- 49 -
Peterson,7 moreover, the Second Circuit agreed with us (even in
the absence of the regulation at issue today) that it was
reasonable to regard the lapse of a general power as a
constructive addition to the trust that created it. It is just
as reasonable to treat all generation-skipping uses--whether a
lapse or transfer or some other exercise--of a general power
alike. Doing so eliminates the distinctions created in Simpson
and Bachler between the taxability of a general power’s exercise,
and the taxability of its lapse. It also conforms the transition
provision to a commonsense reading of section 1433(b)(2)(A) as
protecting generation-skipping transfers only where the tax could
not have otherwise been avoided.
Is section 26.2601-1(b)(1)(i), GST Tax Regs., the best
interpretation of the statute? That isn’t for us to decide. Our
task is simply to determine if the regulation is a reasonable
interpretation of the exemption’s applicability to the holder of
a general power under an irrevocable generation-skipping trust.
This regulation is.
SWIFT, J., agrees with this concurring opinion.
7 Peterson Marital Trust v. Commissioner, 102 T.C. 790
(1994), affd. 78 F.3d 795 (2d Cir. 1996).
Page: Previous 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 NextLast modified: May 25, 2011