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Estate of DeWitt v. Commissioner
United States Tax Court
68 T.C.M. 1136 (1994)
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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