Audrey J. Walton - Page 18

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          interests.  Moreover, the foregoing language reflects that the              
          statute was designed primarily to restrict a donor’s ability to             
          calculate the amount of a gift by subtracting certain elements of           
          actuarial value that would or might in fact pass to the donee.  A           
          fixed-term annuity, payable to the grantor or the grantor’s                 
          estate, would therefore appear to fall within the statute’s                 
          permissible parameters, as elucidated by the legislative history.           
          Such an interest would further seem to fall within the class of             
          easily valued rights which the final sentence in the passage                
          above indicates Congress envisioned would not be afforded a                 
          lesser value under the new rules.                                           
               Respondent, however, characterizes the annuities at issue              
          here as equivalent to the reversionary rights referenced by                 
          Congress as nonqualified, rather than to the fixed-term interests           
          approved by the lawmakers.  In respondent’s view, the                       
          congressional concern underlying section 2702 reaches                       
          petitioner’s annuities.                                                     
               Respondent alleges that Congress sought to curb the then-              
          current practice of dividing trusts into numerous interests and             
          selectively retaining interests based on mortality, such as                 
          reversions.  Respondent points out the common estate planning               
          device of creating a trust, with a term short enough that the               
          grantor’s risk of dying during the term would be minimal, in                
          which the grantor retained both an income interest and a                    

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