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estate contends that the blocks of stock should not be
aggregated.
1. Estate of Mellinger
The estate’s primary contention is that we should extend our
holding in Estate of Mellinger v. Commissioner, 112 T.C. 26
(1999), to prevent aggregation of stock owned outright by the
decedent with stock subject to a testamentary GPA. In Estate of
Mellinger, Frederick Mellinger’s will created a qualified
terminable interest property (QTIP)2 trust for the benefit of his
wife, Harriett. Id. at 27. The QTIP trust contained Frederick’s
interest in Frederick’s of Hollywood stock that he and Harriett
had owned, as community property. Id. Upon Harriett’s death,
respondent sought to aggregate, for valuation purposes, the stock
she owned outright with the stock held by the QTIP trust. Id.
We concluded that, for valuation purposes, stock held by a QTIP
trust would not be aggregated with stock owned outright by
Harriett. Id. at 38; accord Estate of Bonner v. United States,
84 F.3d 196, 198 (5th Cir. 1996).
a. Qualified Terminable Interest Property
The marital deduction is generally not allowed for a
property interest passing to a surviving spouse if on lapse of
time, or occurrence or failure of an event or contingency, such
2 QTIP is, pursuant to sec. 2056(b)(7)(B)(i), property “(I)
which passes from the decedent, (II) in which the surviving
spouse has a qualifying income interest for life, and (III) to
which an election under this paragraph applies.”
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