Priv. Ltr. Rul. 201332001 (May 10, 2013)

(taxpayer proposed that joint and survivor life insurance policy on married couple would be purchased by newly created irrevocable trust (second trust) from previously existing trust; both trusts were grantor trusts and on death of surviving spouse assets of initial trust to be distributed outright to couple's children; after creation of initial trust, one child diagnosed with disability impacting ability to manage property; taxpayer proposed to create second trust with children as beneficiaries, but that disabled child's property held in special needs trust; second trust t0 buy policy from initial trust at value as determined by interpolated terminal reserve plus last gross premium payment before sale date; IRS determined that proposed purchase would not constitute transfer for value with the result that no portion of insurance proceeds ordinary income to beneficiaries; both trusts grantor trusts, and husband treated as owner of second trust; thus computation of gain or loss with respect to second trust same as with first trust and transaction within exception to transfer for value rule under I.R.C. Sec. 101(a)(2)(B) to extent policy insures husband's life; to extent policy insures wife's life, that portion of policy transferred to husband as partner of insured under I.R.C. Sec. 101(a)(2)(B) under partnership theory).