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discretion as * * * [a
distribution to or in
trust for the settlors'
children].
Mr. Walsh has not executed the power of appointment mentioned in
the Agreement, and neither his will nor the decedent's will
provided for the exercise of this power.
The decedent's Federal estate tax return reported a gross
estate of $1,533,805, deductions of $933,805, a taxable estate of
$600,000, and no tax liability. The reported deductions included
funeral and administrative expenses of $13,198 and a marital
deduction of $920,607. The estate claimed the marital deduction
with respect to the assets passing to Trust A under the
Agreement.
Discussion
We must decide whether the property passing to Trust A
qualifies for the marital deduction under section 2056. Section
2056 provides in part:
SEC. 2056. BEQUESTS, ETC., TO SURVIVING SPOUSE.
(a) Allowance of Marital Deduction.--* * * the
value of the taxable estate shall, except as limited by
subsection (b), be determined by deducting from the
value of the gross estate an amount equal to the value
of any interest in property which passes or has passed
from the decedent to his surviving spouse, but only to
the extent that such interest is included in
determining the value of the gross estate.
(b) Limitation in the Case of Life Estate or Other
Terminable Interest.--
(1) General rule.--Where, on the lapse
of time, on the occurrence of an event or
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