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valued as interests for the term of 15 years or for the lives of
the grantor and spouse, whichever is shorter. Respondent asserts
that the interests in the annuities that were given to each
spouse are not qualified interests and that the retained
interests are single-life annuities. Respondent contends that
the retained interests in the annuities should be valued as
interests for the term of 15 years or for the life of the
grantor, whichever is shorter. Valuation of a retained interest
as a dual-life annuity produces a greater retained value than
valuation as a single-life annuity and, correspondingly, reduces
the amount of the taxable gift of the remainder.
Section 2501 imposes a tax for each calendar year on the
transfer of property by gift. A gift of property is valued as of
the date of the transfer. See sec. 2512(a). Generally, where
property is transferred in trust but the donor retains an
interest in such property, the value of the gift is the value of
the property that is transferred, less the value of the donor’s
retained interest. See sec. 25.2512-5A(e), Gift Tax Regs.
However, if the gift in trust is to a family member (as defined
in section 2704(c)(2)), the value of the gift is determined
subject to the limitations of section 2702.
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Last modified: May 25, 2011