- 2 -
Held, further: R’s determination that the
disputed transfer is subject to GST tax is sustained.
Mark A. Phillips and Jeffry L. Weiler, for petitioner.
Stephen J. Neubeck, for respondent.
OPINION
HAINES, Judge: Respondent issued a notice of deficiency to
the Estate of Eleanor R. Gerson (the estate) determining a
deficiency of $1,144,465 in Federal generation-skipping transfer
(GST) tax. The sole issue before the Court concerns the validity
of section 26.2601-1(b)(1)(i), GST Tax Regs., which provides that
the “grandfather” exception to the GST tax set forth in section
1433(b)(2)(A) of the Tax Reform Act of 1986 (TRA 1986), Pub. L.
99-514, 100 Stat. 2085, 2731 (hereinafter TRA 1986 section
1433(b)(2)(A)), does not except from GST tax a transfer of
property pursuant to the exercise, release, or lapse of a general
power of appointment that is treated as a taxable transfer for
purposes of Federal estate or gift tax.1 We hold the regulation
is valid, and we sustain respondent’s determination that the
disputed transfer is subject to GST tax.
1 Unless otherwise indicated, section references are to
sections of the Internal Revenue Code, as amended, and Rule
references are to the Tax Court Rules of Practice and Procedure.
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