Morgens: More QTIP Mischief
4 Pages Posted: 24 Jul 2010
Date Written: July 22, 2010
In Morgens, the court ruled in favor of the government that section 2035(b) applied to the gift taxes paid by the qualified terminable interest property (QTIP) trust beneficiaries to gross up the widow’s estate by that amount. Because the surviving (or donee) spouse must be taxed on the underlying property over which she has no ownership rights, Congress enacted section 2207A to allow the second spouse to recover from the beneficiaries of the property the transfer taxes relating to her gift or estate inclusion. However, the court held that section 2207A did not shift the gift tax liability to those beneficiaries to exempt the widow’s estate from the application of section 2035(b).
Keywords: qualified terminable interest property, QTIP, marital deduction, section 2035, section 2207A, Morgens, Mellinger, estate tax, gift tax
JEL Classification: H20, H29, K34, J16
Suggested Citation: Suggested Citation