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Section 1001(e)(2)(A) provides that a "term interest in
property" includes a life interest in property. Because
petitioner has a life interest in the trust, she has a "term
interest in property".
Section 267(b)(1) provides that a "related person" includes
members of an individual's family. Section 267(c)(4) provides
that the family of an individual includes his lineal descendants.
Because Laura and Ted are lineal descendants of petitioner, they
are "related persons" with respect to petitioner for purposes of
section 167(e).
Section 267(b)(6) provides that "related persons" include a
fiduciary of a trust and a beneficiary of such trust. Section
7701(a)(6) provides that a trustee is a fiduciary. As a trustee
of the trust, petitioner is a fiduciary of the trust. As the
holder of a remainder interest in the trust, Caroline is a
beneficiary of the trust. Because petitioner is a fiduciary of
the trust and Caroline is a beneficiary of the trust, they are
"related persons" for purposes of section 167(e).
Because petitioner holds a term interest in the trust and
all of the remainder interests in the trust are held by related
persons, it is clear that section 167(e) applies to disallow the
amortization deductions claimed by petitioner if section 273 is
not applicable to the facts here present.
Since we have held that section 273 is applicable to the
facts here, we will not discuss section 167(e) other than in the
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Last modified: May 25, 2011