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expanded it in 1981. H. Rept. 97-201, at 159-161 (1981), 1981-2
C.B. 352, 377-378. As a result, bequests of property from a
predeceasing spouse to the surviving spouse are in certain
circumstances eligible for an unlimited marital deduction. Sec.
2056(a). It is a basic policy of the marital deduction that
property that passes untaxed from a predeceasing spouse to a
surviving spouse is included in the estate of the surviving
spouse. Estate of Shelfer v. Commissioner, 86 F.3d 1045, 1048
(11th Cir. 1996), revg. 103 T.C. 10 (1994); Estate of Cavenaugh
v. Commissioner, 100 T.C. 407, 416 (1993), affd. in part and
revd. in part on other grounds 51 F.3d 597 (5th Cir. 1995).
The marital deduction provides special rules for gifts of
terminable interest property (e.g., life interests). Sec.
2056(b). A terminable interest is an interest passing to a
surviving spouse that will end on the lapse of time, on the
occurrence of an event or contingency, or on the failure of an
event or contingency to occur. Sec. 2056(b)(1). The marital
deduction is not available for terminable interest property given
to the surviving spouse unless the estate of the predeceasing
spouse elects to treat the property as QTIP. Sec. 2056(b)(1),
(7).5 The estate of the predeceasing spouse is denied a marital
5 The QTIP election is available for estates of decedents
(continued...)
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