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purposes the gross estate includes the value of all property
receivable by the executor as insurance under policies on the
life of the decedent (not on the policies themselves).
In the present case, when decedent, as the owner and insured
of certain life insurance policies that were community property,
designated his estate as the beneficiary thereof, and also made
other transfers of property to his wife in a manner that was fair
to her and compensated her for the loss of insurance rights,
decedent was successful under Texas law in withdrawing said
insurance proceeds from the regime of community property and in
eliminating his wife's interest therein when he died. That being
so, the entire proceeds of the insurance are includable in
decedent's gross estate under section 2042(1). In this
connection, it is of no help to petitioner to cite or rely on
section 20.2042-1(b)(2), Estate Tax Regs.1 This regulation
presupposes that under controlling local law, one-half of the
proceeds of community property life insurance belongs to the
spouse and not to decedent, so that only one-half of such
proceeds is includable in the taxable estate. But as we have
already seen, supra, decedent's wife here was divested of her
1 The cited regulation provides: "If the proceeds of an
insurance policy made payable to the decedent's estate are
community assets under the local community property law and, as a
result one-half of the proceeds belongs to the decedent's spouse,
then only one-half of the proceeds is considered to be receivable
by or for the benefit of decedent's estate".
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