-6-
shares by the value of a single-life annuity; i.e., the present
value of the annuity payable until the earlier of (1) the end of
the applicable 2- or 4-year term or (2) the death of Focardi.
Respondent also determined a gift tax deficiency for 1997 due to
the increase in prior year gifts as a result of his determination
for 1996.
4. Relevant Trust Provisions
Each of the instruments establishing the decedent GRATs
states in relevant part as follows:
ARTICLE FOUR: Irrevocable Provision. This
agreement and the trust it creates are irrevocable, and
neither all nor part can be altered, amended, revoked,
or terminated prior to the time specified in this
agreement, by me, Trustee, or anyone else. * * *
ARTICLE FIVE: Administration of Trust Estate.
Trustee shall hold, administer, and distribute the
trust estate as follows:
A. Annuity Term. During the period beginning on
the date of this agreement and ending on the date [“2"
in the case of the decedent 2-year GRAT and “4" in the
case of the decedent 4-year GRAT] years thereafter (the
“Annuity Term”), Trustee shall pay to me from the net
income, or (to the extent that net income is
insufficient) from the principal, of the trust an
annuity (the “Annuity”) in an amount equal to
[“51.2535" in the case of the decedent 2-year GRAT and
“22.9876" in the case of the decedent 4-year GRAT]
percent of the initial fair market value of the assets
contributed to the trust as finally determined for
federal tax purposes. The annuity will increase by
twenty percent (20%) each year during the Annuity Term,
* * * If I die before the expiration of the Annuity
Term, the Trustee shall pay to my estate any part of
the Annuity that is accrued and undistributed at my
death, based on a daily proration through the date of
my death. * * * The remaining trust assets are to be
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