William A. and Gayle T. Cook, Donors - Page 15




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               In each of these examples, only the retained interest for              
          the shorter of a term of years or the transferor’s life is fixed            
          and ascertainable at the creation of the interest, and is                   
          therefore a qualified interest under section 2702.  In Example              
          (5) and Example (6) above, the unitrust interests that may be               
          paid to A’s estate are both contingent upon A’s death before the            
          completion of the 10-year fixed term, and are therefore not                 
          qualified interests.  In the trusts before us, the spousal                  
          interests are not fixed and ascertainable at the creation of the            
          trusts but, rather, are contingent in each case upon the spouse’s           
          surviving the grantor.  For this reason, the spousal interests              
          are not qualified interests and therefore must be valued as zero            
          under section 2702(a)(2)(A).                                                
               Legislative history reflects that Congress was “concerned              
          about potential estate and gift tax valuation abuses”,                      
          specifically, “undervaluation of gifts valued pursuant to                   
          Treasury tables.”  136 Cong. Rec. S15629, S15680-S15681 (daily              
          ed. Oct. 18, 1990).  As explained by the lawmakers in the context           
          of trusts and term interests in property:  “Because the taxpayer            
          decides what property to give, when to give it, and often                   
          controls the return on the property, use of Treasury tables                 
          undervalues the transferred interests in the aggregate, more                










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