Commissioner of Internal Revenue v. McLean, 10086.
| Decision Date | 23 April 1942 |
| Docket Number | No. 10086.,10086. |
| Citation | 127 F.2d 942 |
| Parties | COMMISSIONER OF INTERNAL REVENUE v. McLEAN. McLEAN v. COMMISSIONER OF INTERNAL REVENUE. |
| Court | U.S. Court of Appeals — Fifth Circuit |
L. W. Post and J. Louis Monarch, Sp. Assts. to the Atty. Gen., Samuel O. Clark, Asst. Atty. Gen., and J. P. Wenchel, Chief Counsel, and Ralph F. Staubly, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., for Commissioner of Internal Revenue.
L. J. Benckenstein, of Beaumont, Tex., for Marrs McLean.
Before HUTCHESON, HOLMES, and McCORD, Circuit Judges.
These are appeals from a decision and opinion1 of the Board re-determining deficiencies in gift taxes for the years 1933 and 34, and awarding relief which, while giving the commissioner largely the best of it, fully satisfied neither taxpayer nor commissioner. Rejecting taxpayer's contention that, as to both years, the transfers in trust, executed simultaneously by husband and wife, were made in consideration of each other and were therefore made for adequate and full consideration in money and monies worth, the Board found that the 1933 transfers were completed gifts and taxable as such. But as to the 1934 transfers, it found that because the grantor had retained a possibility of reverter there was no completed gift and on the authority of Helvering v. Hallock, 309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368; Sanford's Estate v. Commissioner, 308 U.S. 39, 60 S.Ct. 51, 84 L.Ed. 20, it rejected the commissioner's view, that the transfers by petitioner and his wife were gifts, and his determination of deficiencies accordingly, and if the taxpayer had not already returned and paid a gift tax on these transfers taxpayer would not have gotten much the worst of the decision.
Taxpayers, however, had already returned and paid gift taxes for 1934 on a valuation of $218,904.12 and $217,751.12, respectively, and the ruling of the Board;2 that their petitions for redetermination put in issue only the increase in amount to $222,310.37 and $221,157.36 respectively, and not their right to a refund; and that their claim for refund had been filed too late, had in effect the net result of denying taxpayer relief as to the overpayment and relieving him only from paying taxes on the small increase in value the Commissioner found.
Here, taxpayer, agreeing that there was no completed gift in 1934, insists that the Board was wrong in holding that the 1933-34 transfers in trust were not for a consideration in money or monies worth, and it was wrong too in denying refund of the gift taxes it had overpaid in 1934.
The Commissioner on his part while agreeing with the Board's findings that the 1933 and 34 transfers were not for a consideration in money or monies worth, and that the taxpayers claim for refund was filed too late, insists that the Board was wrong in holding that the 1934 transfers in trust were not completed gifts.
The issues were submitted to the Board on a stipulation to which was attached the transfers in trust which are in question here. Neither in the transfers nor in the stipulation is there any statement that the transfer by petitioner was in consideration of the transfer by his wife or vice versa. Nor is there any evidence from any source that the transfers in trust were other than donative in intent and in effect. Taxpayer may not by merely pointing to the fact that; the trusts were created at the same time; were in equal amounts; and contained reciprocal provisions, claim a discharge of the burden resting on him to show that the transfers were made in consideration of each other. The Board well said: "If any agreement existed between the petitioners for the creation of the trusts and for the transfers, that fact would be best known to them and they should have proved it," and we are therefore in agreement with the ruling that the 1933 and 1934 transfers were not upon consideration but were donative, we are in complete agreement with it too as to the deficiencies for 1933. With its conclusion however that the 1934 transfers while donative in intent were because of the retained possibility of reverter incomplete as gifts and therefore without gift tax consequences, we cannot at all agree. We think it clear that the provisions of the trust instruments as correctly summarized by the Board in its opinion,3 effected as to the donor, a taxable gift to the extent and value of the estates and interests in the property then transferred, and that the reservation by grantor of the possibility of reverter had no effect upon the completeness but only upon the value of the gift. We will therefore, without...
To continue reading
Request your trial
-
Smale & Robinson, Inc. v. United States
...nothing more than that which admittedly is his substantive right, and would not work a violation of law. Commissioner of Internal Revenue v. McLean, 5 Cir., 1942, 127 F.2d 942, 944; Howbert v. Penrose, supra, 38 F.2d at page 581; see: United States v. Heth, 1806, 3 Cranch 399, 408-409, 7 U.......
-
Higgins v. Commissioner of Internal Revenue
...has been held that the grantor must pay a gift tax upon the value of the intermediate interests thereby created. Commissioner v. McLean, 5 Cir., April 23, 1942, 127 F.2d 942; Commissioner v. Marshall, 2 Cir., 1942, 125 F.2d 943. But the property is includible in the grantor's gross estate f......
-
Commissioner of Internal Revenue v. Siegel
...748, 752-753, 171 P.2d 724. In the donative cases on which the Commissioner relies, we have either (a) joint wills (Commissioner v. McLean, 5 Cir., 1942, 127 F.2d 942; McFarland v. Campbell, 5 Cir., 1954, 213 F.2d 855, both arising under Texas law), or (b) trust funds created for the benefi......
-
Smith v. Shaughnessy
...Commissioner v. Marshall, 2 Cir., 125 F.2d 943, 141 A.L.R. 445; Commissioner v. Beck's Estate, 2 Cir., 129 F.2d 243; Commissioner v. McLean, 5 Cir., 127 F.2d 942; Helvering v. Robinette, 3 Cir., 129 F.2d 832, affirmed by this Court today; Hughes v. Commissioner, 9 Cir., 104 F.2d 144; and se......