Magazine article The CPA Journal

Qtip Treatment for a Personal Residence

Magazine article The CPA Journal

Qtip Treatment for a Personal Residence

Article excerpt

In Technical Advice Memorandum 9140004, the decedent's spouse desired QTIP treatment for a residence. The decedent's will left the residuary of his estate to his two sons. However, it reserved for his spouse the use and occupancy of the residence for as long as she used it as her residence and did not remarry. The decedent's children, grandchildren and great-grandchildren all timely disclaimed their interests in the residence which might pass to them by reversion or intestacy during the spouse's lifetime.

QTIP treatment was then elected on Form 706. In order for the residence to qualify for QTIP treatment, the spouse would require a qualifying income interest for life. Since her interest could terminate upon remarriage or abandonment of use as a residence, qualified disclaimers were required on the part of the children and grandchildren to perfect the interest. The IRS found that qualified disclaimers did not exist and denied QTIP treatment.

REASONS FOR DENIAL

In order to have a qualified disclaimer, there must be an unqualified refusal to accept an interest in property. The refusal must be received in writing not later than nine months after the transferor creates the interest (or the disclaimant turns 21). The disclaimant may not have accepted the property or any of its benefits, and the interest must pass without direction by the disclaimant to either the decedent's surviving spouse or someone other than the disclaimant. All of these requirements were met. …

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