6
Thus, we interpret the above sentence to mean, what amount,
when added to lifetime gifts, will cause the taxable estate (TE)
to be taxed at less than 50 percent? The only unknown in our
equation is the largest amount, or LA. Under section 2001, the
marginal amount (MA) taxed under 50 percent is $2,499,999. It is
agreed by the parties that the amount of the lifetime adjusted
taxable gifts was $35,573.
The taxable estate has three components: The bequests to
the grandchildren, the lifetime gifts, and the largest amount,
which will be the same as the nonmarital share. Thus TE is equal
to BG + LG + LA. The taxable estate must be equal to the
marginal amount, which is $2,499,999. Therefore TE is equal to
$2,499,999. Because the values of TE, BG, and LG, are known, the
value of LA is determined by subtracting BG and LG from TE.
Thus, our formula is TE - (LG + BG) = LA. Therefore, LA =
$2,374,426, which is $2,499,999 less the sum of $90,000 and
$35,573. The nonmarital share is $2,374,426. The residuary
estate is $2,576,677.11, and, when reduced by the nonmarital
share, leaves a marital share of $202,251.11. This was the
amount shown on the estate tax return.
Respondent argues that we must not include the bequests to
the grandchildren when making the computation. Respondent
insists that the above-quoted sentence instructs us to reduce the
residuary estate by some amount which when added to lifetime
gifts would be taxed at less than 50 percent. Respondent asserts
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