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2056(d)(1)(B) provides that if the surviving spouse of the
decedent is not a citizen of the United States, section 2040(b)
shall not apply.
Having determined that the Young Property was held in joint
tenancy, section 2040, along with section 2031, is applicable.
Yang, the surviving spouse of decedent, held the Young property
in joint tenancy with decedent. Because Yang is not a citizen of
the United States, section 2056(d)(1)(B) applies, making section
2040(b) inapplicable. Instead, section 2040(a) is applicable.
During trial and respondent's opening brief, respondent
relied on the application of section 2040(b). In the reply
brief, respondent noted the mistake of relying on section 2040(b)
and stated that section 2040(a) is applicable. In order to avoid
prejudice to petitioner, respondent concedes the value of the
joint tenancy included in the gross estate to be one-half of the
entire value of the Young Property, not the full value.8
Normally, section 2040(a) starts with the full inclusion of
the value of the joint tenancy in the gross estate of the first
joint tenant to die. In order to reduce this inclusion, there is
a strict tracing of contributions by the surviving joint tenant.
Because petitioner and respondent were relying at trial upon the
application of section 2040(b), the record that they presented
8 While respondent noted the mistake on reply brief, during
opening statement at trial, petitioner's counsel acknowledged the
interplay of sec. 2040(b) and sec. 2056(d)(1)(B).
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