70 T.C. 578">*579 OPINION

Respondent determined a deficiency in petitioner's estate tax in the amount of $ 30,177.36. After concession by petitioner of all the other adjustments, the only issue remaining for decision is the amount of marital deduction to be allowed under section 2056¹ for an interest1978 U.S. Tax Ct. LEXIS 85">*87 in a trust created under decedent's will whereby decedent's surviving spouse is entitled for life to all the income with a power to appoint the greater of $ 5,000 or 5 percent of the principal to himself per year noncumulatively.

All of the facts have been stipulated; the stipulation and the exhibits attached thereto are incorporated herein by this reference.

Irving Hollingshead (hereinafter referred to as petitioner) is the executor of the Estate of Jean C. Hollingshead, deceased; he also is decedent's widower. Petitioner was a legal resident of Medford, N. J., when he filed the petition in this case.

Decedent died testate on October 4, 1972. Her will created a residuary trust; the pertinent provisions of the will are as follows:

Fourth: I give the rest, residue and remainder of my estate, real and personal, to my husband IRVING HOLLINGSHEAD, In Trust, pursuant to paragraph1978 U.S. Tax Ct. LEXIS 85">*88 Fifth herein.

Fifth: If my husband, IRVING HOLLINGSHEAD, survives me by thirty days, my Trustee shall hold all of my property, real and personal, in trust as stated in paragraph Fourth, and shall keep it invested and shall distribute the net income from it and the principal of it as follows.

A. The net income therefrom shall be paid to my husband, in quarterly or other convenient installments during his life time.

70 T.C. 578">*580 B. As much of the principal as the Corporate Trustee may from time to time think desirable for the comfort, welfare, maintenance or support of my husband shall be paid to him or shall be applied directly for those purposes.

D. Upon my husband's death (or my death if he does not survive me) the then remaining principal shall be divided into equal shares so that there shall be one for each child of mine, either then living or then dead and kept invested thereafter:

* * * *

Fourteenth: * * *

C. I Further Direct that IRVING HOLLINGSHEAD while acting as1978 U.S. Tax Ct. LEXIS 85">*89 a Trustee under this Will shall not participate in any decision regarding encroachment upon the corpus of said trust for his own benefit, but any such decision shall be made entirely by the Corporate Trustee, with the exception as enumerated in Item Fifth (c) above, as it may apply to my husband.

Petitioner maintains that the present value of the power of the decedent's widower to appoint the greater of $ 5,000 or 5 percent of the testamentary trust principal annually, noncumulatively -- "together with the invasionary rights by the trustee for the comfort, maintenance and welfare of the husband" ² -- qualifies for the marital deduction; the present value of this amount, petitioner maintains, is to be determined by taking into account the widower's 11.3-year life expectancy (petitioner acknowledges that the present value he determines, $ 134,464, cannot be deducted in entirety because of the 50-percent limitation, and so he seeks to deduct the maximum allowable marital deduction).

1978 U.S. Tax Ct. LEXIS 85">*90 Respondent maintains that only 5 percent of the trust principal (i.e., $ 9,503.60) is subject to a power that qualifies for the marital deduction, since any excess over 5 percent is not "exercisable * * * in all events."

We agree with respondent.

Section 2056(a) provides for a "marital deduction" -- the value of the gross estate is to be reduced by the value of property interests passing to the surviving spouse. Section 2056(b) provides a series of rules generally disqualifying a transfer from 70 T.C. 578">*581 eligibility for the marital deduction if the transfered interest is terminable.

Section 2056(b)(5)³ provides for an exception to the general rule that terminable interests do not qualify for the marital deduction. In general, an interest in property passing from the decedent may qualify for the marital deduction if --

(1) The surviving spouse is entitled for life to all income from the entire interest or a specific portion thereof;

(2) The surviving spouse has power to appoint the entire interest or specific portion to himself or herself (or to his or her estate);

(3) No other person has power to appoint any part of the interest or specific portion; and

(4) The power is exercisable1978 U.S. Tax Ct. LEXIS 85">*91 by the surviving spouse alone and in all events.

