the Trump family’s nonprofit organization. New York estate law allows for the statute of limitations to be overlooked by the courts under certain circumstances such as fraud. If an estate has failed to report transactions on record, and fraud is alleged where a federal or state tax issue persists, due diligence may be enforced by the courts. In such case, no statute of limitations applies.
Estate Law Attorney Practice
Ettinger Law Firm is a licensed New York attorney practice specializing in estate planning and probate litigation. Contact Ettinger Law Firm to schedule a consultation about an estate law matter.
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