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of section 26.2601-1(b)(1)(i), GST Tax Regs. (discussed below),
which was not in effect until a later date.
III. Section 26.2601-1(b)(1)(i), GST Tax Regs.
We now turn to the regulation at issue in this case--a
regulation that was amended in response to the Eighth Circuit’s
decision in the Simpson case. Section 26.2601-1(b)(1)(i), GST
Tax Regs., originally was promulgated in 1995 and closely tracked
the language of TRA 1986 section 1433(b)(2)(A). The regulation
stated in pertinent part:
(b) Exceptions-(1) Irrevocable trusts-(i) In
general. The provisions of chapter 13 do not apply to
any generation-skipping transfer under a trust (as
defined in section 2652(b)) that was irrevocable on
September 25, 1985. The rule of the preceding sentence
does not apply to a pro rata portion of any generation-
skipping transfer under an irrevocable trust if
additions are made to the trust after September 25,
1985. * * *
See T.D. 8644, 1996-1 C.B. 200, 207.
In November 1999, several months after the Eighth Circuit
issued Simpson, the Secretary proposed to amend section 26.2601-
1(b)(1)(i), GST Tax Regs. See 64 Fed. Reg. 62997 (Nov. 18,
1999). The Treasury Department’s notice of proposed rulemaking
included a discussion and comparison of Peterson Marital Trust
and Simpson, and articulated the view that (1) there was no
substantive difference in the cases, and (2) Simpson was wrongly
decided. See id. at 62999. The proposed amendment was adopted
and promulgated in final form on December 20, 2000. See T.D.
8912, 2001-1 C.B. 452.
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