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Decedent's will established two residuary trusts. The Part A
trust contained a maximum marital deduction formula clause; the
Part B trust did not. Respondent acknowledges that the property
funding the Part A trust qualifies for the marital deduction.
Respondent asserts that the effect of the transitional rule is to
limit overall the amount of the marital deduction available to
petitioner to that of the pre-ERTA quantitative limits. Hence,
respondent posits that the amount of the marital deduction
available to petitioner is the amount of the property funding the
Part A trust.
Petitioner asserts in its posttrial brief:
The "Transitional Rule" was not intended
to limit the marital deduction for property
"passing to the surviving spouse", but rather
was intended to prevent the unintended
legislative amendment of a testator's
testamentary scheme. In the present matter,
the formula is used to divide property into a
"Part A" trust and a "Part B" trust both of
which "pass" to the surviving spouse. The
"Part A" trust provides an income interest to
the surviving spouse for life and grants her a
general power of appointment and qualifies for
the marital deduction and this is not
contested by respondent.
The "Part B" trust also qualifies for the
marital deduction as it is Qualified
Terminable Interest Property ("Q-TIP") and,
therefore, pursuant to I.R.C. Sec.
2056(b)(7)(B) "passes" to the surviving
spouse. As required, petitioner properly
elected on Schedule M, Part 2 of the estate
tax return Q-TIP treatment for the "Part B"
trust.
We find petitioner's position unpersuasive. The language of
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