Commissioner of Int. Rev. v. Bridgeport City Trust Co.
| Decision Date | 15 December 1941 |
| Docket Number | No. 8.,8. |
| Citation | 124 F.2d 48 |
| Parties | COMMISSIONER OF INTERNAL REVENUE v. BRIDGEPORT CITY TRUST CO. et al. |
| Court | U.S. Court of Appeals — Second Circuit |
Samuel O. Clark, Jr., Asst. Atty. Gen., and Sewall Key and Lee A. Jackson, Sp. Assts. to Atty. Gen., for petitioner, Commissioner of Internal Revenue.
Valentine B. Havens, of New York City, for respondents, Bridgeport Trust Co. and Arthur E. Alling, executors.
Before SWAN, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
On January 10, 1929, the decedent, Noyes E. Alling, transferred in trust certain securities of a fair market value as of the date of his death on June 19, 1934, of $138,735.12 for purposes named in the trust instrument. The trust was not created in contemplation of death and under the law of Connecticut, where it took effect, did not violate the rule against perpetuities. Its provisions so far as pertinent to the present case were as follows:
The fair market value, as of the date of decedent's death on June 19, 1934, of the life estates granted to the decedent's three daughters Edna Alling Doherty, Madeline Alling Mason and Ruth Alling Barber, was $88,225. The fair market value as of that date of the life estates of his three daughters and his three grandchildren, Noyes Alling Jaycox, Edna Alling Mason and Paul Alling Barber, was $120,949.28.
The Commissioner determined a deficiency against the estate of the decedent based upon the inclusion in the gross estate for estate tax purposes of the full value or the corpus of the trust. The executors sought a review by the Board of Tax Appeals on the ground that no part of the property transferred should be included. The Commissioner contended before the Board that the entire value of the corpus should be included but urged, in the alternative, that there should be included the collective fair market value, as of the date of decedent's death, of the interests of the six income beneficiaries (the decedent's three daughters and three grandchildren) and, if not, then there should be included the collective fair market value of the interest of the decedent's three daughters. The Board reviewed both the main and alternative contentions and held that no part of the property transferred in trust should be included in the decedent's gross estate.
The Commissioner appeals from the decision of the Board and now claims error in so far as the Board failed to sustain his first alternative contention for inclusion of the value of the six income beneficiaries' interest in the trust. The fair market value of these six interests was stipulated to be $120,949.28. We are of the opinion that this contention of the Commissioner should prevail.
The Commissioner chiefly relies on Section 302(d) of the Revenue Act of 1926, 26 U.S.C.A. Int.Rev.Acts, page 228, requiring in respect to the property of a decedent which is to be taxed that: "The value of the gross estate * * *...
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