Camp v. Comm'r of Internal Revenue
| Decision Date | 06 October 1950 |
| Docket Number | Docket No. 13964. |
| Citation | 15 T.C. 412 |
| Parties | FREDERIC E. CAMP, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
1. GIFT TAX— TRANSFER IN TRUST— Where a transfer in trust in 1932 was made with a reserved power in the grantor to revoke in whole or in part in conjunction with a contingent remainderman who agreed to comply with grantor's wishes as to subsequent changes, held not a completed gift of the entire trust property.
2. Where by amendment on December 11, 1937, the grantor's wife, who as the present income beneficiary had a substantial adverse interest, was substituted as the only person in conjunction with whom petitioner could thereafter revoke the trust, held, a completed gift of the entire trust property. Held, further, that payments of trust income to the wife prior to such amendment constituted annual gifts in the years such payments were made. Marvin Lyons, Esq., Sinclair Hatch, Esq., and Charles I. Pierce, Esq., for the petitioner.
Paul P. Lipton, Esq., for the respondent.
Respondent determined gift tax deficiencies in the amounts of $22,867.07 and $6,404.36 for the calendar years 1937 and 1943, respectively.
Petitioner claims overpayments in the amounts of $22,800 gift tax plus $12,996 interest thereon for 1937 and $6,400, gift tax plus $1,3144 interest thereon for 1943 which amounts were paid on September 15, 1947, four months after the filing of the petition herein, solely to stop the running of interest. Petitioner also filed waivers on that date.
Respondent affirmatively alleges errors in his determination and by reason thereof claims increased gift tax deficiencies in the total amounts of $78,537.08 for 1937 and $8,872.85 for 1943.
The primary issues involved herein are (1) whether by a transfer in trust on February 1, 1932, with a reserved power of revocation in conjunction with certain contingent beneficiaries, petitioner made a completed gift of the entire trust corpus on that date (as alleged by petitioner), and if not, (2) whether by an amendment to the trust on December 11, 1937, whereby petitioner's reserved power of revocation was in conjunction only with the present life beneficiary, petitioner made a completed gift of the entire trust corpus (as affirmatively alleged by respondent). An alternative issue is whether by the amendment on December 11, 1937, petitioner made a completed gift only of an interest in the income of the trust (as determined by respondent in the deficiency notice).
The various corollary issues raised by the parties involving, inter alia, the value of the gift, if any, in 1937, the unused portion of the specific exemption; the amount of trust income which constituted annual gifts, if any, to the life beneficiary in the taxable years; and the amounts of net gifts for years preceding the taxable years will be more fully set forth in the opinion to the extent that becomes necessary in the light of our determination on the primary issues. The petitioner's assignment of error alleging unconstitutionality of the asserted gift tax deficiency for 1937 is deemed to have been abandoned since it was not prosecuted by petitioner either at the hearing or on brief.
The proceeding has been submitted upon the pleadings, testimony, and a stipulation of facts with appended exhibits. The facts, as stipulated are so found and included as part of our findings of fact.
Petitioner is an individual residing at East Blue Hill, Maine. He filed gift tax returns for the periods here involved with the collector of internal revenue for the district of Maine.
Petitioner is the posthumous son of Frederic E. Camp who died testate in December 1903. Under that decedent's will one-half of his estate was distributed to petitioner in 1928 in the amount of approximately $1,000,000, and the income from the other half was payable to petitioner's mother, Johanna Maria Camp (hereinafter referred to as Johanna), who was born November 15, 1868. in 1908 petitioner's mother Johanna married Horace Bullock and of that marriage was born on February 24, 1909, petitioner's half brother, Horace Ridgely Bullock (hereinafter referred to as Ridgley). Johnanna's second husband, Horace Bullock, died in 1926, leaving his estate of several hundred thousand dollars to his widow.
