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often than not.” Id. at S15681. Hence, a statute was enacted
which Congress intended would “deter abuse by making unfavorable
assumptions regarding certain retained rights.” Id. at S15680.
This congressional purpose is advanced by a rule which
ensures that only value that is fixed and ascertainable at the
creation of the trust, and therefore is not contingent, may
reduce the value of the gift of the remainder. In contrast, if
gifts in trust may be reduced by the value of spousal interests
which are contingent and which in fact never take effect, the
retained interests have the potential for overvaluation and the
gift of the remainder for undervaluation. We are satisfied that
such would be contrary to the intent of section 2702.
Moreover, even if we were to assume that the spousal
interests here, standing alone, were qualified, the retained
annuities to the extent based on two lives would fail to achieve
qualified status for an additional reason. As previously noted,
the regulations provide that retention of a power to revoke a
qualified annuity interest (or unitrust interest) of the
transferor’s spouse is treated as the retention of a qualified
annuity interest (or unitrust interest). See sec. 25.2702-
2(a)(5), Gift Tax Regs. In each of the trusts under scrutiny,
however, if the interest over which the grantor has retained a
power to revoke is treated as an interest retained by the
grantor, the requirement of section 25.2702-3(d)(3), Gift Tax
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