As this article from the Wall Street Journal details, the IRS recently lost another case, this time in the Ninth Circuit, dealing with gift tax issues.  Where family members are trying to make signficant lifetime transfers to loved ones, there is frequently some uncertainty over how to value the assets, especially business or real estate interests.  If the IRS successfully challenges the valuation, it might result in gift tax being due to the federal government.  The taxpayer had specified that if additional tax was found to be due, increased transfers would be made to the taxpayer's own charitible foundation, thus negating the additional taxes.  The IRS challenged this strategy (as it results in no additional revenues to the IRS) and lost.  The IRS has the power to change the regulations at issue on its own, with no action by Congress, so this is another reason why those considering significant lifetime gifts while the gift tax exemption remains at $5 million per person (through the end of 2012) should think about taking action now.