§2044 — Certain property for which marital deduction was previously allowed
43 citing cases
Statute Text — 26 U.S.C. §2044
The value of the gross estate shall include the value of any property to which this section applies in which the decedent had a qualifying income interest for life.
This section applies to any property if—
a deduction was allowed with respect to the transfer of such property to the decedent—
under section 2056 by reason of subsection (b)(7) thereof, or
under section 2523 by reason of subsection (f) thereof, and
section 2519 (relating to dispositions of certain life estates) did not apply with respect to a disposition by the decedent of part or all of such property.
For purposes of this chapter and chapter 13, property includible in the gross estate of the decedent under subsection (a) shall be treated as property passing from the decedent.
Treasury Regulations
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Treas. Reg. §20.2044-1Certain property for which marital deduction was previously allowed
(a) In general. Section 2044 generally provides for the inclusion in the gross estate of property in which the decedent had a qualifying income interest for life and for which a deduction was allowed under section 2056(b)(7) or 2523(f). The value of the property included in the gross estate under section 2044 is not reduced by the amount of any section 2503(b) exclusion that applied to the transfer creating the interest. See section 2207A, regarding the right of recovery against the persons receiving the property that is applicable in certain cases.
(b) Passed from. For purposes of section 1014 and chapters 11 and 13 of subtitle B of the Internal Revenue Code, property included in a decedent's gross estate under section 2044 is considered to have been acquired from or to have passed from the decedent to the person receiving the property upon the decedent's death. Thus, for example, the property is treated as passing from the decedent for purposes of determining the availability of the charitable deduction under section 2055, the marital deduction under section 2056, and special use valuation under section 2032A. In addition, the tax imposed on property includible under section 2044 is eligible for the installment payment of estate tax under section 6166.
(c) Presumption. Unless established to the contrary, section 2044 applies to the entire value of the trust at the surviving spouse's death. If a marital deduction is taken on either the estate or gift tax return with respect to the transfer which created the qualifying income interest, it is presumed that the deduction was allowed for purposes of section 2044. To avoid the inclusion of property in the decedent-spouse's gross estate under this section, the executor of the spouse's estate must establish that a deduction was not taken for the transfer which created the qualifying income interest. For example, to establish that a deduction was not taken, the executor may produce a copy of the estate or gift tax return filed with respect to the transfer by the first spouse or the first spouse's estate establishing that no deduction was taken under section 2523(f) or section 2056(b)(7). In addition, the executor may establish that no return was filed on the original transfer by the decedent because the value of the first spouse's gross estate was below the threshold requirement for filing under section 6018. Similarly, the executor could establish that the transfer creating the decedent's qualifying income interest for life was made before the effective date of section 2056(b)(7) or section 2523(f).
(d) Amount included—(1) In general. The amount included under this section is the value of the entire interest in which the decedent had a qualifying income interest for life, determined as of the date of the decedent's death (or the alternate valuation date, if applicable). If, in connection with the transfer of property that created the decedent's qualifying income interest for life, a deduction was allowed under section 2056(b)(7) or section 2523(f) for less than the entire interest in the property (i.e., for a fractional or percentage share of the entire interest in the transferred property), the amount includible in the decedent's gross estate under this section is equal to the fair market value of the entire interest in the property on the date of the decedent's death (or the alternate valuation date, if applicable) multiplied by the fractional or percentage share of the interest for which the deduction was taken.
(2) Inclusion of income. If any income from the property for the period between the date of the transfer creating the decedent-spouse's interest and the date of the decedent-spouse's death has not been distributed before the decedent-spouse's death, the undistributed income is included in the decedent-spouse's gross estate under this section to the extent that the income is not so included under any other section of the Internal Revenue Code.
(3) Reduction of includible share in certain cases. If only a fractional or percentage share is includible under this section, the includible share is appropriately reduced if—
(i) The decedent-spouse's interest was in a trust and distributions of principal were made to the spouse during the spouse's lifetime;
(ii) The trust provides that the distributions are to be made from the qualified terminable interest share of the trust; and
(iii) The executor of the decedent-spouse's estate can establish the reduction in that share based on the fair market value of the trust assets at the time of each distribution.
(4) Interest in previously severed trust. If the decedent-spouse's interest was in a trust consisting of only qualified terminable interest property and the trust was severed (in compliance with § 20.2056(b)-7(b) or § 25.2523(f)-1(b) of this chapter) from a trust that, after the severance, held only property that was not qualified terminable interest property, only the value of the property in the severed portion of the trust is includible in the decedent-spouse's gross estate.
