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venture owned entirely by decedent and the children. It is also
inconsistent with the evidence introduced to support that
argument.
For these reasons we find that the amounts of unused annual
exclusion available are those shown in our findings of fact.
The amount of decedent's taxable gifts redetermined in this
opinion will increase the amount of estate tax due from
petitioner, because it will increase the amount of petitioner's
"tentative" estate tax computed under section 2001(b)(1).
However, the amount of gift tax that would have been payable on
those gifts, whether or not actually paid, will offset part of
this increase in tax, because it will increase the "hypothetical"
gift taxes payable for purposes of section 2001(b)(2). See
Estate of Smith v. Commissioner, 94 T.C. 872 (1990). Of course,
if petitioner ultimately pays any gift taxes associated with the
gifts at issue herein, petitioner will be entitled to additional
deductions from the gross estate on account of those taxes. See
sec. 2053; sec. 20.2053-6(d), Estate Tax Regs.
To reflect all the foregoing,
Decision will be entered
under Rule 155.
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