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Gift Tax Regs., which provides that the term of the annuity
interest must be fixed by the trust instrument for one of three
terms: (1) The life of the term holder, (2) a specified term of
years, or (3) the shorter (but not the longer) of those periods.
For these reasons, the spousal interests were valued at zero
under section 2702(a)(2)(A). See id. at 24-25. Petitioners
acknowledge that Cook is applicable to this issue but argue that
Cook was incorrectly decided. However, we find no reason to
reach a result that is different from the result in Cook.
As part of the analysis in Cook, the Court relied on
section 25.2702-2(d)(1), Examples (6) and (7), Gift Tax Regs.
Examples (6) and (7) are as follows:
Example 6. A transfers property to an irrevocable
trust, retaining the right to receive the income for
10 years. Upon expiration of 10 years, the income of
the trust is payable to A’s spouse for 10 years if
living. Upon expiration of the spouse’s interest, the
trust terminates and the trust corpus is payable to A’s
child. A retains the right to revoke the spouse’s
interest. Because the transfer of property to the
trust is not incomplete as to all interests in the
property (i.e., A has made a completed gift of the
remainder interest), section 2702 applies. A’s power
to revoke the spouse’s term interest is treated as a
retained interest for purposes of section 2702.
Because no interest retained by A is a qualified
interest, the amount of the gift is the fair market
value of the property transferred to the trust.
Example 7. The facts are the same as in
Example 6, except that both the term interest retained
by A and the interest transferred to A’s spouse
(subject to A’s right of revocation) are qualified
annuity or unitrust interests. The amount of the gift
is the fair market value of the property transferred to
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