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[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
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