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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
merit.
To reflect the foregoing and the concessions of the parties,
Decisions will be entered
under Rule 155.
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Last modified: May 25, 2011