Audrey J. Walton - Page 24

                                       - 24 -                                         
               [Sec. 20.2031-7T(d)(5), Example (4), Temporary Estate                  
               Tax Regs., 64 Fed. Reg. 23214 (April 30, 1999); see                    
               also pre-1999 sec. 20.2031-7(d)(5), Example (4), Estate                
               Tax Regs.]                                                             
          It strikes us as incongruous that respondent is willing to                  
          recognize the full value of a term annuity, whether payable to a            
          taxpayer or to the taxpayer’s estate, when to do so will reduce             
          the amount of a charitable deduction, but refutes this approach             
          when it will decrease the amount of a taxable gift.                         
               Thus, given the above authorities, we construe each of the             
          subject GRAT’s as creating a single, noncontingent annuity                  
          interest payable for a specified term of years to the                       
          undifferentiated unit of petitioner or her estate.  We further              
          conclude that Congress meant to allow individuals to retain                 
          qualified annuity interests for a specified term of years, and              
          that the proper method for doing so is to make the balance of any           
          payments due after the grantor’s death payable to the grantor’s             
          estate.  We hold that Example 5 is an unreasonable interpretation           

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