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(exercisable by the executor's not making the QTIP election)
would be to adopt the test applied by the Court of Appeals for
the Sixth Circuit in Estate of Spencer v. Commissioner, 43 F.3d
226 (6th Cir. 1995), revg. T.C. Memo. 1992-579, that the date for
determining whether property qualifies is the date the QTIP
election is made.
However, the holding of the Court of Appeals for the Sixth
Circuit, if pursued to its logical conclusion, would prohibit
QTIP treatment for any qualifying income interest granted to a
surviving spouse if the surviving spouse dies prior to the
executor's making the QTIP election. In such a situation, if the
date for determining whether property qualifies as QTIP is the
date the election is made, then the executor of the first spouse
to die cannot make the election to treat any property interest as
QTIP. This is because, at the time the executor makes the
election, the surviving spouse has died and no longer has any
interest in the property; the property has passed to the
remainder interest. In that situation, at the time the executor
makes the election, the surviving spouse does not have a
qualifying income interest for life, and the second essential
element for QTIP treatment cannot be met. In such situation, the
spouses could lose the benefit of the surviving spouse's unified
credit.1 I do not think that the date of making the election is
1 For example, assume husband is the first to die and leaves
wife a qualifying income interest in his entire estate, which
estate is valued at $1.2 million. Assume further that wife dies
(continued...)
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