INTRODUCTION
In Private Letter Ruling ("PLR") 200107015, the Internal Revenue Service (the "Service") was recently asked to consider the federal gift and generation-skipping transfer ("GST") tax consequences of the assignment of a vested remainder interest by a beneficiary of a testamentary charitable lead annuity trust ("CLAT").
A charitable lead annuity trust is a split interest trust that provides for the payment of a specified sum each year to one or more charitable lead beneficiaries.1 If designed properly, the grantor or testator’s estate can claim an income, gift or estate tax charitable deduction for the actuarial value of the lead interest in the CLAT.2 In order for gifts to a CLAT to qualify for any of the foregoing charitable deductions, the lead interest given to charity must be in the form a guaranteed annuity. A guaranteed annuity is an arrangement in which a determinable amount is paid periodically, not less often than annually, and for either a specified term of years or for the life or lives of any one or more of the donor, the donor’s spouse or a lineal ancestor or the spouse of a lineal ancestor of one or more of the noncharitable remainder beneficiaries of the trust.3 The annuity payment can be stated as a specific dollar amount or, alternatively, as a percentage or fraction of the gift into the trust.4 If a specified term is selected for the lead interest, there is no limit on its duration.5
A CLAT is subject to a special rule regarding the allocation of GST exemption.6 In determining the inclusion ratio of a CLAT, the applicable fraction is determined with an adjusted GST exemption ("AGE") and in accordance with the value of all of the property in the CLAT immediately after the termination of the lead interest.7 The AGE is the amount of GST exemption allocated to the CLAT increased at the same §7520 rate used to value the charitable lead annuity interest compounded over the term of that interest.8
Example of AGE Rule: Assume that a testamentary CLAT is funded with $1,000,000. The terms of the CLAT provide that charity will receive an annuity payment equal to 8% of the initial value of the assets used to the fund the trust for a period of 24 years. The applicable §7520 rate used to value the lead and remainder interests in the CLAT is 6.4%. Under these facts, the estate would be entitled to a charitable deduction of $968,000 and the remainder interest would be valued at only $32,000. Assume that the testator has at least $32,000 of unused GST exemption to allocate to the non-charitable remainder of the CLAT and that the testator’s executors actually allocate $32,000 of that GST exemption to the trust. At the end of the 24-year term the AGE would be $141,823.78.9 If the assets in the CLAT have out-performed the applicable §7520 rate and the assets will immediately or eventually be distributed to or for the benefit of skip persons, the GST tax consequences could be devastating.10 The testator will only be deemed to have allocated $141,823.78 of his or her GST tax exemption to the trust.
If the charitable lead trust under the testator’s will in the foregoing example had been designed as a charitable lead unitrust, the entire fund could be exempt from GST tax regardless of the value of the assets at the termination of the lead interest since the allocation is deemed to be finalized as of the testator’s death.11
PLR 200107015
PLR 200107015 involved a CLAT established under a decedent’s will. Under the facts of the ruling, the decedent was survived by his spouse and three children. The decedent‘s will provided that a portion of his estate should be held in a CLAT that directed the trustees to pay a designated charity an annuity equal to a specified percentage of the initial fair market value of the assets that originally passed to the trust for a period of 25 years. At the end of the 25-year term the trustees were directed to divide the remaining assets, other than any amount due the charity, into as many equal shares as will be necessary to create one share for each of the decedent‘s children who are then living and one share for the then living children of any of decedent‘s children who are then deceased. Any share set apart for a deceased child’s children is directed to be further divided into shares on a per stirpital basis for such descendants. Following division into shares, each share is directed to be held in trust for the benefit of decedent’s descendant (whether a child or grandchild) for whom the share was set aside, such beneficiary’s descendants and certain charities, including the original designated lead charity.
During the term of a separate trust, the trustees are directed to pay a percentage of the net income to the original designated lead charity at least annually. The trustees are given the discretion to distribute the remaining net income and any amount of principal to any one or more of the beneficiaries of the trust. Each separate trust must terminate upon the earliest of the death of the issue for whom the share was created or the 21st anniversary of the death of the last to die of all of the decedent’s spouse and the descendents of the decedent’s father who survived him. When a separate trust terminates, the trustees are directed to pay the remaining trust assets to any one or more the beneficiaries of such trust in such shares as the trustees deem advisable.
