The current rule whereby a zero taxable capital gain rate arises from the deemed disposition of
public company shares on death now requires that the gift be made by a GRE.11 A zero taxable
capital gain rate would be reflected on John’s terminal return as a result of his GRE’s gift of
ABC Co. shares. (If, unlike in our example, John’s estate was not designated as a GRE, a capital
gain of $50,000 would be included on his terminal return.)
Life interest trusts
Spousal trusts, AETs, and joint partner trusts are not GREs and, therefore, do not benefit from
the flexibility the new legislation offers for donations. These trusts will have a deemed year-end on
the death of the individual beneficiary, and any capital gains arising on the deemed disposition of
the trust property on this date will be taxed on the deceased’s terminal tax return.12 This makes
it difficult to shelter the tax liability through use of a DTC, as the tax liability on the terminal
return cannot be ٙ