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pursuant to Rule 161.1
We incorporate herein by this reference the facts found in
our prior opinion, Marten v. Commissioner, T.C. Memo. 1999-340
(Marten I), and we reiterate the pertinent facts and find
additional facts as necessary.
In 1953, David E. Lane (Mr. Lane) and Ms. Marten married.
During their marriage, they had four children. Their youngest
child, Niklas, nearly drowned in an accident and became a
quadriplegic at age 4. On or about January 16, 1979, Mr. Lane
and Ms. Marten legally separated.
On September 1, 1982, Mr. Lane purchased a $750,000 life
insurance policy on his own life (the policy). The policy was a
whole life policy that began accumulating a cash surrender value
in the 16th year. Ms. Marten was the owner and irrevocable
beneficiary of the policy, and it was immediately assignable by
her.
On March 20, 1984, the Sacramento County Superior Court (the
superior court) dissolved the marriage of Mr. Lane and Ms.
Marten. In an order issued by the superior court (the support
decree), among other things, Mr. Lane was ordered to continue
paying the premiums on the policy. On January 27, 1987, the
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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