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buyer with knowledge of all relevant facts would pay for the
subject interest. See Estate of Lion v. Commissioner, 438 F.2d
at 62; Estate of Lion v. Commissioner, 52 T.C. at 606; Old Kent
Bank & Trust Co. v. United States, supra at 54. Since such a
buyer would have been aware that the decedents were hurtling to
the ground in a plane crash and would have recognized the
probability of simultaneous deaths, the buyer would have paid
nothing for the life estates at issue. See Estate of Lion v.
Commissioner, 52 T.C. at 606; Old Kent Bank & Trust Co. v. United
States, supra at 54. As stated by the Court of Appeals for the
Fourth Circuit:
Where at the time of the transferor’s death it was
unmistakable to one in possession of the facts that the
transferee’s life would be radically shorter than
predicted in the actuarial tables, the value of a
transferred life estate may be reduced accordingly for
purposes of calculating the tax credit under � 2013.
[Estate of Lion v. Commissioner, 438 F.2d at 62.]
Moreover, the Court of Appeals for the Fourth Circuit also
noted that this result is consistent with the regulations, which
explicitly sanction use of “‘recognized valuation principles’” in
the section 2013 context. Id. at 59-60, 62. The court concluded
that use in section 20.2013-4, Estate Tax Regs., of the phrase
beginning “see” to direct attention to actuarial tables, rather
than an imperative phrase, served to “leave room for departure
from strict application of the tables.” Id. at 60.
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