(e) Examples. The following examples illustrate the principles in paragraphs (a) through (d) of this section, where the decedent, D, was survived by spouse, S.
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Treas. Reg. §20.2044-1(a)In general.
In general. Section 2044 generally provides for the inclusion in the gross estate of property in which the decedent had a qualifying income interest for life and for which a deduction was allowed under section 2056(b)(7) or 2523(f). The value of the property included in the gross estate under section 2044 is not reduced by the amount of any section 2503(b) exclusion that applied to the transfer creating the interest. See section 2207A, regarding the right of recovery against the persons receiving the property that is applicable in certain cases.
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Treas. Reg. §20.2044-1(b)Passed from.
Passed from. For purposes of section 1014 and chapters 11 and 13 of subtitle B of the Internal Revenue Code, property included in a decedent's gross estate under section 2044 is considered to have been acquired from or to have passed from the decedent to the person receiving the property upon the decedent's death. Thus, for example, the property is treated as passing from the decedent for purposes of determining the availability of the charitable deduction under section 2055, the marital deduction under section 2056, and special use valuation under section 2032A. In addition, the tax imposed on property includible under section 2044 is eligible for the installment payment of estate tax under section 6166.
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Treas. Reg. §20.2044-1(c)Presumption.
Presumption. Unless established to the contrary, section 2044 applies to the entire value of the trust at the surviving spouse's death. If a marital deduction is taken on either the estate or gift tax return with respect to the transfer which created the qualifying income interest, it is presumed that the deduction was allowed for purposes of section 2044. To avoid the inclusion of property in the decedent-spouse's gross estate under this section, the executor of the spouse's estate must establish that a deduction was not taken for the transfer which created the qualifying income interest. For example, to establish that a deduction was not taken, the executor may produce a copy of the estate or gift tax return filed with respect to the transfer by the first spouse or the first spouse's estate establishing that no deduction was taken under section 2523(f) or section 2056(b)(7). In addition, the executor may establish that no return was filed on the original transfer by the decedent because the value of the first spouse's gross estate was below the threshold requirement for filing under section 6018. Similarly, the executor could establish that the transfer creating the decedent's qualifying income interest for life was made before the effective date of section 2056(b)(7) or section 2523(f).
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Treas. Reg. §20.2044-1(d)Amount included—(1) In general.
Amount included—(1) In general. The amount included under this section is the value of the entire interest in which the decedent had a qualifying income interest for life, determined as of the date of the decedent's death (or the alternate valuation date, if applicable). If, in connection with the transfer of property that created the decedent's qualifying income interest for life, a deduction was allowed under section 2056(b)(7) or section 2523(f) for less than the entire interest in the property (i.e., for a fractional or percentage share of the entire interest in the transferred property), the amount includible in the decedent's gross estate under this section is equal to the fair market value of the entire interest in the property on the date of the decedent's death (or the alternate valuation date, if applicable) multiplied by the fractional or percentage share of the interest for which the deduction was taken.
(2) Inclusion of income. If any income from the property for the period between the date of the transfer creating the decedent-spouse's interest and the date of the decedent-spouse's death has not been distributed before the decedent-spouse's death, the undistributed income is included in the decedent-spouse's gross estate under this section to the extent that the income is not so included under any other section of the Internal Revenue Code.
(3) Reduction of includible share in certain cases. If only a fractional or percentage share is includible under this section, the includible share is appropriately reduced if—
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Treas. Reg. §20.2044-1(e)Examples.
Examples. The following examples illustrate the principles in paragraphs (a) through (d) of this section, where the decedent, D, was survived by spouse, S.
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Treas. Reg. §20.2044-1(i)§20.2044-1(i)
The decedent-spouse's interest was in a trust and distributions of principal were made to the spouse during the spouse's lifetime;
(ii) The trust provides that the distributions are to be made from the qualified terminable interest share of the trust; and
(iii) The executor of the decedent-spouse's estate can establish the reduction in that share based on the fair market value of the trust assets at the time of each distribution.
(4) Interest in previously severed trust. If the decedent-spouse's interest was in a trust consisting of only qualified terminable interest property and the trust was severed (in compliance with § 20.2056(b)-7(b) or § 25.2523(f)-1(b) of this chapter) from a trust that, after the severance, held only property that was not qualified terminable interest property, only the value of the property in the severed portion of the trust is includible in the decedent-spouse's gross estate.
