William A. and Gayle T. Cook, Donors - Page 12




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          market value of the property transferred to the trust as finally            
          determined for Federal tax purposes.  See sec. 25.2702-                     
          3(b)(1)(ii), Gift Tax Regs.  In either case, a fixed amount must            
          be payable periodically but not less frequently than annually.              
          See id.                                                                     
               The trust instrument must also prohibit distributions from             
          the trust to or for the benefit of any person other than the                
          holder of the qualified annuity interest during the term of the             
          qualified interest.  See sec. 25.2702-3(d)(2), Gift Tax Regs.               
          The term of the annuity interest must be fixed by the trust                 
          instrument for the life of the term holder, for a specified term            
          of years, or for the shorter (but not the longer) of those                  
          periods.  See sec. 25.2702-3(d)(3), Gift Tax Regs.                          
               For purposes of section 2702, a transfer of an interest in             
          property with respect to which there are one or more term                   
          interests is treated as a transfer in trust.  See sec.                      
          2702(c)(1).  A term interest is one of a series of successive (as           
          contrasted with concurrent) interests.  See sec. 25.2702-4(a),              
          Gift Tax Regs.                                                              
          II.  Application                                                            
               As previously stated, section 2702 contains special                    
          valuation rules for transfers of interests in trusts to family              
          members.  In this case, we proceed on the assumption that each              
          trust creates interests which consist of the right to receive               






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