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“constructive” addition of corpus to the trust after September
25, 1985, within the meaning of the statute. The Commissioner
relied upon section 26.2601-1(b)(1)(v)(A), Temporary GST Tax
Regs., 53 Fed. Reg. 8445 (Mar. 15, 1988), amended by 53 Fed.
18839 (May 25, 1988).4 The taxpayer in turn asserted the
temporary regulation was invalid on the ground it was contrary to
the plain meaning of TRA 1986 section 1433(b)(2)(A).
Upon review of the matter, we initially observed TRA 1986
section 1433(b)(2)(A) did not define the term “added to the
trust” and neither the provision nor its legislative history
contained any specific guidance whether a lapse of a general
power of appointment constituted a constructive addition to the
corpus of a trust. Peterson Marital Trust v. Commissioner, 102
T.C. 798-799. Nevertheless, we gleaned from the effective date
provisions a congressional intention to “grandfather” certain
irrevocable trusts to protect the “reliance interests” of trust
settlors who established trusts before the new GST tax regime was
introduced. Id. at 799. We elaborated on this point as follows:
The effective date rules of TRA 1986 section
1433(b)(2)(A) were apparently intended to “grandfather”
4 Sec. 26.2601-1(b)(1)(v)(A), Temporary GST Tax Regs., 53
Fed. Reg. 8445 (Mar. 15, 1988), provided in pertinent part:
where any portion of a trust remains in the trust after
the release, exercise, or lapse of a power of
appointment over that portion of the trust, * * * the
value of the entire portion of the trust subject to the
power that was released, exercised, or lapsed will be
treated as an addition to the trust.
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