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had occasion to address TRA 1986 section 1433(b)(2)(A) or
regulations related thereto.
We note at the outset that the Secretary promulgated section
26.2601-1(b)(1)(i), GST Tax Regs., after the Commissioner
received an adverse decision from the Eighth Circuit in Simpson.
In Natl. Cable & Telecomm. Association v. Brand X Internet
Servs., 545 U.S. 967, ___, 125 S. Ct. 2688, 2700 (2005), the
Supreme Court stated:
A court’s prior judicial construction of a statute
trumps an agency construction otherwise entitled to
Chevron deference only if the prior court decision
holds that its construction follows from the
unambiguous terms of the statute and thus leaves no
room for agency discretion.
As previously discussed, the Eighth Circuit based its holding in
Simpson on the plain meaning of the phrase “transfer under a
trust” contained in TRA 1986 section 1433(b)(2)(A), whereas this
Court and the Second Circuit in Peterson Marital Trust held that
the same statute must be read in proper context. Where, as here,
the Secretary was confronted with what we consider conflicting
judicial constructions of TRA 1986 section 1433(b)(2)(A), we do
not believe the Supreme Court’s statement in Natl. Cable &
Telecomm. Association curtailed the Secretary’s discretion to
promulgate the regulation in dispute or mandates a holding in
this case that Simpson trumps the regulation in dispute.
Section 26.2601-1(b)(1)(i), GST Tax Regs., is a Federal
interpretative tax regulation promulgated under the general
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