Frank Armstrong, III, Transferee, et al. - Page 15




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          255, 1981-2 C.B. 481, 511.  As we see it, the explanation of                
          section 2035(d)(3)(C) in the conference report supports our                 
          holding that section 2035(d)(3)(C) is applicable in these cases.            
          Indeed, the plain language of section 2035(d)(3)(C), by referring           
          as it does to subchapter C of chapter 64, and not to section                
          6324(a)(1) to the exclusion of section 6324(a)(2), belies                   
          petitioners' interpretation.                                                
               Petitioners' final contention is that there is an                      
          insufficient "nexus" between the stock that they received from              
          decedent and the estate taxes that respondent seeks to collect              
          from them.  Consistent with their argument under section 6901(a),           
          petitioners assert that there is no meaningful connection between           
          the estate tax liability--which is attributable to the                      
          application of the section 2035(c) "gross-up" rule--and the stock           
          transfers that petitioners received from decedent.                          
               The short answer to petitioners' contention is that Congress           
          did not restrict transferee liability to those instances where              
          there is an immediate link between an estate tax liability and              
          property transferred to a transferee.  As previously discussed,             
          section 6324(a)(2) imposes personal liability for unpaid estate             
          taxes upon a transferee in the event that the transferee has                
          received property from a decedent that is includable in the gross           









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