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after December 13, 1995. See sec. 20.7520-3(c), Estate Tax Regs.
These exceptions, where pertinent, will be discussed in greater
detail below.
II. Contentions of the Parties
The fundamental disagreement between the parties concerns
whether the stream of lottery payments constitutes an annuity
which must be valued pursuant to the actuarial tables prescribed
under section 7520.
The estate concedes that the prize’s value is properly
included in calculating decedent’s gross estate under the general
rule of section 2033, as “an unsecured debt obligation” in which
decedent had an interest at death. However, the estate denies
that the payments are similarly includible as an annuity under
section 2039. According to the estate, the lottery prize fails
to meet the specific requirements set forth in section 2039(a)
for classification as an annuity under that section. Moreover,
even if such criteria were deemed satisfied, the estate maintains
that operation of section 2039(b) would result in including only
that portion of the asset equal to the $1.00 purchase price, a de
minimis amount.
From these propositions, and to a significant degree
apparently equating the term “annuity” in section 2039 with use
of the word in section 7520, the estate argues that the LOTTO
payments need not be valued under the prescribed actuarial
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