In Estate of Tatum, Jr. v. U.S., 106 AFTR 2d 2010-6556 (S.D. Miss. 10/6/2010), the Southern District of Mississippi held that a disclaimer was not qualified where the disclaimed property passed to the disclaimant by intestacy. At issue was property disclaimed by a decedent when his father died in 1987, leaving his residuary estate 60% to the decedent and 20% to each of the decedent’s nephews. At such time, the disclaimer was approved by the Mississippi probate court and, as a result, the decedent’s share of the residue, consisting mostly of stock, was distributed to his children, as if he had predeceased his father. On the decedent’s death, IRS assessed a gift tax deficiency and penalty against decedent’s estate, claiming that decedent was liable for gift tax on the transfer of stock to his children. IRS claimed that the disclaimer was not qualified because the property passed back to the son by intestacy, which failed the requirement of Code Section 2518 that the disclaimed property pass to a person other than the disclaimant. Apparently, under Mississippi law at the time of the death of the decedent’s father, if a condition was not provided for in the will, the state’s intestacy statute would control. As the father’s Will provided for an alternate disposition of the residuary estate if one of his beneficiaries predeceased him, but not where one of them disclaimed, the disclaimed property simply passed back to the decedent by intestacy. Thus, the decedent’s estate was liable for gift tax on the transfer of the disclaimed property to his sons.