Notwithstanding the foregoing, the trustees, other than any trustee who was a descendent of the decedent, were given the power to amend the dispositive or administrative provisions of the remainder trusts. This power only permitted the trustees to amend the dispositive provisions of the trust in such a manner that only the decedent's descendants or their estates, charitable organizations, charitable trusts or certain governmental entities would be the beneficiaries of the trust following the amendment. Additionally, following any amendment the decedent’s will mandated that all of the trusts would still need to terminate no later than the 21st anniversary of the death of the last to die of the decedent’s spouse and the descendants of the decedent's father who survived him. The trustees were only permitted to exercise the amendment power before the CLAT terminates. They were also permitted to release the power in whole or in part at any time and any release would be binding on the trustees and their successors.
The trustees proposed to amend the provisions of the trust to provide that upon the termination of the CLAT, one-sixth of the remaining principal of the trust would vest in one of the decedent’s children. At the same time, the trustees proposed to release their right to change the provisions of the trust granting that child the vested remainder interest. Additionally, the child who would be granted the vested remainder proposed to assign that interest to his children and file a gift tax return reporting the gift.
The taxpayer requested the Service to rule that upon termination of the CLAT and distribution of trust assets to the child's children pursuant to the assignment, there would not be a transfer subject to GST tax because the child would be treated as the transferor of the assets, not the decedent. Instead, the Service held that the proposed transactions would have the effect of circumventing the AGE rule. According to the ruling, to be consistent with the purpose of the AGE rule, the child’s assignment of his vested remainder interest would produce two transferors of the assets in the CLAT for purposes of the GST tax. The child would be treated as the transferor of a portion of the trust assets equal to the present value of the one-sixth vested remainder interest on the date of his gift. The decedent would continue to be treated as the transferor of the balance of the assets in the CLAT. The ruling also indicated that under these facts the Service might disregard the form of the transaction and view the transaction as though the trustees designated the child's children as the vested remainder beneficiaries. If the Service collapsed the transaction in this manner, the decedent would continue to be treated as the transferor of the entire trust for purposes of the GST tax.12
Whether the Service would be able to ignore the form of the transaction and continue to treat the decedent as the transferor of the one-sixth portion the trust assets is a question of fact.13 It would seem, however, that a careful practitioner could assist a client in structuring an assignment of a vested CLAT remainder interest while minimizing the likelihood of the Service asserting this argument with any success.14
ANALYSIS
The holding in PLR 200107015 may be technically incorrect for the following reasons:
(1) By its terms, the AGE rule only applies to the original transferor of assets to the CLAT, i.e., the taxpayer who receives the benefit of the charitable deduction;
(2) By its terms, the AGE rule only applies to property in the CLAT, whereas a vested remainder interest, according to the Code and the Treasury Regulations, is a property interest in and of itself separate and apart from the assets in the CLAT; and
(3) The ruling attempts to overturn the statutory mandate set forth in §7520, the only provision in the Code where vested remainders may be valued.
Section 2642(e) and the applicable Treasury Regulations make it clear that the AGE rule is only applicable to the taxpayer who established the CLAT and is therefore able to claim either a gift or estate tax charitable deduction for the value of the charitable lead interest in the trust. The Code Section provides in relevant part:
(1) For purposes of determining the inclusion ratio for any charitable lead annuity trust, the applicable fraction shall be a fraction-(A) the numerator of which is the adjusted GST exemption, and (B) the denominator of which is the value of all of the property in such trust immediately after the termination of the charitable lead annuity. (2) For purposes of paragraph (1), the adjusted GST exemption is an amount equal to the GST exemption allocated to the trust increased by interest determined-(A) at the interest rate used in determining the amount of the deduction under section 2055 or 2522 (as the case may be) for the charitable lead annuity, and (B) for the actual period of the charitable lead annuity. (3) For purposes of this subsection-(A) The term "charitable lead annuity trust" means any trust in which there is a charitable lead annuity. (B) The term "charitable lead annuity" means any interest in the form of a guaranteed annuity with respect to which a deduction was allowed under section 2055 or 2522 (as the case may be). (Emphasis supplied.)
