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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 legally enforceable. Estate of
Maxwell v. Commissioner, 3 F.3d 591, 593 (2d Cir. 1993), affg. 98
T.C. 594 (1992); Guynn v. United States, supra at 1150; Estate of
Reichardt v. Commissioner, supra at 151; Estate of Rapelje v.
Commissioner, 73 T.C. 82, 86 (1979). The existence or
nonexistence of such an understanding is determined from all of
the facts and circumstances surrounding both the transfer itself
and the subsequent use of the property. Estate of Reichardt v.
Commissioner, supra at 151; Estate of Rapelje v. Commissioner,
supra at 86.
As used in section 2036(a)(2), the term “right” has been
construed to connote “an ascertainable and legally enforceable
power”. United States v. Byrum, 408 U.S. 125, 136 (1972).
Nonetheless, regulations clarify:
With respect to such a power, it is immaterial
(i) whether the power was exercisable alone or only in
conjunction with another person or persons, whether or
not having an adverse interest; (ii) in what capacity
the power was exercisable by the decedent or by another
person or persons in conjunction with the decedent; and
(iii) whether the exercise of the power was subject to
a contingency beyond the decedent’s control which did
not occur before his death (e.g., the death of another
person during the decedent’s lifetime). The phrase,
however, does not include a power over the transferred
property itself which does not affect the enjoyment of
the income received or earned during the decedent’s
life. * * * Nor does the phrase apply to a power held
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