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amend her answer, and she increased the estate tax deficiency by
treating, as a gift, decedent's cancellation of her daughter's
obligation to pay for the 25 percent of agency stock. The Court
granted petitioner leave to amend its petition, and petitioner
subsequently alleged that decedent's will made a bequest of the
agency stock to her daughter subject to a condition precedent.
Since the asserted condition, payment of $3,750 a month for 10
years, was not met, petitioner alleged that the bequest to
decedent's daughter failed, and that the agency stock passed to
the surviving spouse as the residuary beneficiary. Petitioner
alleged that the entire value of decedent's agency stock,
$567,534, qualifies for the marital deduction. After trial, but
before opening briefs were due, petitioner and respondent filed a
"Stipulation of Settled Issue" that stated:
Since the payments called for in the codicil,
namely the sum of $3,750.00 per month for a period of
ten years, have not been made, petitioner no longer
contends that the payments, had they been made, would
have qualified for the marital deduction pursuant to
I.R.C. section 2056.
OPINION
The issues in this case revolve around the decedent's
cancellation of her daughter's debt and the provisions of
decedent's will and codicil relating to the agency stock and the
monthly payments. The language in the will concerning the agency
stock was drafted by decedent, and the parties dispute its
interpretation.
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