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over and distributed in equal shares to the children of Mr.
Jackson. Mr. Jackson's children are: Laura H. Jackson (Laura),
Ted K. Jackson IV (Ted), and Caroline A. Jackson (Caroline).
Laura and Ted are the children of Mr. Jackson and petitioner.
Caroline is the daughter of Mr. Jackson, but she is not the
daughter of petitioner.
On her Federal income tax return for each of the taxable
years 1991 and 1992, petitioner claimed $23,664.74 as a deduction
for amortization of her life interest in the trust. She
calculated this amount by subtracting from the basis of the trust
the fair market value of the remainder interest in the trust,
$60,584.56, to arrive at the value of her life interest in the
trust, $538,136.24, and dividing the value of her life interest
by her life expectancy, which she incorrectly determined to be
22.74 years. Petitioner's correct life expectancy at the time
the trust was established was 33.9 years, which would result in a
yearly amortization amount of $15,874.
In the notice of deficiency, respondent disallowed the
amortization deductions claimed by petitioner for 1991 and 1992,
stating that the life interest petitioner received was a property
settlement and, therefore, not amortizable. Petitioner contends
that she received the life interest in exchange for her marital
rights and, therefore, it is amortizable.
Generally, a taxpayer may amortize his cost basis in a
purchased life interest over his life expectancy. See Gist v.
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