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C. The Parties' Positions--In General
Respondent's position stresses the overall effect of
decedent's conduct with respect to the assets decedent received
under Garry's will and decedent's share of the investment income
generated by those assets during 1979-93. According to
respondent, decedent's conduct with respect to these assets and
income both depleted decedent's taxable estate and benefited the
children, who were the natural objects of her bounty.
Respondent urges us to remember that although decedent
received a bequest from Garry's estate with a value of over $2.15
million, and also became entitled to $913,200 of net investment
income during the period between Garry's death and her death,
petitioner reported a gross estate of only $1,107,141, a taxable
estate of only $272,756, and adjusted taxable gifts of only $313.
Respondent additionally reminds us that because Garry's
bequest to decedent qualified for the marital deduction, Garry's
estate was not required to pay estate tax on the transfer of 50
percent of its assets to decedent. Respondent, of course, has no
quarrel with this. However, it is generally assumed that the
price to be paid for the tax-free transfer of assets via the
marital deduction is the taxation of those assets in the estate
of the surviving spouse. See Estate of Cavenaugh v.
Commissioner, 100 T.C. 407, 416 (1993), affd. in part and revd.
in part on another ground 51 F.3d 597 (5th Cir. 1995).
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