Furthermore, §26.2642 of the Regulations appears to buttress this conclusion providing in relevant part:
(a) In determining the applicable fraction with respect to a charitable lead annuity trust-(1) The numerator is the adjusted generation-skipping transfer tax exemption (adjusted GST exemption); and (2) The denominator is the value of all property in the trust immediately after the termination of the charitable lead annuity. (b) The adjusted GST exemption is the amount of GST exemption allocated to the trust increased by an amount equal to the interest that would accrue if an amount equal to the allocated GST exemption were invested at the rate used to determine the amount of the estate or gift tax charitable deduction, compounded annually, for the actual period of the charitable lead annuity. If a late allocation is made to a charitable lead annuity trust, the adjusted GST exemption is the amount of the GST exemption allocated to the trust increased by the interest that would accrue if invested at such a rate for the period beginning on the date of the late allocation and extending for the balance of the actual period of the charitable lead annuity. (Emphasis supplied.)
Section 7520 provides in relevant part that "[f]or purposes of this title, the value of any remainder interest shall be determined under tables prescribed by the Secretary and by using an interest rate (rounded to the nearest 2/10ths of 1 percent) equal to 120 percent of the Federal midterm rate in effect under section 1274(d)(1) for the month in which the valuation date falls."15 Furthermore, applicable local law creates legal interests and property rights for federal tax purposes.16 In Morgan v. Comissioner,17 the Court stated "State law creates legal interests and rights. The federal revenue acts designate what interests or rights, so created, shall be taxed." A vested remainder interest is a recognized property interest under state law and under the estate and gift tax regulations.18
A simple economic analysis illustrating the application of §7520 highlights one of the flaws in the conclusion reached by PLR 200107015. Assume a child is given a vested remainder interest in a CLAT established under his father’s will. The father died on January 1 of calendar year X. The CLAT presently has a corpus of $1,000,000 and provides for a payout of $150,000 per year to a designated charitable organization on the last day of each calendar year. The charitable lead term will expire in exactly five years. As permitted under the terms of the will, on January 1 of the calendar year the child assigns his vested remainder interest in the CLAT to a trust for the benefit his descendants. At the time of this assignment the §7520 rate is 6.8%.
The value of the child’s gift must be determined under §7520. No other section of the Code deals with the valuation of this gift. It is important to focus on the property that the child has transferred in this analysis, i.e., the vested remainder interest or the right to receive the remaining trust assets at the end of five years. The property interest that the child has transferred is not the underlying assets in the trust. On the day the child assigned his vested remainder interest to the trust for the benefit of his descendants, the charitable lead interest in the CLAT had a value of $618,337.21 under §7520 and the remainder interest had a value of $381,662.79. Using an assumed growth rate of 6.8%, the vested remainder interest in the CLAT would be worth $530,317.65 when the assets are distributed in five years.19 Thus, the foregoing analysis reveals one of the flaws of the result in PLR 200107015.20 The tables assume the value of the vested remainder interest will be $530,317.64. It is this vested remainder interest that is the recognized property right the beneficiary in PLR 200107015 is assigning.
The Service applied the foregoing rules correctly in PLR 9533017. In this ruling the donor was a shareholder, director and officer of a bank. The donor and his family owned stock interests in the bank that were considered significant with respect to the control of the bank. The donor intended to create a CLAT that would pay a guaranteed annuity to a private foundation. Neither the donor nor the donor’s spouse was an officer or director of the private foundation. The donor intended to transfer shares of his stock in the bank to the CLAT. The ruling provided that the charitable lead interest would last for a period of years to be determined by the time of the execution of the trust. The CLAT would also provide for an annuity payment equal to a fixed percentage of the net fair market value of the trust assets valued on the date of the inception of the trust. Upon the termination of the charitable lead interest, all of the remaining principal and income, except any amount due to the private foundation, would be distributed in equal shares to the donor’s two children. If either child was not living upon the termination of the charitable lead interest, that child’s share would be distributed to the child’s estate.
