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The disputed regulations are consistent with Peterson
Marital Trust v. Commissioner, supra, and provide like results
for generation-skipping transfers arising from the exercise of
general powers of appointment and generation-skipping transfers
arising from lapses of general powers of appointment. This
result properly recognizes that there is no substantive
difference between these types of generation-skipping transfers.
As memorialized by the Staff of the Joint Committee on
Taxation in the General Explanation of the Tax Reform Act of 1986
(J. Comm. Print 1987) (the General Explanation), contemporaneous
Congressional colloquies indicate that the principal architects
of the transitional rule understood it to apply to the exercise
of a limited power of appointment under an otherwise
grandfathered trust, provided that the exercise of the limited
power did not unduly extend the time for the vesting of any
beneficial interest in the trust.4 From these statements, one may
4 The General Explanation states:
The new generation-skipping transfer tax does not
apply to the exercise of a limited power of appointment
under an otherwise grandfathered trust or to trusts to
which the trust property is appointed provided such
exercise cannot postpone vesting of any estate or
interest in the trust property for a period
ascertainable without regard to the date of the
creation of the trust. [Staff of Jt. Comm. on Taxation,
General Explanation of the Tax Reform Act of 1986, at
1267 n.12 (J. Comm. Print 1987).]
As authority for this statement, the General Explanation
cites substantively identical colloquies involving the Chairman
(continued...)
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