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Section 2036(a) is designed to include in a decedent’s gross
estate “‘transfers that are essentially testamentary--i.e.,
transfers which leave the transferor a significant interest in or
control over the property transferred during his lifetime.’”
Estate of Abraham v. Commissioner, 408 F.3d 26, 37 (1st Cir.
2005) (quoting United States v. Estate of Grace, 395 U.S. 316,
320 (1969)), affg. T.C. Memo. 2004-39, amended 429 F.2d 294 (1st
Cir. 2005). A decedent retains an interest described in section
2036(a) unless he “absolutely, unequivocally, irrevocably, and
without possible reservations” parts with possession and
enjoyment of the transferred property. Commissioner v. Estate of
Church, 335 U.S. 632, 645 (1949). Possession or enjoyment of
transferred property is retained for purposes of section
2036(a)(1) where there is an express or implied understanding to
that effect among the parties at the time of the transfer, even
if the retained interest is not legally enforceable. Sec.
20.2036-1(a), Estate Tax Regs.; see also Estate of Reichardt v.
Commissioner, 114 T.C. 144, 151 (2000); Estate of Harper v.
Commissioner, T.C. Memo. 2002-121. All of the facts and
circumstances surrounding the transfer and subsequent use of the
property are considered in deciding whether there was an implied
agreement or understanding. Estate of Reichardt v. Commissioner,
supra at 151. The taxpayer bears the burden of disproving the
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Last modified: November 10, 2007