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Abstract

It took nearly a decade, but the Internal Revenue Service has finally acknowledged the line of cases headed by Gallenstein v. United States and followed by five more cases holding that the so-called “consideration-furnished” rule of federal estate taxation of jointly-owned property could be applied at the first death of a husband-wife joint tenancy to produce a higher income tax basis in the hands of the surviving joint tenant. IRS has now acquiesced in the Tax Court decision, Hahn v. Commissioner, which removes the remaining doubt as to whether application of the consideration-furnished rule was acceptable in the case of husband-wife joint tenancies. In Hahn v. Commissioner, The Tax Court agreed that a surviving spouse could be entitled to a new income tax basis on 100 percent of the date of death value for property held in joint tenancy with a predeceased spouse.

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