Handling Joint Tenancies at Death

Abstract

<p>It took nearly a decade, but the Internal Revenue Service has finally acknowledged the line of cases headed by <em>Gallenstein v. United States</em> 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, <em>Hahn v. Commissioner</em>, 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 <em>Hahn v. Commissioner</em>, 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.</p>