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retained the “use, possession, right to the income, or other
enjoyment of the transferred property”. Sec. 20.2036-1(a)(i),
Estate Tax Regs.
Given the language used in the above-quoted provisions, it
has long been recognized that “The general purpose of this
section is ‘to include in a decedent’s gross estate transfers
that are essentially testamentary’ in nature.” Ray v. United
States, 762 F.2d 1361, 1362 (9th Cir. 1985) (quoting United
States v. Estate of Grace, 395 U.S. 316, 320 (1969)).
Accordingly, courts have emphasized that the statute “describes a
broad scheme of inclusion in the gross estate, not limited by the
form of the transaction, but concerned with all inter vivos
transfers where outright disposition of the property is delayed
until the transferor’s death.” Guynn v. United States, 437 F.2d
1148, 1150 (4th Cir. 1971).
As used in section 2036(a)(1), the term “enjoyment” has been
described as “synonymous with substantial present economic
benefit.” Estate of McNichol v. Commissioner, 265 F.2d 667, 671
(3d Cir. 1959), affg. 29 T.C. 1179 (1958); see also Estate of
Reichardt v. Commissioner, 114 T.C. 144, 151 (2000). Moreover,
possession or enjoyment of transferred property is retained for
purposes of section 2036(a)(1) where there is an express or
implied understanding to that effect among the parties at the
time of the transfer, even if the retained interest is not
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