Estate of David Katz, Deceased, Sarah Katz, Executrix - Page 1

                                 T.C. Memo. 2004-166                                  


                               UNITED STATES TAX COURT                                


          ESTATE OF DAVID KATZ, DECEASED, SARAH KATZ, EXECUTRIX, Petitioner           
                                         v.                                           
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      


               Docket No. 1462-03.              Filed July 14, 2004.                  

                    D executed a will in 1991 which provided for the                  
               creation of a trust that was to be funded with an                      
               amount equal to the “aggregate federal estate tax                      
               exemption equivalent”.  Following D’s death in 1998,                   
               D’s wife filed a qualified disclaimer, disclaiming both                
               her interest in the trust, and also in five securities.                
                    R determined that the trust was funded by (1)                     
               assets in an amount equal to the “aggregate federal                    
               estate tax exemption equivalent” and (2) the interests                 
               in the securities disclaimed by D’s wife.  R determined                
               that the estate was liable for a deficiency in estate                  
               tax because of the bequests disclaimed by D’s wife.                    
                    Held:  The trust was funded both by (1) assets in                 
               an amount equal to the “aggregate federal estate tax                   
               exemption equivalent”, and also by (2) the interests in                
               the securities disclaimed by D’s wife.  Since the trust                
               was therefore overfunded, the estate is liable for a                   
               deficiency in estate tax, as determined by respondent.                 





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