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another person, that person is substituted for the “transferor”.
See Bittker & Lokken, supra par. 133.2.2. Under section 2041, if
a decedent holds a general power of appointment, the property
subject to the power is included in the decedent’s gross estate.
Consequently, for GST tax purposes the holder of such a power is
the transferor of the property.1 See Peterson Marital Trust v.
Commissioner, 102 T.C. 790, 794, 805 (1994), affd. 78 F.3d 795
(2d Cir. 1996).
In the instant case, the appointive property under Mrs.
Gerson’s general power of appointment was includable in her gross
estate pursuant to section 2041. Consequently, for GST tax
purposes, she was the “transferor” of this property. Under
section 2652(a), she (and not the grantor of the trust, Mr.
Gerson) is treated as transferring this property.2 Thus,
notwithstanding that Mrs. Gerson’s power of appointment arose
1 By contrast, if a decedent holds a nongeneral power of
appointment (i.e., a limited or special power of appointment),
the appointive property is not taxable under sec. 2041. See
Bittker & Lokken, Federal Taxation of Income, Estates & Gifts,
par. 128.1, at 128-5 (2d ed. 1993). Consequently, in the case of
property passing pursuant to a nongeneral power of appointment,
the power holder would not be the “transferor” for purposes of
the GST tax.
2 Consistent with this view, there appears to be no dispute
that the relevant generation-skipping transfer is the “direct
skip” from Mrs. Gerson to her grandchildren, rather than any
“taxable distribution” from the trust. As the majority opinion
states, majority op. p. 6, “The parties do not dispute that a
transfer from decedent [Mrs. Gerson] directly to her
grandchildren, skipping over decedent’s children, normally would
be subject to GST.”
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