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Section 26.2601-1(b)(1)(i), GST Tax Regs., now states 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. * * * Further, the rule in the
first sentence of this paragraph (b)(1)(i) does not
apply to 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
chapter 11 or chapter 12. The transfer is made by the
person holding the power at the time the exercise,
release, or lapse of the power becomes effective, and
is not considered a transfer under a trust that was
irrevocable on September 25, 1985. * * *
In sum, section 26.2601-1(b)(1)(i), GST Tax Regs., recites the
general transitional rule set forth in TRA 1986 section
1433(b)(2)(A) and excepts from the rule a transfer of property
pursuant to the exercise, release, or lapse of a general power of
appointment if that transfer is treated as a taxable transfer by
the power holder for purposes of Federal estate or gift taxes.
Section 26.2601-1(c), GST Tax Regs., provides that the amended
portion of the regulation is applicable on and after November 18,
1999.5
IV. The Parties’ Positions
Petitioner relies on the Eighth and Ninth Circuit cases,
Simpson and Bachler, for the proposition that the plain and
unambiguous language of TRA 1986 section 1433(b)(2)(A) excepts
5 We note that decedent last amended and restated the
Eleanor Gerson Trust on Sept. 13, 2000, some 10 months after the
Secretary first proposed to amend the regulation in dispute.
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