1978 U.S. Tax Ct. LEXIS 85">*92 The dispute between the parties is as to the extent to which the widower's power to appoint to himself is exercisable "in all events." ⁴

Under the will, the widower has no power to appoint to himself more than 5 percent (or $ 5,000, if greater) of the trust principal per year. This is the greatest amount as to which he has a power that can be exercised without a temporal restriction. Consequently, this is the greatest amount as to which he has a power "exercisable * * * in all events." Indeed, since the power is noncumulative, there is never a time when the widower could 70 T.C. 578">*582 appoint to himself more than 5 percent at that time. In order to appoint to himself more than 5 percent in the aggregate, he would have to appoint some amount in one year, survive until a later year, and in that later year appoint an 1978 U.S. Tax Ct. LEXIS 85">*93 additional amount. This condition of survival ⁵ is itself sufficient to disqualify the power under the "all events" requirement. S. Rept. 80-1013 (Part 2) 17 (1948), 1948-1 C.B. 331, 343; sec. 20.2056(b)-5(g), Estate Tax Regs. As a result, we conclude that the widower's interest in the testamentary trust is eligible for the marital deduction only to the extent of 5 percent of the trust principal.

Petitioner relies primarily on Gelb v. Commissioner, 298 F.2d 544">298 F.2d 544(2d Cir. 1962). In Gelb it was concluded that prior to the 1954 Code, unless all of a trust qualified for a marital deduction, 1978 U.S. Tax Ct. LEXIS 85">*94 no part of it would, and that the 1954 Code introduced the new concept of a qualifying "specific portion." The court held in Gelb that the "specific portion" could be a dollar amount or even one determined by actuarial calculation of life expectancy, thereby invalidating Treasury Department regulations that required the "specific portion" to be a fractional or percentage share. Petitioner's reliance on Gelb is misplaced, however. In sharp contrast to this case, Gelb's widow was given a life interest in the "net income" and a general power of appointment by will over the remainder at her death. The issue in Gelb was whether a power in the trustees to invade corpus for a maximum of $ 5,000 per year for the support of a minor daughter destroyed the marital deduction for the entire trust because the surviving spouse would not have the power to appoint the "entire interest" or a "specific portion" thereof. In Gelb, the widow was given the power over the entire remainder to appoint by will. The trustees' power could cut back on the extent of the power. The court used actuarial calculations to determine the maximum extent to which the widow's power could be cut back. 1978 U.S. Tax Ct. LEXIS 85">*95 The court held that the "all events" test was satisfied only as to what was left after subtracting the maximum reach of the trustees' power. Thus, on the point at issue herein, Gelb may be said to stand for the proposition that only the power that cannot be defeated can qualify for the marital deduction under section 2056(b)(5).

70 T.C. 578">*583 Our conclusion herein, that no part of the widower's power in the instant case (except the constant 5 percent) satisfies the "all events" test, is consistent with, and is supported by, Gelb.

Petitioner also relies upon Northeastern Nat. Bank v. United States, 387 U.S. 213">387 U.S. 213 (1967), and Citizens National Bank of Evansville v. United States, 359 F.2d 817">359 F.2d 817 (7th Cir. 1966). In each of these cases the question before the court was the extent of the interest as to which the surviving spouse was entitled to "all the income." In each of these cases the extent of the power to appoint was conceded to be at least as broad as the income interest. Since the "all events" requirement in the statute applies only to the power to appoint, neither of the courts in these cases had occasion to inquire1978 U.S. Tax Ct. LEXIS 85">*96 into the meaning of the "all events" test. The issue before us is the "all events" test. Consequently, Citizens National Bank and Northeastern Nat. Bank are not relevant to the issue before us. See, in particular, Northeastern Nat. Bank v. United States, 387 U.S. 213">387 U.S. at 224-225.

Since the maximum specific portion of principal over which decedent's surviving spouse has a power of appointment exercisable in all events is 5 percent, no marital deduction in excess of that amount is allowable. Since the respondent has conceded that a marital deduction in an amount equal to 5 percent of the principal is allowable, we need not reach the question of whether the power to appoint this specific portion was exercisable in all events.

Since petitioner has conceded all the other adjustments in the deficiency notice,

Decision will be entered for the respondent.