Audrey J. Walton - Page 12

                                       - 12 -                                         
          interests in the 2-year term annuities set forth in the trust               
          documents.  Such interests thus were, as required by the                    
          regulations, “held by the same individual both before and after             
          the transfer in trust.”  Sec. 25.2702-2(a)(3), Gift Tax Regs.               
               B.  The Extent of the Qualified Interest                               
               Having therefore decided that petitioner, either                       
          individually or through her estate, retained the 2-year annuities           
          in their entirety, we next consider the extent to which these               
          interests are “qualified”.  In this connection, section 2702                
          itself provides only that “qualified interest” means “any                   
          interest which consists of the right to receive fixed amounts               
          payable not less frequently than annually”.  Sec. 2702(b)(1).               
          Since a simple 2-year annuity would appear to fall within this              
          definition, we turn to whether relevant regulations set forth               
          additional restrictions.                                                    
               The regulatory provision which enumerates the permissible              
          terms for a qualified annuity mandates that the term be “for the            
          life of the term holder, for a specified term of years, or for              
          the shorter (but not the longer) of those periods.”  Sec.                   
          25.2702-3(d)(3), Gift Tax Regs.  Petitioner thus contends that              
          her 2-year annuities are sanctioned by the second of these three            
          options and may be valued as such.  Respondent, however, asserts            
          that petitioner’s annuities are in fact of the third listed type            

Page:  Previous  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  Next

Last modified: May 25, 2011