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Treas. Reg. §20.2044-2Effective dates
Except as specifically provided in Example 7 of § 20.2044-1(e), the provisions of § 20.2044-1 are effective with respect to estates of a decedent-spouse dying after March 1, 1994. With respect to estates of decedent-spouses dying on or before such date, taxpayers may rely on any reasonable interpretation of the statutory provisions. For these purposes, the provisions of § 20.2044-1 (as well as project LR-211-76, 1984-1 C.B., page 598, see § 601.601(d)(2)(ii)(b) of this chapter), are considered a reasonable interpretation of the statutory provisions.
43 Citing Cases
See §§ 2044, 2519; Estate of Sommers v. Commissioner, 149 T.C. 209, 223 (2017). Three requirements must be met for a terminable interest property to qualify as QTIP: (1) the property must pass from the decedent, (2) the surviving spouse must have a qualifying income interest in the property for life, and (3) the executor of the estate of the first spous
26, 36–37 (1999) (“Neither section 2044 nor the legislative history indicates that decedent should be treated as the owner of QTIP property for [purposes of aggregating stock ownership in connection with valuing the stock].”).
Specifically, section 2044 requires that, upon the surviving spouse’s death, the value of her gross estate include the value of any QTIP.11 And as a corollary, section 2519 addresses dispositions of a qualifying income interest for life in any QTIP during the surviving spouse’s lifetime, triggering potential gift tax in certain circu
The parties having settled all other issues, this case is before the Court on Cross-Motions for Partial Summary Judgment as to (1) whether the value of the SK Trust assets included in the value of the gross estate pursuant to section 2044 is properly reduced by the agreed- upon undistributed income amount and (2) whether the estate is entitled to deduct any part of the agreed-upon settlement payment as administration expenses pursuant to section 2053.1 Except as relates to respondent’s concessio
We hold that that estate is required under section 2044 to include in the value ofthat gross estate $607,927.51, the value on the applicable valuation date ofonly certain ofthe as- sets that that trust held on the date ofMr.
Alternatively, ifthe surviving spouse disposes ofall or part ofa qualifying income interest for life, - 34 - [*34] section 2519 treats the disposition as a transfer ofall interest in QTIP other than the qualifying income interest.33 Although section 2519 does not define a "disposition", section 25.2519-1(f), Gift Tax Regs., provides tha
Elkins' marital trust includable in decedent's gross estate under section 2044) shall be charged against his residuary estate.
Alternatively, ifthe surviving spouse disposes ofall or part ofa qualifying income interest for life, - 34 - [*34] section 2519 treats the disposition as a transfer ofall interest in QTIP other than the qualifying income interest.33 Although section 2519 does not define a "disposition", section 25.2519-1(f), Gift Tax Regs., provides tha
Elkins’ marital trust includable in decedent’s gross estate under section 2044) shall be charged against his residuary estate.
- 23 - After the death ofthe surviving spouse, section 2044 requires that the value ofhis or her gross estate include the value ofQTIP.
After the death of the surviving spouse, section 2044 requires that the value of his or her gross estate include the value of QTIP.
For Federal estate tax purposes, under section 2044 decedent's estate is required t include in her gross estate the fair market value of the LRC and LSC stock owned by the trust .
Accordingly, decedent's-gross estate is increased by $533,225 pursuant to section 2044 : 'The value of account No .
For example, section 2044 provides that for purposes of the estate and generation-skipping tax chapters of the Code, the QTIP includable in the gross estate of the surviving spouse shall be treated as property passing from the surviving spouse .
Black's gross estate under section 2044, whether the marital trust that Mr.
Black's gross estate under section 2044, whether the marital trust that Mr.
The estate of the surviving spouse may recover from QTIP recipients the amount by which the surviving spouse’s estate tax is increased by the inclusion of the QTIP in the estate. Sec. 2207A(a). As a corollary to section 2044, section 2519 addresses dispositions of QTIP during the surviving spouse’s lifetime and treats any disposition of
Finally, the Commissioner argues that section 2044 requires Thelma's estate to include the value of the property identified on Gary's estate tax return as a QTIP deduction.