The donor requested a ruling on the GST tax consequences related to the property in the CLAT if a child died prior to the termination of the charitable lead interest. The ruling noted the meaning of the term "taxable termination". A taxable termination is the termination of an interest in property held in a trust unless immediately after such termination a non-skip person has an interest in the trust or the property or at no time after the termination may a distribution be made from the trust to a skip person.21 The ruling also noted the meaning of the term "skip person". A skip person is a natural person assigned to a generation that is two or more generations below the generation that the transferor is designated a member.22 A trust is also a skip person if all interests in the trust are held by skip persons.23 The ruling also noted that a non-skip person is any person who is not a skip person.24 Ultimately, the ruling held that no GST would occur if a child died prior to the termination of the charitable lead interest. It stated:
In this case, when [the CLAT] terminates, all of the principal and income will be distributed to non-skip persons. The trustee will distribute the remaining trust principal and income to Child 1 and Child 2 in equal shares. If Child 1 or Child 2 is not living when [the CLAT] terminates, his or her share will be distributed to their [sic] estate. Accordingly, we conclude that [the CLAT] will not be subject to the generation-skipping transfer tax imposed by §2601.25
Thus, in the ruling it was irrelevant who might be the ultimate beneficiary or beneficiaries of a deceased child’s estate.
Based on the foregoing discussion, PLR 9533017 appears to reach the correct result. So why then did the Service reach the opposite conclusion in PLR 200107015? Perhaps the Service now views this transaction as an abusive planning technique. Nevertheless, the economic analysis set forth in this article illustrates that this view is not correct. Hopefully the Service will reverse the holding in PLR 200107015 in the near future.
PLANNING TECHNIQUES
Under the rationale of PLR 9533017, a planner should consider drafting a CLAT that grants a vested remainder interest to a non-skip person. If the spendthrift provision in the CLAT document permits, the non-skip person could gift the vested remainder interest to or for the benefit of others, or sell it to others or to a trust. In determining how to structure the transaction, the planner should attempt to differentiate the series of transfers from the fact pattern in PLR 200107015 as much as possible even though most practitioners may conclude that the holding in PLR 200107015 is incorrect.Transfer to Trust for Descendants. For example, the child could establish a GST tax exempt dynasty trust for the benefit of his descendants and assign his remainder interest in the CLAT to that trust when the interest has very low value. A sale may be a safer transaction than a gift since the Service may view two gifts that occur close in time as being only one gift with the first recipient merely serving as the agent of the original transferor for purposes of the ultimate transfer to the grandchild or to the dynasty trust.
Transfer to Trust for Spouse and Descendants. The child could include his spouse as a discretionary beneficiary of the dynasty trust. The child would be able to benefit indirectly from the trust since the child’s spouse could "share" the benefits of the trust in such spouse’s discretion. If the transaction were structured as a sale, as opposed to a gift, the sale would be income tax-free26 since the spouse is a discretionary beneficiary of the dynasty trust.27
Transfer to Trust for Self and Descendants Set Up by Parent. Alternatively, the child could sell the vested remainder interest to a trust set up by the child’s parent in which the child is a discretionary beneficiary. The sale, for example, could be to a pre-existing dynasty trust established by the child’s parent for the benefit of the child and the child’s descendants. In order to make the remainder sale income tax-free,28 the parent could fund the dynasty trust with a gift over which the child has a power of withdrawal so as to cause the dynasty trust to be income taxable to the child under §678 of the Code.29
It is best to have established the dynasty trust far in advance of the remainder sale to reduce the chance that the Service could successfully argue substance over form and recast the series of transfers as a generation-skipping CLAT as was suggested in PLR 200107015. In addition, the more time between the establishment of the CLAT and the sale of the remainder interest, the more likely the transaction would be distinguished from the series of transfers in PLR 200107015.
Since the trust could be drafted to allow an independent trustee or trust protector to give and take away a general power of appointment, this structure may provide the best protection if PLR 200107015 is not reversed. For example, the independent trustee or trust protector could give the settlor’s child (i.e., a non-skip person) a general power of appointment over the trust so as to avoid a GST tax.
Transfer to Trust for Self and Descendants Set Up by Self. Alternatively, the child could consider selling or gifting the remainder interest to a trust established by the child in which the child is a discretionary beneficiary. If the child establishes the trust and remains a discretionary beneficiary, the trust should have a situs in a jurisdiction that has reversed the common law "self-settled trust" doctrine.30 A gratuitous transfer to such a trust can be designed to be a completed gift for purposes of the Federal gift tax.31 It may also be possible to design such a trust to avoid inclusion in the child-settlor’s estate at death.32
GENERAL COMMENTS
As discussed above, to avoid step transaction arguments and to bring the transaction outside of PLR 200107015, it may be safer to sell the remainder interest rather than gift it. As discussed in this article, the authors herein believe that PLR 200107015 was wrongly decided and that, therefore, an individual should be able to transfer a vested remainder interest in a CLAT without triggering the adverse result found in PLR 200107015. However, until the PLR is reversed, the practitioner should be as careful as possible to structure the CLAT remainder transaction in such a way that it falls outside of the fact pattern found in the PLR.
