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value of the three trusts created in 1971, in which Cyril
retained a life interest, was includable in the gross estate. In
the notice of deficiency, respondent determined that the value of
the three trusts includable in the gross estate was $3,789,849,
which was calculated by taking the value of the three trusts at
the appropriate valuation date ($3,833,727), less the value of
consideration received by Cyril in connection with the 1951
Agreement ($43,878).6
In an amended answer, respondent asserted a deficiency in
estate tax of $2,079,213, based in part on respondent’s revised
determination that Cyril received no consideration for the
transfers and that the entire value of the three trusts was
includable in the gross estate. Respondent’s assertion in the
amended answer that there was no consideration increased the
original deficiency. We held that the issue of whether the
consideration was less than $43,878 was a new matter, and that
the burden of proof was on respondent with respect to this issue.
See Estate of Magnin v. Commissioner, T.C. Memo. 1996-25.
Both parties’ experts used a valuation date of October 31,
1951, to determine the values of the interests exchanged between
Joseph and Cyril. On brief, respondent argued that the amount of
6The amount includable in the gross estate under sec. 2036
is reduced by the value of any consideration received by the
decedent at the time of the transfer. See sec. 2043(a); Estate
of Magnin v. Commissioner, 184 F.3d 1079, 1081-1082 (9th Cir.
1999); United States v. Past, 347 F.2d 7, 14 (9th Cir. 1965).
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