Estate of Anne W. Morgens v. CIR, No. 10-73698 (9th Cir. 2012)
Annotate this CaseThe Estate appealed the Tax Court's decision that it owed additional estate taxes. At issue was whether gift taxes paid by the donee trustees of a Qualifying Terminable Interest in Property (QTIP) trust, based on a 26 U.S.C. 2519 deemed inter vivos transfer of the QTIP property within three years of the donor's death, must be included in the transferor's gross estate under the so-called "gross-up rule" of section 2035(b). The court held that it did. Therefore, the court held that the decedent paid the gift tax on the section 2519 transfers of the Residual Trusts and her estate should be increased under the gross-up rule by the value of the gifts paid.
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