Does a Personal Guaranty for the loan made to the Irrevocable Grantor Trust constitute a completed gift?
Neither CWS nor UNF provides tax or legal advice. Please consult with your legal or tax advisor on the information discussed herein. It is unlikely that the Internal Revenue Service would consider a personal guaranty for a loan a completed gift until a payment under the guaranty is actually made. Guidance in this area is provided by Bradford vs. Commissioner, 34 T.C. 1059 (1960). In this case, the Court made the determination that in order for there to be a gift, there must be a transfer of property owned by the donor with the clear intent to divest himself of the property transferred. The mere promise to make a gift is not taxable, even though the promise may be enforceable, because a mere promise to make a transfer in the future is not itself a transfer. However, the IRS position in Private Letter Ruling (PLR) 9113009 contradicts this. In PRL 9113009, the IRS found a guaranty to be a completed gift as soon as it became legally enforceable. The IRS relied on the 1984 Supreme Court’s d
