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the benefit of his wife, Mrs. Bryan. The trust gave Mrs. Bryan a
general power of appointment by will. Mrs. Bryan died in 1993
and left a will in which she exercised her power of appointment
in favor of her grandchildren. The Commissioner determined the
transfer to the grandchildren was subject to GST tax, and the
District Court granted the Commissioner’s motion for summary
judgment, holding TRA 1986 section 1433(b)(2)(A) did not apply to
relieve the taxpayer of liability.
On appeal, the Court of Appeals for the Eighth Circuit
reversed, holding the transfer to the grandchildren constituted a
“transfer under a trust which was irrevocable on September 25,
1985” within the plain meaning of the language of TRA 1986
section 1433(b)(2)(A). The Court of Appeals stated:
Trust A, having been created by Mr. Simpson’s will in
1966, was of course irrevocable on September 25, 1985.
Was the transfer made by Mrs. Simpson a transfer
‘under’ this trust? We do not see how an affirmative
answer can be avoided. The power of appointment that
made the transfer possible was created by the trust.
Language has to mean something, and the argument that
this particular transfer was not ‘under’ trust A is
simply untenable. [Simpson v. United States, supra at
814-815.]
In so holding, the Court of Appeals rejected the Commissioner’s
argument that the relevant action for purposes of TRA 1986
section 1433(b)(2)(A) was Mrs. Bryan’s exercise of her power of
appointment (after October 22, 1986). In particular, the Court
of Appeals concluded the relevant action under the express
language of TRA 1986 section 1433(b)(2)(A) was whether the trust
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