February 22, 2023 Group and Committee Calls
Significance of Settling Sorensen: Wandry Warnings and Winnings
Income and Transfer Tax Planning Group (TE)
Recorded on February 22, 2023
Significance of Settling Sorensen: Wandry Warnings and Winnings
In 1994, Brothers Chris and Robin Sorensen poured every penny they had into opening Firehouse Subs, leaving them and their immediate family with a combined $100. In late 2021, the company sold for just over $1 Billion.
On December 31, 2014, each brother made gifts of Firehouse nonvoting stock to a family trust for the benefit of his wife and descendants. The gift was a Wandry-style transfer of nonvoting shares with a fair market of $5,000,000, as finally determined for gift tax purposes. On March 31, 2015, each brother sold additional shares to his respective family trust. The brothers' 2014 gift tax returns were audited, and though not reported, their 2015 sales were also picked up on audit through the discovery process. After much negotiation, the case was ultimately settled with the IRS in July 2022, approximately two weeks before the scheduled Tax Court trial.
Bo Trudeau handled the planning for the transactions, and Stephanie Loomis-Price handled the negotiation and litigation with the IRS. They will discuss the transactions, the audit process, and the ultimate settlement with the IRS. They will also discuss tips for practitioners considering these types of estate planning strategies (including “lessons learned”) and the circumstance in which a defined value gift can be a dual-edged sword.
The content of this program does not meet requirements for continuing legal education (CLE) accreditation. You will not receive CLE credit for for this program or any Professors’ Corner programs.
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