Estate of DeWitt v. Commissioner
United States Tax Court
68 T.C.M. 1136 (1994)
- Written by Angela Patrick, JD
Facts
Helen DeWitt created an irrevocable trust for the benefit of her son and his children. DeWitt transferred $250,000 in cash into the trust and paid gift taxes on the transfer. The trustees, DeWitt and her son, used the cash to fund a commercial note. Less than two years after the trust was created, DeWitt died. At that time, the note owned by the trust was worth around $187,500. Because the property had been transferred less than three years before DeWitt’s death, under 26 U.S.C. § 2035, DeWitt’s estate (plaintiff) included the trust property as part of the gross estate when it filed its estate-tax return. In this return, the estate valued the trust property at $187,500. The commissioner of Internal Revenue (commissioner) (defendant) determined that the trust property should be taxed based on its $250,000 value at the time of the original transfer, not the $187,500 value at the time of DeWitt’s death. DeWitt’s estate petitioned the United States Tax Court for a determination that the trust property’s taxable value was its death-date value of $187,500.
Rule of Law
Issue
Holding and Reasoning (Wright, J.)
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