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valuation as a single-life annuity, and correspondingly reduces
the amount of the taxable gift of the remainder. Respondent
disagrees with this result.
As pertinent herein, section 2702 provides:
SEC. 2702. SPECIAL VALUATION RULES IN CASE OF
TRANSFERS OF INTERESTS IN TRUSTS.
(a) Valuation Rules.--
(1) In general.--Solely for purposes of
determining whether a transfer of an interest in
trust to (or for the benefit of) a member of the
transferor’s family is a gift (and the value of
such transfer), the value of any interest in such
trust retained by the transferor or any applicable
family member * * * shall be determined as
provided in paragraph (2).
(2) Valuation of retained interests.--
(A) In general.--The value of any
retained interest which is not a qualified
interest shall be treated as being zero.
(B) Valuation of qualified interest.--
The value of any retained interest which is a
qualified interest shall be determined under
section 7520 [providing for use of valuation
tables prescribed by the Secretary for
annuities, life interests, etc.].
(3) Exceptions.--
(A) In general.--This subsection shall
not apply to any transfer--
(i) if such transfer is an
incomplete gift,
* * * * * * *
(B) Incomplete gift.--For purposes of
subparagraph (A), the term “incomplete gift”
means any transfer which would not be treated
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