- 19 -
contingent reversion in the trust corpus to take effect in the
event of his or her death during the term. The value of the gift
to the remaindermen would then be calculated by subtracting
actuarial amounts for each of these interests, despite the
negligible chance that the reversion would become operative.
Respondent then goes on to frame the annuities payable to
petitioner’s estate as no different in substance from such
reversions. Respondent’s position is that both represent
separate rights to receive property contingent upon the grantor’s
death during the trust term. Because contingent rights, not
fixed or ascertainable at the creation of the trust, do not fall
within any of the three forms defined as qualified in section
2702(b), respondent maintains that both are properly valued at
zero. On this basis, respondent argues that Example 5 is
consistent not only with the purpose of section 2702 but also
with other regulations which deal with post-death interests,
particularly section 25.2702-3(e), Example (1), Gift Tax Regs.
Respondent further contends that Congress’ reference to a
trust consisting only of a fixed-term annuity and a noncontingent
remainder was describing a situation different from that of
petitioner here. Respondent avers that the scenario contemplated
by the lawmakers was one in which the donor transferred the lead
annuity to an entity with perpetual life and retained a
noncontingent remainder. According to respondent, only in that
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011