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in docket No. 45668-86, entered on June 9, 1988, the parties
stipulated that $1,507,881.39 of the assets distributable under
Article Five of Andrew's will represented QTIP for which a
deduction was allowed under section 2056(b)(7). In docket No.
45668-86, the parties further stipulated that the assets of the
Marital Trust which constituted QTIP would be segregated from
those assets of the Marital Trust which did not and that the
assets which did not constitute QTIP would not be includable in
the estate of the surviving spouse.
The $1,507,881.39 which qualified for a QTIP deduction under
section 2056(b)(7) represented 75.13637 percent of the principal
of the Marital Trust, which had a total value of $2,006,859.56.
On or about September 27, 1989, the executors of Andrew's estate,
who were also the trustees of the Marital Trust, filed a Petition
to Divide Trust with the Fayette County, Pennsylvania Orphan's
Court in order to segregate the QTIP portion of the Marital Trust
from the remaining assets, to comply with the Tax Court
stipulation. The Petition to Divide Trust was not granted, and
the QTIP in the Marital Trust has not been segregated from the
remaining assets.
On petitioner's Federal estate tax return, petitioner did
not include in the gross estate the value of any QTIP which had
been deducted by Andrew's estate under section 2056(b)(7).
The assets of the Marital Trust were held at the Fayette
Bank and Trust Co., now known as BT Management Trust Co., which
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