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deduction pursuant to section 2056(b)(5).1 The testamentary GPA
gave Aldo the authority to direct the disposition of Trust A’s
principal and any undistributed income to “one or more persons
and entities, including his own estate, * * * either outright or
in trust”.
On January 11, 1996, Aldo died testate. At his death, Aldo
owned outright 50 percent, and Trust A held 44.069 percent, of
Ledyard stock. Pursuant to his testamentary GPA, Aldo divided
the assets of Trust A into two separate trusts created for the
benefit of Richard and Joan, respectively. In addition, the
Trust B property was transferred, pursuant to Doris’s will, to
two separate trusts created for the benefit of Richard and Joan.
The residue of Aldo’s estate, which included the Ledyard stock he
owned outright, also passed to similar, separate trusts created
for the benefit of Richard and Joan.
The estate filed a Form 706, United States Estate (and
Generation-Skipping Transfer) Tax Return, on April 1, 1997, and a
Supplemental Form 706 on May 20, 1997. The estate reported that
the 50-percent block of Ledyard stock Aldo owned outright and the
44.069-percent block of stock held by Trust A were includable in
Aldo’s gross estate, pursuant to sections 2033 and 2041,
respectively. The estate valued each block separately.
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
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Last modified: May 25, 2011