2053 or 2054. This subsection shall not apply with respect to deductions allowed under part II (relating to income in respect of decedents). This limitation applies only to deductions, not reductions or offsets against selling prices. See generally R. Stephens, G. Maxfield & S. Lind, Federal Estate and Gift Taxation, pp. 5-12 (3d ed. 1974); M. Ferguson, J. Freeland & R. Stephens, Federal Income Taxation of Estates and Beneficiaries, p. 320 (1970). Thus in Estate of Bray v. Commissioner, 46 T.C. 577 (1966), affd. per curiam 396 F.2d 452 (6th Cir. 1968), selling expenses deducted for estate tax purposes under section 2053 were also allowable as an offset against the selling price in computing the estate's income tax. There we specifically held that section 642(g) is not a general limitation against all double tax benefits, but is only a specific limitation against double deductions. 46 T.C. at 580. See also Commerce Trust Co. v. United States, 438 F.2d 111 (8th Cir. 1971), and cases cited therein. It is clear that the income tax benefit which respondent seeks to disallow here is not a deduction. See secs. 1001(a) and 704(d). Certainly the estate and its beneficiary, the petitioner, are enjoying a double tax benefit from the estate's payment of the partnership liabilities. The estate has deducted those expenditures in computing the taxable estate, and because of basis adjustments made for those same payments, petitioner is able also to enjoy certain capital losses from the partnership. But again, section 642(g) disallows double deductions only. A basis increase is not a deduction even though it may result in a later income tax benefit by reducing gain or increasing loss upon disposition of the partnership interest or by allowing the pass through of partnership losses that would otherwise be wasted because of an insufficient basis in that interest. Decision will be entered under Rule 155. ESTATE OF ROBERT B. MARGRAVE, DECEASED, THE UNITED STATES NATIONAL BANK, EXECUTOR AND TRUSTEE OF THE ROBERT B. MARGRAVE REVOCABLE TRUST, PETITIONER V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket No. 2210-76. Filed October 10, 1978. Decedent's spouse applied for and owned an insurance policy on the life of the decedent, naming the trustee of a revocable trust created by the decedent as beneficiary. Upon decedent's death, the Jeffrey L. Stoehr, for the petitioner. TANNENWALD, Judge: Respondent determined a deficiency of $11,176.45 in the estate tax of petitioner, subject to credit for State death taxes paid. The issue is whether the gross estate of decedent should include the proceeds of an insurance policy on the life of decedent. FINDINGS OF FACT Some of the facts have been stipulated. The stipulation of facts and the exhibits attached thereto are incorporated herein by this reference. Decedent, Robert B. Margrave, died testate on April 29, 1973. At his death, he resided in Omaha, Nebr. His last will and testament, dated June 16, 1966, was admitted to probate by the County Court of Douglas County, Nebr., on June 14, 1973. Petitioner filed its Federal estate tax return with the Internal Revenue Service Center, Ogden, Utah, on January 14, 1974. The United States National Bank of Omaha (the bank), a corporation with its principal place of business in Omaha, Nebr., on the date the petition was filed herein, is the executor of decedent's estate. The bank is also the trustee of the Robert B. Margrave Revocable Trust (the trust), created by decedent on June 16, 1966. Under the terms of the trust, decedent was the income beneficiary and, during his lifetime, had the unqualified right to modify or revoke the trust. On January 29, 1970, Glenda Margrave, decedent's wife, applied for a 20-year decreasing term life insurance policy on decedent's life. Decedent, as the insured, signed the application. The policy was issued by Western Life Insurance Co. on March 12, 1970. Under the terms of the policy, the beneficiary was, in the absence of any change, "as designated in the application." The bank, as trustee of the trust, was named beneficiary in the application.1 The benficiary was never changed. During the term of the policy, i.e., the life of decedent, "all benefits, rights and privileges available or exercisable [under the policy]" were vested in decedent's wife as owner and she paid the premiums with her own funds. Upon the decedent's