Copyright (c) 1997 George Mason Law Review
George Mason Law Review
CASENOTE: Estate of Clack v. Commissioner: An End to the Conflict over Contingent QTIP Elections?
6 Geo. Mason L. Rev. 163
Irene A. Vlissides *
In February 1996, the Tax Court addressed an issue of statutory construction that it had decided in three earlier cases. However, after being reversed by three separate federal circuit courts, the Tax Court in Estate of Clack v. Commissioner 1 departed from its prior interpretation of the statute in question. The main issue in Clack, and in its predecessors, involved the definition of qualified terminable interest property (QTIP). 2 Introduced by the Economic Recovery Act of 1981 (ERTA), 3 the QTIP concept was part of a major overhaul of estate tax rules, engineered by Congress to enhance the ability of married couples to make tax-free interspousal transfers at death. 4 Before Clack, the Tax Court consistently disqualified taxpayers' estates from claiming an estate tax marital deduction if the decedent's will gave the executor discretion in electing QTIP treatment. The Tax Court deemed such discretion a prohibited power to possibly divest the surviving spouse of the lifetime income interest that was crucial to meeting the QTIP eligibility requirements. Thus, taxpayers who granted this discretion to their executors were denied the ability to pass assets to their surviving spouses without suffering the imposition of estate tax. The Fifth, Sixth, and Eighth Circuits disagreed with this reasoning, reversing the Tax Court in several cases.
In Clack, the Tax Court held that it would no longer deny the marital deduction to taxpayers who granted their executors discretion in making the QTIP election. The Clack opinion contained little legal reasoning and only ...
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