94
Syllabus
(a) Hubert's executors used the standard date-of-death valuation to determine the value of property included in the gross estate for estate tax purposes. The parties agree that, for purposes of the question presented, the charitable, 26 U. S. C. § 2055, and marital, § 2056, deduction statutes should be read to require the same answer, notwithstanding differences in their language. Since the marital deduction statute and regulation speak in more specific terms on this question than the charitable deduction statute, this plurality concentrates on the marital provisions, but the holding here applies to both deductions. Pp. 99-100. (b) The marital deduction statute allows deduction for qualifying property only to the extent of the property's "value." So when the executors use date-of-death valuation for gross estate purposes, the deduction's value will be limited by that value. Marital deduction "value" is "net value," determined by the same principles as if the bequest were a gift to the spouse, 26 CFR § 20.2056(b)-4(a), i. e., present value as of the controlling valuation date, § 25.2523(a)-1(e); see also §§ 20.2056(b)-4(d), 20.2055-2(f)(1). Although the question presented is not controlled by these provisions' exact terms, it is natural to apply the present-value principle here. Thus, assuming it were necessary for valuation purposes to take into account that income, this would be done by subtracting from the value of the bequest, computed as if the income were not subject to administration expense charges, the present value (as of the controlling valuation date) of the income expected to be used to pay administration expenses. Cf. Ithaca Trust Co. v. United States, 279 U. S. 151. There is no dispute the entire interests transferred in trust here qualify for the marital and charitable deductions; the question before the Court is one of valuation. Pp. 100-104. (c) Only material limitations on the right to receive income are taken into account when valuing the property interest passing to the surviving spouse. 26 CFR § 20.2056(b)-4(a). A provision requiring or allowing administration expenses to be paid from income "may" be deemed a "material limitation" on the spouse's right to income. For example, where the amount of the corpus, and the expected income from it, are small, the amount of the estate's anticipated administration expenses chargeable to income may be material as compared with the anticipated income used to determine the assets' date-of-death value. Whether a limitation is material will also depend in part on the nature of the spouse's interest in the assets generating income. An obligation to pay administration expenses from income is more likely to be material where the value of the trust to the spouse is derived solely from income, but is less likely to be material where, as here, the marital property is valued as being equivalent to a transfer of the fee. Pp. 104-107.
Page: Index Previous 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 NextLast modified: October 4, 2007