Patricia A. Schott - Page 16

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               As part of the analysis, the Court in Walton found that the            
          interest of the estate could not be bifurcated from the retained            
          interest of the taxpayer.  See id. at 602.  The Court noted that            
          an individual cannot make a gift to himself or to his or her own            
          estate.  See id. at 595.  Therefore, the Court held that, for               
          purposes of determining the value under section 2702, the                   
          taxpayer’s retained interest should be valued as an annuity for a           
          specified term of years, rather than as an annuity for the                  
          shorter of a term certain or for the period ending upon the                 
          taxpayer’s death.                                                           
               The dual-life annuity, in the cases at hand, differs from              
          the annuity for a specified term of years in Walton, in that,               
          with the dual-life annuity, the value of the remainder interest             
          would be reduced for a contingent spousal interest that may in              
          fact never take effect.  Furthermore, the retained interests in             
          Walton satisfied one of the three term requirements of                      
          section 25.2702-3(d)(3), Gift Tax Regs.                                     
               We have considered all remaining arguments made by                     
          petitioners for a result contrary to that expressed herein, and,            
          to the extent not discussed above, they are irrelevant or without           
               To reflect the foregoing and the concessions of the parties,           
                                             Decisions will be entered                
                                        under Rule 155.                               

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