TC upholds GSTT regs. (Tax Court, generation-skipping transfer tax)

Tax Adviser, The, February, 2007 by Ransome, Justin P.

In Estate of Gerson, 127 TC No. 11 (10/24/06), the Tax Court held that the exercise of a testamentary general power of appointment (GPA) by a decedent in favor of her grandchildren was subject to generation-skipping transfer tax (GSTT). In so holding, it ruled that Regs. Sec. 26.2601-1(b) (1)(i) was a reasonable interpretation of the grandfathering provision contained in Section 1433 (b)(2)(A) of the Tax Reform Act of 1986 (TRA '86).

Facts

In Gerson, the decedent's husband had created a revocable trust that became irrevocable on his death. On his death, the trust agreement provided that the trust was to be divided into three separate trusts. One was a marital trust for the decedent's benefit; the trust agreement provided for the distribution of income...

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