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Trust’s property mean that the property being disclaimed was not
going “to a person other than the person making the disclaimer?”
The Commissioner argues that the disclaimed property did not pass
(or, to be more precise, pass only) to a person other than
Hamilton. See sec. 2518(b)(4); sec. 25.2518-2(e)(3), Gift Tax
Regs.
The applicable regulation is section 25.2518-2(e)(3), Gift
Tax Regs., and the key provision is this one:
(3) Partial failure of disclaimer. If a
disclaimer made by a person other than the
surviving spouse is not effective to pass
completely an interest in property to a
person other than the disclaimant because-–
(i) The disclaimant also has a right to
receive such property as an heir at law,
residuary beneficiary, or by any other means;
and
(ii) The disclaimant does not
effectively disclaim these rights, the
disclaimer is not a qualified disclaimer with
respect to the portion of the disclaimed
property which the disclaimant has a right to
receive * * *.
If the regulation stopped here, the estate would win--
everyone agrees that the partial disclaimer’s carveout of a
contingent remainder means that the estate can’t deduct the value
of that remainder interest. But the regulation doesn’t stop
there. Instead, it continues:
If the portion of the disclaimed interest in
property which the disclaimant has a right to
receive is not severable property or an
undivided portion of the property, then the
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