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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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