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interest will terminate or fail (terminable interest rule). Sec.
2056(b)(1). Section 2056(b)(7) provides an exception to this
general rule and allows a marital deduction for QTIP even though
the surviving spouse receives only an income interest and has no
control over the ultimate disposition of the property.
The value of QTIP is included in a surviving spouse’s estate
pursuant to section 2044(a). In the legislative history
accompanying the enactment of sections 2044 and 2056(b)(7), the
House Ways and Means Committee noted that prior to the enactment
of sections 2044 and 2056(b)(7) “the marital deduction [was]
available only with respect to property passing outright to the
spouse or in specified forms which [gave] the spouse control over
the transferred property”. H. Rept. 97-201 at 159-160 (1981),
1981-2 C.B. 352, 377. The House Ways and Means Committee
concluded that “a deduction should be permitted for certain
terminable interests”, but “property subject to terminable
interests qualifying for the marital deduction should be taxable
* * * upon the death of the second spouse”. H. Rept. 97-201,
supra, 1981-2 C.B. at 378. Thus, pursuant to section 2044(c),
property subject to a section 2056(b)(7) election “shall be
treated as property passing from the decedent” (emphasis added),
despite the fact that the surviving spouse does not control the
ultimate disposition of the property.
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Last modified: May 25, 2011