39
points out that section 2036 applies to a remainder interest a
decedent buys from a third party if the decedent retained a life
interest in the property. Estate of Shafer v. Commissioner,
supra.
In Estate of Shafer v. Commissioner, supra, the decedent
bought real property and had the seller convey a life interest to
him and his wife and a remainder interest to their sons. 749
F.2d at 1218, 1221. The U.S. Court of Appeals for the Sixth
Circuit treated the decedent as having (a) purchased the
property, (b) transferred the remainder to his sons, and (c)
retained a life interest for himself. It held that the
decedent's estate included the property under section 2036
because the decedent retained possession and enjoyment of the
property while conveying a remainder interest to his sons. Id.
at 1221.
Respondent contends that, under Estate of Shafer, section
2036 brings into Paul Brown's estate 312 of the 329 shares
obtained by Paul Brown's sons when they exercised the option. We
disagree. The decedent in Estate of Shafer bought a life
interest and a remainder interest in property. In contrast, Paul
Brown did not buy either a life interest or a remainder interest
in the 329 shares.
The option granted to the Browns was not a remainder
interest. A remainder interest arises automatically when a life
interest ends. The Browns were not automatically entitled to
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