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The estate also argues that the value of the annuity
purchased in 1998 by Austin using the proceeds of KPLP’s U.S.
savings bonds should not be included in Austin’s gross estate.
The estate does not argue that the annuity should not be treated
as a gift or contest the value respondent ascribed to the annuity
($43,638). The estate’s argument is moot; respondent does not
argue that it should be included in the gross estate. The estate
does not dispute respondent’s adjustment of the estate’s adjusted
taxable gifts by the value of the 1998 annuity.
III. The Family Trust
Finally, the estate argues that the value of the portion of
property included in Edna’s gross estate that was transferred to
a family trust pursuant to the terms of the living trust
agreement should not be included in Austin’s gross estate. The
record shows that the family trust was created in 1999 and filed
Federal income tax returns for 2000, 2001, 2002, and 2003.
Austin’s estate tax return reported as a debt of the decedent
$25,000 due the family trust “payable out of the proceeds of the
sale of the homestead as established by the estate of Edna Korby
date of death July 3 1998”. The record does not show that the
homestead was sold at any time or that Austin’s estate paid
$25,000 to the family trust. In addition, the income tax returns
filed by the family trust show that the family trust was not
created until September 1, 1999, approximately the time Austin’s
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