death, the proceeds of the insurance policy in the amount of $84,583 were paid to the bank as trustee of the trust. OPINION The question before us is whether the proceeds of insurance on the life of a decedent, which are payable to an inter vivos trust established by the decedent, are includable in the gross estate either under section 2042 or section 2041,2 where (a) the decedent's wife was at all times the owner of all the rights under the policy, and (b) the decedent retained the unqualified right, during his lifetime, to modify or revoke the trust. We turn first to the question of includability of the life insurance proceeds under section 2042, which provides in relevant part: SEC. 2042. PROCEEDS OF LIFE INSURANCE. The value of the gross estate shall include the value of all property (1) RECEIVABLE BY THE EXECUTOR.-To the extent of the amount receivable by the executor as insurance under policies on the life of the decedent. (2) Receivable BY OTHER BENEFICIARIES.-To the extent of the amount receivable by all other beneficiaries as insurance under policies on the life of the decedent with respect to which the decedent possessed at his death any of the incidents of ownership, exercisable either alone or in conjunction with any other person. Respondent argues that decedent possessed at his death 'The application further provided that if the beneficiary was not "living," the proceeds would be payable to the estate of the insured. The estate could have become the primary beneficiary of the proceeds if the decedent had, prior to his death, either revoked the trust, i.e., so that it was not "living," or amended it to make his estate the remainderman and Mrs. Margrave had not changed the beneficiary designation. The respondent makes no argument that the proceeds should be includable in decedent's gross estate on account of such contingent designation. The trustee was named as beneficiary of other insurance policies on the life of the decedent which were included in decedent's gross estate because the decedent was the owner. 2All references, unless otherwise indicated, are to the Internal Revenue Code of 1954, as amended and in effect on the date of death. In the notice of deficiency, respondent stated that sec. 2038 provided an alternative basis for his determination. On brief, respondent concedes that sec. 2038 is inapplicable to the proceeds in question. sufficient "incidents of ownership" so as to require includability under section 2042(2) and the regulations thereunder. We disagree. The regulations specify that "the term 'incidents of ownership' is not limited in its meaning to ownership of the policy in the technical legal sense," and that the focus is on "the right of the insured or his estate to the economic benefits of the policy." Sec. 20.2042-1(c)(2), Estate Tax Regs. As we see it, the key question is what power did decedent possess during his lifetime to control the disposition of the policy or of the proceeds. See United States v. Rhode Island Hospital Trust Co., 355 F.2d 7, 11 (1st Cir. 1966). Mrs. Margrave was the owner of the policy and as such "all benefits, rights, options and privileges available or exercisable [thereunder] during the lifetime of [decedent]" were vested in her. Those powers could be exercised without decedent's consent. See Morton v. United States, 457 F.2d 750, 754 (4th Cir. 1972). In this respect, the cases where the decedent's right to prevent a change in the beneficiary of a policy (either by way of a requirement of his consent or a veto power) was held to be an incident of ownership are clearly distinguishable. See Commissioner v. Karagheusian's Estate, 233 F.2d 197 (2d Cir. 1956), revg. on this issue 23 T.C. 806 (1955); Schwager v. Commissioner, 64 T.C. 781 (1975). Similarly distinguishable are those cases where the policies themselves were part of the corpus of a trust and the decedent-trustee, albeit only in his fiduciary capacity, had limited but irrevocable rights with respect to the policies or the proceeds thereof. Compare Terriberry v. United States, 517 F.2d 286 (5th Cir. 1975), Rose v. United States, 511 F.2d 259 (5th Cir. 1975), Estate of Lumpkin v. Commissioner, 474 F.2d 1092 (5th Cir. 1973), revg. 56 T.C. 815 (1971), and Estate of Fruehauf v. Commissioner, 427 F.2d 80 (6th 'Respondent does not argue that the proceeds should be included in the gross estate by application of