Frank Armstrong, III, Transferee, et al. - Page 10




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          to the estate's failure to include in the gross estate pursuant             
          to section 2035(c) the amount of the gift tax that decedent paid            
          with respect to the stock transfers.                                        
          Respondent counters that petitioners are personally liable                  
          for the estate tax deficiency pursuant to section 6324(a)(2)                
          inasmuch as section 2035(d)(3)(C) provides that the value of the            
          stock that petitioners received from decedent is treated as if it           
          were included in the gross estate for purposes of section                   
          6324(a)(2).                                                                 
          Section 2035 provides in pertinent part:                                    
                    SEC. 2035(a) Inclusion of Gifts Made by Decedent.-                
               -Except as provided in subsection (b), the value of the                
               gross estate shall include the value of all property to                
               the extent of any interest therein of which the                        
               decedent has at any time made a transfer, by trust or                  
               otherwise, during the 3-year period ending on the date                 
               of the decedent's death.                                               
                 *        *       *       *       *       *       *                   

                    (d) Decedents Dying After 1981.--                                 
                         (1) In general.--Except as otherwise                         
                    provided in this subsection, subsection (a)                       
                    shall not apply to the estate of a decedent                       
                    dying after December 31, 1981.                                    
                  *       *       *       *       *       *       *                   
                         (3) 3-Year Rule Retained for Certain                         
                    Purposes.--Paragraph (1) shall not apply for                      
                    purposes of–                                                      









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