On October 30, 1931, petitioner married Alida Donnell Milliken (hereinafter referred to as Alida), who was born on November 3, 1908. No children have been born of that marriage, but petitioner and his wife have adopted four children as follows:
+---------------------------------------------------+
¦ ¦ ¦Date of ¦
+---------------------+---------------+-------------¦
¦Name ¦Date of birth ¦Adoption ¦
+---------------------+---------------+-------------¦
¦Nicholas Ridgely Camp¦June 23, 1936 ¦Jan. 19, 1937¦
+---------------------+---------------+-------------¦
¦Susan Milliken Camp ¦June 22, 1937 ¦Jan. 2, 1938 ¦
+---------------------+---------------+-------------¦
¦Donnell McKesson Camp¦July 11, 1940 ¦Jan. 31, 1941¦
+---------------------+---------------+-------------¦
¦Catherine Floyd Camp ¦June 14, 1942 ¦Oct. 3, 1942 ¦
+---------------------------------------------------+
On February 24, 1930, petitioner transferred securities having a value of approximately $100,000 to trustees to pay the income to Ridgley for life and the principal to his issue or if none, then to petitioner or his issue. Petitioner reserved to himself alone the power to revoke, change, modify or annual that trust.
On February 1, 1932, petitioner executed a trust indenture with the Bankers Trust Co. of New York City as trustee and transferred to the latter, as corpus of the trust, property having a fair market value of $416,131.72 on that date. Thereafter petitioner made no additions to the corpus of the trust. The petitioner's purpose in creating the trust was to provide an income for his wife, Alida, and the remainder to his surviving issue with retention of command and control over the trust property to enable him to recapture such property for his own benefit or further disposition to others if for any reason Alida ceased to be his wife during his lifetime. Consistent with that purpose and at the time of the execution of the trust indenture petitioner and his half brother, Ridgely (in conjunction with whom he could revoke or modify the trust as hereinafter set out), had a mutual understanding that Ridgely would at any time fully comply with the desires of petitioner with respect to any subsequent changes he might wish to make as to the provisions of the trust.
On August 30, 1934, petitioner, in conjunction with Ridgely, exercised his power to alter and amend by inserting a provision that Alida should receive the income from the trust only as long as she continued during his lifetime to remain his wife and to reside with him.
On December 11, 1937, petitioner, in conjunction with Ridgely, exercised the power to alter and amend to provide (1) that the term ‘issue of the Donor‘ should include petitioner's adopted son Nicholas Ridgely Camp, and such other children as the donor and his wife might legally adopt and (2) the above-quoted power to revoke alter or modify was eliminated and substituted in lieu thereof was a provision containing the same words except that the name of Alida Donnell Milliken Camp was substituted for the names of H. Ridgely Bullock and Johnanna R. Bullock.
On June 6, 1946, petitioner, in conjunction with Alida, exercised the power to modify by striking the above-mentioned power of revocation in conjunction with his wife, Alida, and inserting in lieu thereof the following:
TENTH: This indenture shall not be subject to revocation, alteration or modification.
Pursuant to the provisions of the trust created by petitioner February 1, 1932, the trustee paid to Alida the following amounts from the net income of the trust:
+-------------------------------------+
¦1932 (subsequent to June 6)¦$9,554.80¦
+---------------------------+---------¦
¦1933 ¦18,964.32¦...To continue reading
Request your trial
-
Provident Tradesmens Bank & Trust Co. v. Comm'r of Internal Revenue (In re Estate of Holtz), Docket No. 88457.
...with someone else to modify, alter, or revoke the trust, as in Camp v. Commissioner, 195 F.2d 999 (C.A. 1, 1952), reversing in part 15 T.C. 412 (1950). Leon reserved no rights in himself to change the disposition of the income or principal of the trust as fixed in the trust agreement. Howev......
-
Goldstein v. Comm'r of Internal Revenue, Docket Nos. 80834-80837
...the beneficiaries. We do not think that theory would apply here. In Camp v. Commissioner, 195 F.2d 999 (C.A. 1, 1952) reversing in part 15 T.C. 412 (1950), Judge Magruder analyzed the principle recognized by the Supreme Court in Burnet v. Guggenheim, 288 U.S. 280 (1933), as being that the g......