sec. 2042(1), and there is nothing in the record to indicate that the trust was under a legal obligation "to pay taxes, debts, or other charges enforceable against the estate." Sec. 20.2042-1(b)(1), Estate Tax Regs. See also United States v. First National Bank & Trust Co. of Minneapolis, 133 F.2d 886 (8th Cir. 1943); Freedman v. United States, 382 F.2d 742, 744 n. 5 (5th Cir. 1967). "We recognize that, in this case, the decedent's power as trustee was substantively revocable in the sense that the decedent's widow, who was the grantor of the trust, could have removed him as trustee. See Terriberry v. United States, 517 F.2d 286, 289–290 (5th Cir. 1975). The critical fact, however, is that so long as he was the trustee, decedent had direct control of the policies and, thus, could be said to have incidents of ownership in the policies themselves within the meaning of the statute and applicable regulations. See sec. 2042; sec. 20.2042-1(c), Estate Tax Regs. In the instant case, the decedent had no such direct control. Cf. Rose v. United States, 511 F.2d 259, 265 n. 14 (5th Cir. 1975). Cir. 1970), affg. 50 T.C. 915 (1968), with Estate of Connelly v. United States, 551 F.2d 545 (3d Cir. 1977), and Skifter v. Commissioner, 468 F.2d 699 (2d Cir. 1972), affg. 56 T.C. 1190 (1971). Prior to decedent's death, the designation of the trustee as beneficiary created only an expectancy that it would continue to remain such until the policy became payable. See Farwell v. United States, 243 F.2d 373, 377 (7th Cir. 1957). Thus, decedent's interest in the trust as regards the policy proceeds was merely a power over an expectancy subject to the absolute whim of the policy owner, Mrs. Margrave,5 and was, by the terms of the trust itself, extinguished at the moment of his death. See Estate of Pyle v. Commissioner, 36 T.C. 1017, 1020 (1961), affd. 313 F.2d 328 (3d Cir. 1963). This simply does not constitute an incident of ownership. Respondent next contends that decedent's power to modify or revoke the trust constituted a general power of appointment with the result that the proceeds of the policy are includable in his gross estate under section 2041.6 Again, we disagree. "Insofar as the record indicates, there was no agreement or understanding between decedent and Mrs. Margrave with respect to the disposition of the policy or of proceeds, and respondent has not made any suggestion along these lines. Any attempt to infer a prearranged agreement or understanding can rest only on an automatic inference based upon the marital relationship, a course which the Court has in the past declined to pursue. Cf. Estate of Gutchess v. Commissioner, 46 T.C. 554 (1966). ❝Sec. 2041 provides in relevant part: SEC. 2041. POWERS OF APPOINTMENT. (a) IN GENERAL.-The value of the gross estate shall include the value of all property (2) POWERS CREAted after OctobER 21, 1942.-To the extent of any property with respect to which the decedent has at the time of his death a general power of appointment created after October 21, 1942, or with respect to which the decedent has at any time exercised or released such a power of appointment by a disposition which is of such nature that if it were a transfer of property owned by the decedent, such property would be includible in the decedent's gross estate under sections 2035 to 2038, inclusive. For purposes of this paragraph (2), the power of appointment shall be considered to exist on the date of the decedent's death even though the exercise of the power is subject to a precedent giving of notice or even though the exercise of the power takes effect only on the expiration of a stated period after its exercise, whether or not on or before the date of the decedent's death notice has been given or the power has been exercised. (b) DEFINITIONS.-For purposes of subsection (a)— (1) GENERAL POWER OF APPOINTMENT.—The term “general power of appointment” means a power which is exercisable in favor of the decedent, his estate, his creditors, or the creditors of his estate; except that (A) A power to consume, invade, or appropriate property for the benefit of the decedent which is limited by an ascertainable standard relating to the health, education, support, or maintenance of the decedent shall not be deemed a general power of appointment. (B) A power of appointment created on or before October 21, 1942, which is exercisable by the |