Estate of Eleanor R. Gerson, Deceased, Allan D. Kleinman, Executor - Page 1

                                   127 T.C. No. 11                                    

                               UNITED STATES TAX COURT                                

                       ESTATE OF ELEANOR R. GERSON, DECEASED,                         
                     ALLAN D. KLEINMAN, EXECUTOR, Petitioner v.                       
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 13534-04.            Filed October 24, 2006.                

                    G created the Benjamin Gerson Trust which became                  
               irrevocable when G died in 1973.  The trust provided                   
               for the creation of a marital trust (the trust) for the                
               benefit of G’s wife, D.  The trust conferred upon D a                  
               general power of appointment over the trust property.                  
               D died in October 2000 and left a will under which she                 
               exercised the power of appointment in favor of her                     
               grandchildren.  R determined that the transfer to D’s                  
               grandchildren was subject to generation-skipping                       
               transfer (GST) tax.  P contends (1) sec. 26.2601-                      
               1(b)(1)(i), GST Tax Regs., is invalid, and (2) the                     
               transfer is excepted from GST tax under sec.                           
               1433(b)(2)(A) of the Tax Reform Act of 1986, Pub. L.                   
               99-514, 100 Stat. 2731.                                                
                    Held:  Sec. 26.2601-1(b)(1)(i), GST Tax Regs., is                 
               a reasonable and valid interpretation of sec.                          
               1433(b)(2)(A) of the Tax Reform Act of 1986 because it                 
               harmonizes with the plain language of the statute, its                 
               origin, and its purpose.                                               

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