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Value of split-dollar No-change partnership examinations
arrangement is not its The Treasury Inspector General for Tax Administration found a high no-change rate
cash surrender value for partnership examinations under the centralized partnership audit regime rules.

In the latest IRS challenge to an 400
intergenerational split-dollar
arrangement, the taxpayer 350
prevails.
300
By Hannah Pitstick
250

200

150

100

50
The Tax Court held that the value
0
includible in a taxpayer’s gross estate for 2016 2017 2018 2019
a receivable created under split-dollar life  No-change closures  Total closures
insurance arrangements was the stipu- Source: TIGTA Rep’t No. 2022-30-020.
lated value of the receivable created by the
arrangements, not the much higher cash
surrender value of the insurance policies
purchased as part of the arrangements. Percentage of offers in compromise accepted, FY 2011–2020
Facts: Marion Levine was born in
After years of holding steady at a little over 40%, the percentage of offers in compromise
1920 in St. Paul, Minn., and, by the
accepted by the IRS dropped in fiscal years 2019 and 2020 to the low 30s. In FY 2020,
time she died in 2009, had a net worth taxpayers proposed 44,809 offers in compromise and the IRS accepted 14,288.
in excess of $25 million. Her benefi-
ciaries included her two children and 50
five grandchildren.
In an initial estate planning move,
Levine created a revocable trust (the 40
Marion Levine Trust) in 1988. In 2007,
Levine retained a new adviser to revise
her estate plan. The adviser suggested 30
the family consider an intergenerational
split-dollar life insurance arrangement,
20
with split-dollar life insurance policies
purchased on the lives of Levine’s daugh-
ter, Nancy, and son-in-law, Larry.
10
As part of the arrangement, an
irrevocable trust (the insurance trust) was
created to buy and own the split-dollar 0
insurance policies. The insurance trust
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
was settled in South Dakota, and, under
Source: IRS Data Book.
the terms of the trust and South Dakota
law, the investments in the trust were
controlled by the trust’s “investment

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