- 6 -
return reported a gross estate in the amount of $22,054,002.79,
and Federal estate tax in the amount of $7,168,531.02.
As indicated, respondent issued a statutory notice of
deficiency to decedent’s estate. A timely petition for
redetermination was filed with the Court challenging respondent’s
determination.
Discussion
The parties do not dispute that a transfer from decedent
directly to her grandchildren, skipping over decedent’s children,
normally would be subject to GST. As discussed in detail below,
the dispute in this case centers on the transitional relief
provided by the “grandfather” exception to the GST tax set forth
in TRA 1986 section 1433(b)(2)(A), and the validity of section
26.2601-1(b)(1)(i), GST Tax Regs. The regulation provides that a
transfer of property pursuant to the exercise, release, or lapse
of a general power of appointment that is treated as a taxable
transfer under Federal estate and/or gift tax provisions, is not
a “transfer under a trust” that is eligible for transitional
relief from GST tax under TRA 1986 section 1433(b)(2)(A).
To frame the issue properly, we briefly outline the GST tax
provisions, review pertinent caselaw that preceded the
promulgation of section 26.2601-1(b)(1)(i), GST Tax Regs.,
examine the regulation and the circumstances surrounding its
promulgation, and summarize the parties’ positions.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011