- 7 -
that the marital deduction is reduced by the amount of Federal
estate tax ($47,459,641) payable out of property passing to the
surviving spouse from the revocable trust, leaving, according to
respondent, a marital deduction of $44,223,267. The parties
agree that the value of the notice trusts is $40,471,059, and
that the value of the notice trusts is included in the gross
estate.
OPINION
A. Whether Federal Estate Tax Is Payable From Property That
Would Otherwise Pass to the Surviving Spouse
1. Background
A tax is imposed on the transfer of the taxable estate of
every decedent who is a citizen or resident of the United States.
Sec. 2001(a). In computing the amount of the taxable estate, an
estate may deduct the value of property which passes from a
decedent to the decedent’s spouse (marital deduction), but only
to the extent that that property is included in determining the
value of the gross estate. Sec. 2056(a). The marital deduction
is reduced by the amount of Federal estate tax payable from the
property passing to the surviving spouse. Sec. 2056(b)(4).
State law governs how a taxpayer’s estate tax burden is
allocated among its assets. Riggs v. del Drago, 317 U.S. 95,
101-102 (1942); Estate of Sawyer v. Commissioner, 73 T.C. 1, 3
(1979). Illinois law applies in this case. Under Illinois law,
equitable apportionment applies if the decedent provided no
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011