Estate of Mildred Geraldine Letts, Deceased, James P. Letts III and Joanne L. Magbee, Coexecutors - Page 7

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          decedent's gross estate.  Petitioner attached the following                 
          statement to its estate tax return:                                         
                      Statement Regarding Question 6 of Part 4                        
                    Item Two of the Will of James P. Letts, Jr., the                  
               late husband of Mildred G. Letts, created a trust for                  
               her benefit.  Pursuant to the terms of that trust,                     
               Mildred G. Letts was to receive all of the income from                 
               the trust for life.  She also was given the power to                   
               withdraw up to $40,000 from the trust each year (see                   
               Schedule H), but had no other general power of                         
               appointment.  On the Form 706 filed on behalf of the                   
               estate of James P. Letts, Jr., a copy of which is                      
               attached hereto, the executor did not elect to treat                   
               the Item Two trust as qualified terminable interest                    
               property.  Consequently, the assets held in the item                   
               two trust are not includible in the gross estate of                    
               Mildred G. Letts under section 2044.                                   
               James P. Letts III and JoAnne L. Magbee signed decedent's              
          Federal estate tax return.  It was filed on April 20, 1992.                 
               Respondent determined that the value of the Item II trust is           
          includable in decedent's gross estate.2  Petitioner concedes that           
          $40,000 of the trust property is includable in decedent's gross             
          estate because it was subject to decedent's power of withdrawal             
          or appointment at her death.                                                

               2 The parties agree that the value of the Item II trust is             
          $967,407 if the Court decides that the value of the Item II trust           
          is includable in decedent's gross estate.                                   












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