- 20 - context is it possible for a donor to create strictly an annuity for a term of years and a noncontingent remainder. Hence, it is only that kind of situation which respondent claims is sanctioned by the mention of an annuity “for a specified term of years” in section 25.2702-3(d)(3), Gift Tax Regs., with the result that there exists no inconsistency between Example 5 and such regulatory section. In response to this latter argument, we would simply point out that the statute does not contemplate a transfer of the lead annuity to a perpetual-life entity. See secs. 2702(e), 2704(c)(2) (defining “member of the family” for purposes of bringing a transaction within the section 2702 rules). We therefore turn to respondent’s broader contentions regarding Example 5’s consistency with the underlying purpose of section 2702. On this issue, we conclude that the annuities here are more akin to the fixed-term interests cited with approval in the legislative history than to the reversionary interests identified as leading to undervaluation. We base our conclusions on the statutory text, on the above-quoted policy concerns, and on the comparable situation in the section 664 context (dealing with valuation of split-interest gifts to charity), to which the legislative history alludes.Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
Last modified: May 25, 2011