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provision, and therefore the value of decedent's gifts is not
included in the gross estate for purposes of determining whether
petitioners are personally liable as transferees.
Petitioners further contend that the legislative history of
section 2035(d)(3)(C) supports their position. Section 2035(d)
was enacted by section 424 of the Economic Recovery Tax Act of
1981, Pub. L. 97-34, 95 Stat. 172, 317. Petitioners rely on H.
Rept. 97-201, at 187 (1981), 1981-2 C.B. 352, 390, which explains
the addition of section 2035(d)(3)(C) as follows: "[A]ll
transfers within 3 years of death (other than gifts eligible for
the annual gift tax exclusion) will be included [in the gross
estate] * * * for purposes of determining property subject to the
estate tax liens (under subchapter C of Chapter 64)".
Based upon our review of the plain language of section
2035(d)(3)(C), and the background of section 6324(a)(2), we agree
with respondent that petitioners are liable as transferees in
these cases. The legislative history cited by petitioners does
not persuade us otherwise.
Initially, we reject petitioners' contention that the
parenthetical language "(relating to lien for taxes)" contained
in section 2035(d)(3)(C) limits the application of the provision
to what petitioners consider to be traditional lien provisions.
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