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(1) §170(f)(2)(B); §2055(e)(2)(B) and §2522(c)(2)(B). All section references are to the Internal Revenue Code of 1986, as amended, and the regulations thereunder, unless otherwise indicated.
(2) §§170(f)(2), 2055(e)(2)(B), and 2522(c)(2)(B). See also Regs. §20.2055-2(e)(3)(iii). If not designed properly, in certain circumstances it may be possible to reform a CLAT to claim the desired income, gift or estate tax charitable deduction. See §2055(e)(3). See also §§170(f)(7) and 2522(c)(4).
(3) All of the foregoing individuals being referred to as "certain individuals" within the meaning of the regulations. See Regs. §§1.170A-6(c)(2), 20.2055-2(e)(2) and 25.2522(c)-3(c).
(4) Reg. §1.170A-6(c)(2)(i)(A); §20.2055-2(e)(2)(vi)(a); §25.2522(c)-3(c)(2)(vi)(a).
(5) C.f., §664(d) (charitable remainder trust for a specified term must be limited to no more than a 20-year term).
(6) See §2642(e). A working knowledge of the GST tax is assumed by this article.
(7) Id.
(8) Id.
(9) Future value ("FV") equals the principal ("P") multiplied by a number equal to the sum of one plus the §7520 rate ("I") raised to the Nth power (i.e., the number of periods compounded ("N") or the term of the lead interest in the CLAT (i.e., twenty-four years)). $141,823.78 = $32,000 x (1 + .064) to the 24th power.
(10) For example, if the trust fund grew at a rate of 12% each year, the value of the assets remaining in the trust at the time the lead interest terminates would be $5,726,209.64.
(11) A charitable lead unitrust ("CLUT") is a trust that provides for the payment of a specified percentage of the fair market value of the trust assets each year valued on an annual basis to one or more charitable lead beneficiaries. §170(f)(2)(B); §2055(e)(2)(B) and §2522(c)(2)(B). A discussion about CLUTs is beyond the scope of this article. Nevertheless, it is important to note that setting aside any GST tax issues, the use of a CLAT as a wealth transfer planning strategy will always produce a more favorable result for a taxpayer than the use of a CLUT.
(12) The ruling cited Estate of Bies v. Com’r, T.C. Memo. 2000-338; Estate of Cidulka v. Com’r, T.C. Memo. 1996-149; Griffin v. United States, 42 F.Supp.2d 700 (W.D. Tex. 1998) as possible authority for ignoring the form of the transaction. But see Estate of Holland, 73 TCM (CCH) 3236 (1997).
(13) See Footnote 12.
(14) A discussion of this aspect of the ruling and the substance over form doctrine is beyond the scope of this article.
(15) Emphasis supplied.
(16) See e.g., U.S. v. Bess, 357 U.S. 51 (1958); Morgan v. Com’r., 309 U.S. 78 (1940); Aquilino v. U.S., 363 U.S. 509 (1960); Aldrich v. U.S. 346 F.2d 37 (1965); and McGehee v. Com’r., 260 F.2d 818 (1958).
(17) Id.
(18) See e.g., Davis v. Goodman, 17 Del. Ch. 231 (1930), 152 A. 115; Joyner v. Duncan, 299 N.C. 565 (1980), 264 S.E. 2d 76. See also PLR 8910007. See also Reg. §§20.2031-1; 20.2031-7; 25.2512-1; 25-2512-5.
(19) According to Table B in Publication 1457 Aleph Volume, if the §7520 rate is 6.8% and an annuity interest has a five-year term, the Table Annuity factor is 4.122248088 or (1-1/(1+.068)5)/.068. Immediately following the assignment in year one, the fund in the CLAT will have a value of $1,000,000. Multiply that value by .068 for the assumed growth rate of the fund as mandated by §7520. Thus, the fund will have earned $68,000 in the year immediately following the child’s assignment. Add this amount to the existing fund for a total value of $1,068,000. The CLAT must also satisfy its obligation to pay the charity an annuity of $150,000 at the close of the year. Thus, at the beginning of the second year following the assignment the CLAT will have assets totaling $918,000. The same analysis must be followed in each subsequent year until the CLAT terminates: for year two: $918,000 x 1.068 = 980,424. 980,424 - 150,000 = 830,424; for year three: 830,424 x 1.068 = 886,892.83. 886,892.83 - 150,000 = 736,892.83; for year four: 736,892.83 x 1.068 = 787,001.54. 787,001.54 - 150,000 = 637,001.54; and for year five: 637,001.54 x 1.068 = 680,317.64. 680,317.64 - 150,00 = 530,317.64.
