Estate of Claude C. Focardi, Deceased, Nina M. Focardi, Personal Representative - Page 13

                                        -13-                                          
          remainder of the term or until the surviving spouse’s earlier               
          death.                                                                      
               Petitioners argue that the spousal interests were qualified            
          interests in that they were “fixed and ascertainable interests              
          existing for a specified term of years, for the life of the term            
          holders, or for the shorter of the two.”  Petitioners assert that           
          the GRATs operated in the same manner as the GRATs in Schott v.             
          Commissioner, 319 F.3d 1203 (9th Cir. 2003), revg. and remanding            
          T.C. Memo. 2001-110, which the Court of Appeals for the Ninth               
          Circuit held were qualified interests under section 2702(b).                
          Petitioners stress that the Court of Appeals for the Ninth                  
          Circuit concluded in Schott that section 25.2702-2(d)(1),                   
          Example (7), Gift Tax Regs., establishes, contrary to                       
          respondent’s position both there and here, that a spousal                   
          interest is not disqualified simply because it is contingent upon           
          a spouse’s surviving the grantor.5  Petitioners recognize that              

               5 Sec. 25.2702-2(d)(1), Example (6) and Example (7), Gift              
          Tax Regs., states:                                                          
                    Example (6).  A transfers property to an                          
               irrevocable trust, retaining the right to receive the                  
               income for 10 years.  Upon expiration of 10 years, the                 
               income of the trust is payable to A’s spouse for 10                    
               years if living.  Upon expiration of the spouse’s                      
               interest, the trust terminates and the trust corpus is                 
               payable to A’s child.  A retains the right to revoke                   
               the spouse’s interest.  Because the transfer of                        
               property to the trust is not incomplete as to all                      
               interests in the property (i.e., A has made a completed                
               gift of the remainder interest), section 2702 applies.                 
                                                             (continued...)           





Page:  Previous  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  Next

Last modified: May 25, 2011