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value basis in the transferred property. This holding would
support petitioner's position based on Alabama law.
Section 1041 was enacted specifically to change the law as
announced in the Davis case for Federal income tax purposes. H.
Rept. 98-432 (Vol. II), at 1491 (1984). H. Rept. 98-432 (Vol.
II), supra at 1492, states that "Thus, uniform Federal income tax
consequences will apply to these transfers notwithstanding that
the property may be subject to differing state property laws."
Under section 1041(b)(1), it is clear that petitioner is to
be treated for Federal income tax purposes as acquiring her life
interest in the trust by gift. Under section 273, an
amortization deduction of a life interest acquired by gift,
bequest, or inheritance is not allowed as a reduction of income
from the trust. Therefore, we hold that petitioner is not
entitled to any amortization deduction for the value of her life
interest in the trust for either of the calendar years 1991 and
1992. See Staff of Joint Comm. on Taxation, General Explanation
of the Revenue Provisions of the Deficit Reduction Act of 1984,
at 711 (J. Comm. Print 1984).
In the alternative, respondent contends under section 167(e)
that the amortization deductions claimed by petitioner would be
disallowed in full, even if section 273 were inapplicable to the
circumstances here.4
4 Sec. 167(e) does not apply to any term interest to which
sec. 273 applies. Sec. 167(e)(2). Thus, because we hold that
(continued...)
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