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percent of $1,349,170.02, the fair market value of the principal
of the trust on the date of decedent's death.
OPINION
Section 2041(a)(2) requires that the value of a decedent's
gross estate include the value of all property--
To the extent of any property with respect to which the
decedent has at the time of his death a general power
of appointment created after October 21, 1942, or with
respect to which the decedent has at any time exercised
or released such a power of appointment by a
disposition which is of such nature that if it were a
transfer of property owned by the decedent, such
property would be includible in the decedent's gross
estate under sections 2035 to 2038, inclusive. For
purposes of this paragraph (2), the power of
appointment shall be considered to exist on the date of
the decedent's death even though the exercise of the
power is subject to a precedent giving of notice or
even though the exercise of the power takes effect only
on the expiration of a stated period after its
exercise, whether or not on or before the date of the
decedent's death notice has been given or the power has
been exercised.
Sec. 2041(a)(2). Section 2041(b)(1) defines a general power of
appointment, with exceptions not applicable to this case, as "a
power which is exercisable in favor of the decedent, his estate,
his creditors, or the creditors of his estate". The power to
consume the principal of the trust is a power of appointment.
Sec. 20.2041-1(b), Estate Tax Regs. The possession of a general
power of appointment is subjected to the estate tax, whether or
not the power is exercised, and the exercise or release of such
power during the holder's life is subjected to the gift tax.
Estate of Kurz v. Commissioner, 101 T.C. 44, 53 (1993),
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