Rosalyn Deutsch - Page 11

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               The personal representatives had made distributions from the           
          estate to the residuary beneficiaries in 1990 and 1991.  As of              
          the time of trial, the personal representatives had not made                
          final distributions from the estate.                                        
                                       OPINION                                        
               The question for decision is whether payments in                       
          satisfaction of a surviving spouse’s elective share under Florida           
          law (the Florida elective share) are distributions of income or             
          other amounts properly paid or credited or required to be                   
          distributed, secs. 661(a), 662(a); sec. 1.661(a)-2(e), Income Tax           
          Regs., that carry out the estate’s DNI to the recipient.4                   
               We begin our inquiry by summarizing the issues that bear on            
          the question, as framed and argued by petitioner and respondent.            
          Petitioner argues, citing and quoting Ferguson, Freeland, &                 
          Ascher, Federal Income Taxation of Estates, Trusts, and                     
          Beneficiaries, sec. 1.3 at 1:17 (2d ed. 1993 & Supp. 1997)                  
          (Ferguson et al.), that the Florida elective share is not                   
          “subchapter J property”; in petitioner’s view, the Florida                  


               4 By not issuing a timely protective notice of deficiency to           
          the estate, respondent lost the opportunity for a comprehensive             
          resolution of the issues in this case in a consolidated                     
          proceeding that would have avoided any potential whipsaw.  But              
          see the provisions for statutory mitigation, secs. 1311-1314,               
          particularly, sec. 1312(5); see also sec. 1.1312-5(a)(3), Income            
          Tax Regs., and transferee liability, sec. 6901(h).  As to                   
          petitioner's status as a nontransferee, see John Ownbey Co. v.              
          Commissioner, 645 F.2d 540, 546 (6th Cir. 1981), revg. T.C. Memo.           
          1978-482; Stokes v. Commissioner, 22 T.C. 415, 427 (1954).                  




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