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nothing more than demonstrate that, if one assumes a fixed dollar
amount to be paid, contingent on a person of an assumed age not
surviving a 3-year period, one can use mortality tables and
interest assumptions to calculate the amount that (without any
loading charge) an insurance company might demand to bear the
risk that the assumed amount has to be paid. However, the dollar
amount of a potential liability to pay the 2035 tax is by no
means fixed; rather, such amount depends on factors that are
subject to change, including estate tax rates and exemption
amounts (not to mention the continued existence of the estate tax
itself51). For that reason alone, we conclude that petitioners
are not entitled to treat the mortality-adjusted present values
as sale proceeds (consideration received) for purposes of
determining the amounts of their respective gifts at issue.52
See Robinette v. Helvering, 318 U.S. 184, 188-189 (1943) (donor’s
reversionary interest, contingent not only on donor outliving
51 See Economic Growth and Tax Relief Reconciliation Act of
2001, Pub. L. 107-16, secs. 501(a), 901(a), 115 Stat. 38, 69, 150
(repealing the estate tax with respect to decedents dying after
Dec. 31, 2009, and reinstating same with respect to decedents
dying after Dec. 31, 2010).
52 We recognize that, in Harrison v. Commissioner, 17 T.C.
1350, 1354-1355 (1952), we reduced the amount of a gift of a
trust remainder by the present value of the trustee’s obligation,
under the terms of the trust agreement, to pay the settlor-life
beneficiary’s income tax liability attributable to the trust’s
income for the remainder of her life: “Federal income taxes have
become a permanent and growing part of our economy, and there is
no likelihood that such taxes will not continue to be imposed
throughout the life expectancy of petitioner.” We do not have
occasion today to reconsider that opinion.
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