By contrast, the Internal Revenue Code contains no specific provision (apart from the general rule of sec. 2041(a)(2), which brings into the gross estate property with respect to which the decedent has a general power of appointment) requiring property transferred pursuant to sec. 2056(b)(5) to be included in the spouse’s gross estate. 1
of the assets owned by any of the Five Partnerships is includible in Ms. Stone’s gross estate under section 2036(a)(1). The second issue is whether certain assets owned by one of the Five Partnerships is includible in Ms. Stone’s gross estate under section 2044. We hold that none of the assets owned by that partnership is includible in Ms. Stone’s gross estate under section 2044. FINDINGS OF FACT Many of the facts have been stipulated and are so found 1Unless otherwise indicated, all section re
of the assets owned by any of the Five Partnerships is includible in Ms. Stone’s gross estate under section 2036(a)(1). The second issue is whether certain assets owned by one of the Five Partnerships is includible in Ms. Stone’s gross estate under section 2044. We hold that none of the assets owned by that partnership is includible in Ms. Stone’s gross estate under section 2044. FINDINGS OF FACT Many of the facts have been stipulated and are so found 1Unless otherwise indicated, all section re
The value of QTIP is included in a surviving spouse’s estate pursuant to section 2044(a). In the legislative history accompanying the enactment of sections 2044 and 2056(b)(7), the House Ways and Means Committee noted that prior to the enactment of sections 2044 and 2056(b)(7) “the marital deduction [was] available only with respect to property passing outright to the spouse or in specified forms which [gave] the spouse control over the transferred property”. H. Rept. 97-201 at 159-160 (1981), 1
e date-of-death value of a 25-percent interest in C&L Bailey that was held in a - 2 - qualified terminable interest property (QTIP) trust established by decedent’s predeceased first wife and that is includable in decedent’s gross estate pursuant to section 2044; (3) the amount, if any, of net taxable gifts arising with respect to the 1995 assignment to decedent’s children of a promissory note; (4) the amount, if any, of decedent’s unreported taxable gifts in 1993 and 1989; and (5) the amount ded
h is includible in my estate for the purpose of determining such tax, including, but not limited to, any tax on property includible under section 2041 (relating to life insurance proceeds), section 2042 - 5 - (relating to powers of appointment), or section 2044 (relating to qualified terminable interest property) of the Internal Revenue Code, or any comparable provision of state law, but excluding, however, any tax imposed by section 2032A(c) (relating to qualified real property) or chapter 13 (
Commissioner, supra at 35-36, we reasoned that although section 2044 required that property held by the QTIP trust be included in Harriett’s (i.e., the surviving spouse’s) gross estate, the property “[did] not actually pass to or from” her, and that she “at no time” possessed “control” or had “any power of disposition over” the property.
Section 2044 includes in the gross estate the value of all qualified terminable interest property (QTIP); i.e., property in which the decedent had a qualifying income interest for life and for which a deduction was allowed to the estate of a predeceased spouse under section 2056(b)(7). Upon the death of the second spouse, the QTIP is taxed as part
Section 2044, in turn, expressly provides that the value of any property for which a deduction was taken under section 2056(b)(7) is included in the surviving spouse’s gross estate. Consequently, a surviving spouse cannot, by means of a testamentary power of appointment over a QTIP trust, direct beneficial enjoyment of the trust property in a trans
he was the chairman of the board on February 1, 1993. He retired in 1994. - 3 - 2. Ownership Green Light is a closely held corporation. Of the 460 outstanding shares of stock in Green Light, 184 shares were included in decedent’s gross estate under section 2044. Decedent’s children owned the remaining shares of Green Light stock when she died. Green Light has never paid dividends. 3. Products and Operations Green Light formulates and markets (but does not manufacture) insecticides, weed killers,
Respondent argues that decedent's situation is distinguishable from Propstra because all of the property to be aggregated in this case is included in decedent's estate. The FOH shares in the Harriett trust are included pursuant to section 2033, and FOH shares in the QTIP trust are included pursuant to section 2044.
The issues for decision are: (1) Whether certain partnership interests - 2 - includable in the gross estate pursuant to section 2044 should be merged or aggregated with the partnership interests includable in the gross estate pursuant to section 2038, for valuation purposes; and (2) whether the interests in two partnerships passing at death should be valued for Federal estate tax purposes as "assignee" interests or as partnership interests.
Section 2044 includes in the gross estate the value of all property in which the decedent had a qualified income interest for life and for which a deduction was allowed to the estate of a predeceased spouse under section 2056(b)(7) (QTIP). Upon the death of the second spouse, the QTIP is taxed as part of the second spouse's estate. See sec. 2044(c)
After concessions by the parties, the issues remaining for decision are: (1) Whether section 2044 requires aggregation, for valuation purposes, of the stock held in a trust established by decedent’s predeceased spouse under section 2056(b)(7) with stock held in decedent’s revocable trust and with stock held outright by decedent; and (2) if section 2044 does not require aggregation, the fair market value of the stock at decedent’s d
2044 provides as follows: SEC.