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(petitioner) is entitled. Petitioner contends that property that
funded a residuary trust established under the will of Leon Amiel
(the Part B trust) is qualified terminable interest property
(QTIP), and as a consequence, petitioner is entitled to an
unlimited marital deduction (amounting to $7,305,191) pursuant to
section 2056(a) as amended by section 403(a) of the Economic
Recovery Tax Act of 1981 (ERTA), Pub. L. 97-34, 95 Stat. 301.
Respondent, on the other hand, claims that the transitional rule
set forth in ERTA section 403(e)(3), 95 Stat. 305, subjects
petitioner to the pre-ERTA marital deduction quantitative limits.
Respondent acknowledges that property funding another residuary
trust that contains a maximum marital deduction formula clause (the
Part A trust) qualifies for the marital deduction. Thus, respondent
concludes that petitioner is limited to a marital deduction in the
amount of $5,603,819. Continuing for the sake of completeness,
respondent argues that the Part B trust property fails to qualify
for QTIP treatment because decedent's surviving spouse did not
possess a qualifying income interest for life in the trust
property. For the reasons that follow, we agree with all of
respondent's positions and conclude that the amount of the marital
deduction available to petitioner is limited to the amount
available prior to the enactment of ERTA.
Unless otherwise indicated, all section references are to the
Internal Revenue Code as amended and in effect for the date of Leon
Amiel's death, and all Rule references are to the Tax Court Rules
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