Estate of Rose D' Ambrosio, Deceased, Vita D'Ambrosio, Executrix - Page 1

                                   105 T.C. No. 18                                    

                               UNITED STATES TAX COURT                                

             Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent               

               Docket No. 6724-94.          Filed September 25, 1995.                 

                    D transferred her remainder interest in stock for                 
               consideration equal to the value of that interest, and                 
               retained an income interest in the stock for life.                     
               Following D's death, E did not include the stock in D's                
               gross estate for Federal estate tax purposes.  E argues                
               that the stock is excludable from D's gross estate                     
               under the bona fide sale exception of sec. 2036(a),                    
               I.R.C., given the fact that D transferred the remainder                
               interest for its fair market value.  Held: D's gross                   
               estate includes the value of the stock at D's death,                   
               less the amount that D received for the remainder                      
               interest.  The bona fide sale exception of sec.                        
               2036(a), I.R.C., is inapplicable to the facts at hand.                 

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