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(b) Limitation in the Case of Life Estate or Other
Terminable Interest.--
(1) General rule.--Where, on the lapse of
time, on the occurrence of an event or
contingency, or on the failure of an event or
contingency to occur, an interest passing to the
surviving spouse will terminate or fail, no
deduction shall be allowed under this section with
respect to such interest--
(A) if an interest in such property
passes or has passed (for less than an
adequate and full consideration in money or
money’s worth) from the decedent to any
person other than such surviving spouse (or
the estate of such spouse); and
(B) if by reason of such passing such
person (or his heirs or assigns) may possess
or enjoy any part of such property after such
termination or failure of the interest so
passing to the surviving spouse;
* * * * * * *
(7) Election with respect to life estate for
surviving spouse.--
(A) In general.--In the case of
qualified terminable interest property--
(i) for purposes of subsection (a),
such property shall be treated as
passing to the surviving spouse, and
(ii) for purposes of paragraph
(1)(A), no part of such property shall
be treated as passing to any person
other than the surviving spouse.
(B) Qualified terminable interest
property defined.--For purposes of this
paragraph--
(i) In general.--The term
“qualified terminable interest property”
means property--
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