116
O'Connor, J., concurring in judgment
than suggest an estate tax valuation theory that itself has questionable value in this context, these provisions do not in my view provide any meaningful guidance in this case.
The Tax Court, on the other hand, zeroed in on 26 CFR §§ 25.2523(e)-1(f)(3) and (4) (1996), the gift tax regulations which, read together, provide that a trustee's power to allocate the "trustees' commissions . . . and other charges" to the trust's income will not disqualify the trust from the gift tax spousal deduction as long as the donee spouse receives "substantial beneficial enjoyment" of the trust property. 101 T. C. 314, 325 (1993); see also 26 CFR § 20.2056(b)-5(f) (1996) (tracking language of § 25.2523(e)-1(f)). The Commissioner interpreted this language in Revenue Ruling 69-56, and held that a trustee's power to
"charge to income or principal, executor's or trustee's commissions, legal and accounting fees, custodian fees, and similar administration expenses . . .
. . . . . "[does] not result in the disallowance or diminution of the marital deduction for estate and gift tax purposes unless the execution of such directions would or the exercise of such powers could, cause the spouse to have less than substantially full beneficial enjoyment of the particular interest transferred." Rev. Rul. 69-56, 1969-1 Cum. Bull. 224 (emphasis added).
Both the plurality and Justice Scalia argue that these gift regulations and rulings are inapposite because they address how the power to allocate expenses affects a trust's qualification for the marital deduction, and not how it affects the trust's value. Ante, at 103-104; post, at 125-126, 131-132. They further contend that the "material limitation" language in 26 CFR § 20.2056(b)-4(a) (1996) would be rendered super-fluous if a "material limitation" on the spouse's right to receive income existed only when that spouse lacked "substantial beneficial enjoyment" of the income. 101 T. C.,
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