(20) See also Magnin v. Com’r., 184 F.3d 1074 (9th Cir. 1999), T.C. Memo 2001-31; Wheeler v. U.S., 116 F.3d 749 (5th Cir. 1997); Estate of D’Ambrosio v. Com’r., 101 F.3d 309 (3rd Cir. 1996). These cases all dealt with a sale by a decedent of his remainder interest in certain property in which the decedent retained a life estate. In each case the decedent’s objective was to remove the value of the property from the decedent’s taxable estate at death notwithstanding the retained life estate. Each case recognized that it was possible for the decedent to remove the property in which the decedent sold a remainder interest from the decedent’s taxable estate as long as the decedent received "adequate and full consideration" for that remainder interest. In accordance with the same principles set forth in the economic analysis in the text and Footnote 19, the courts held that the consideration received by the decedent for the sale of the remainder interest need only equal the actuarial value of the remainder interest sold at the time of the sale. For additional analysis of these actuarial principles, see Hesch, Gopman & Kaplan, "Purchasing the Remainder Interest in a QTIP Trust - An Analysis of Olsten v. Commissioner," 21 Tax Mgmt. Est., Gifts & J. 122 (May-June 1996).
(21) §2612(a)(1).
(22) §2613(a)(1).
(23) §2613(a)(2)(A). Additionally, a trust is considered a skip person if there is no person holding an interest in the trust and at no time after the transfer may a distribution, including a distribution made on termination, be made from the trust to a non-skip person. §2613(a)(2)(B).
(24) §2613.
(25) Emphasis supplied.
(26) Rev. Rul. 85-13, 1985-1 C.B. 184.
(27) §677(a)(1).
(28) See Footnote 26.
(29) §678(a)(1). The power of withdrawal could be designed to lapse within the 5 and 5 exemption (i.e., by no more than the greater of 5% or $5,000) each year so that after a certain period the assets in the trust would not be included in the child’s taxable estate. See §§ 2041(b)(2) and 2514(e). The child should be treated as the owner of the lapsed amount under §678(a)(2). See e.g., PLRs 200022035, 200011054, 200011055, 200011056, 200011058, 9812006, 9810008, 9810007, 9810006, 9809004, 9809005, 9809006, 9809007, 9809008, 9801025, 9745010, 9739026, 9625031, 9541029, 8142061, 8521060, 8545076, 8809043, 8805032, 8701007, 9034004, 9320018 and 9311021. See also Rev. Rul. 67-241, 1967-2 CB 225.
(30) See e.g., Alaska Laws, SLA 1997, Ch. 6 (H.B. 101), A.S. §§13.12.205(2), 13.27.050(a), 13.36.035, 13.36.310, 13.36.390, 34.40.010, 34.40.110(a), 34.40.110 (Alaska); 12 Del. Code Ann. §§3570-3576 (1997) (The Qualified Dispositions in Trust Act) (Delaware); M.R.S. §§428.005-428.059, 456.020, and 456.080 (Missouri); N.R.S. §166.040 (Nevada); and Title 18, Chapter 9.2 of the General Laws of Rhode Island (The Qualified Dispositions in Trust Act) (Rhode Island).
(31) See e.g., PLRs 9837007 and 9332006.
(32) See e.g., Herzog v. Com’r., 116 F.2d 591 (2d Cir. 1941) (but c.f., Vanderbilt Credit Corp. v. Chase Manhattan Bank, N.A., 100 AD2d 544, 473 N.Y.S.2d 242 (2d Dep’t. 1984); Wells v. Com’r., T.C. Memo 1981-574; Estate of Uhl, 241 F.2d 867 (7th Cir. 1957); Estate of German v. U.S., 85-1 U.S.T.C. ¶13,610 (Ct. Cl. 1985); PLR 9332006; PLR 8829030; and PLR 8037116.