589 (2000),[1] a decision of the United States Tax Court in favor of taxpayer Audrey J. Walton, "ruled that a grantor's right to receive a fixed amount for a term of years, if that right is a qualified interest within the meaning of Section 2702(b),[2] is valued for gift tax purposes under Section 7520,[3] without regard to the life expectancy of the transferor.

[7] The IRS "issued a notice of deficiency,"[7] asserting that the taxable value of each gift was $3.8 million.

The court sided with Audrey, but declined to make specific gift-tax calculations because timing disagreements remained that could best be dealt with through Rule 155 proceedings.

This case has led to the proliferation of "Walton GRATs," which tax experts Beth D. Tractenberg & Michael J. Parets describe as GRATs that last "for a term of years, with the annuity payable to the grantor's estate if the grantor dies during the annuity term.

"[10] This allows the grantor to retain a qualified interest that is equal to the property transferred, resulting in a gift valuation of zero to the remainder-interest party[ies].