Estate of Ralph H. Davis, Deceased, Evelyn Davis, Personal Representative - Page 11




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               A marital deduction generally is not allowable for a                   
          “terminable interest”, which is a property interest that will               
          terminate or fail “on the lapse of time, on the occurrence of an            
          event or contingency, or on the failure of an event or                      
          contingency to occur”.  Sec. 2056(b)(1); see Estate of Clack v.             
          Commissioner, supra.  An interest in the nature of a life estate            
          generally is not eligible for the marital deduction.  Estate of             
          Doherty v. Commissioner, 95 T.C. 446 (1990), revd. on other                 
          grounds 982 F.2d 450 (10th Cir. 1992); see Estate of Kyle v.                
          Commissioner, 94 T.C. 829 (1990); see also Estate of Nicholson v.           
          Commissioner, 94 T.C. 666 (1990).                                           
               Section 2056(b)(5) is an exception to the section 2056(b)(1)           
          terminable interest rule.  Section 2056(b)(5) provides:                     
               SEC. 2056(b) Limitation in the Case of Life Estate or Other            
          Terminable Interest.--                                                      
                         *    *    *    *    *    *    *                              
                    (5) Life estate with power of appointment in surviving            
               spouse.–-In the case of an interest in property passing from           
               the decedent, if his surviving spouse is entitled for life             
               to all the income from the entire interest, or all the                 
               income from a specific portion thereof, payable annually or            
               at more frequent intervals, with power in the surviving                
               spouse to appoint the entire interest, or such specific                
               portion (exercisable in favor of such surviving spouse, or             
               of the estate of such surviving spouse, or in favor of                 
               either, whether or not in each case the power is exercisable           
               in favor of others), and with no power in any other person             
               to appoint any part of the interest, or such specific                  
               portion, to any person other than the surviving spouse–-               








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