Commissioner of Internal Revenue v. Bank of California
Decision Date | 22 May 1946 |
Docket Number | No. 11088.,11088. |
Citation | 155 F.2d 1 |
Parties | COMMISSIONER OF INTERNAL REVENUE v. BANK OF CALIFORNIA. |
Court | U.S. Court of Appeals — Ninth Circuit |
Sewall Key, Acting Asst. Atty. Gen., Tax Div., and Helen R. Carloss and L. W. Post, Spc. Assts. to Atty. Gen., for petitioner.
Allen G. Wright and Edward Hale Julien, both of San Francisco, Cal., for respondent.
Before GARRECHT, DENMAN, and BONE, Circuit Judges.
The Commissioner seeks review of a decision of the Tax Court holding that in a trust created in 19241 of certain properties, the settlor reserving income to her for life, there was no possibility that the corpus would return to her during her lifetime. Upon this holding the Tax Court decided that the corpus of the trust estate was not subject to the estate tax of Section 811(c) of the Revenue Code, 26 U.S.C.A.Int.Rev.Code, § 811(c), since the creation of the trust was not a transfer to take effect at death.
The trust provided that upon the death of the settlor the trust fund was to be divided between her son Richard and her daughter Lee in such shares and proportions that the son should receive one moiety or equal half part of the trust fund less seven thousand five hundred dollars and that the daughter should receive one moiety or equal half part of the trust fund and in addition the seven thousand five hundred dollars. It was also provided that should either of the children die in the lifetime of the settlor, leaving issue at her death such issue should take the share which their parent would have taken. It was further provided that should either of the children die in the settlor's lifetime without issue then on the settlor's death the survivor should take the whole of the trust fund.
On June 26, 1924, Richard Girvin, decedent's son, had three children, and Lee Girvin Tevis, her daughter, had two children; both children, all five grandchildren, and a great grandchild born subsequently were all alive at the date of the hearing of the Tax Court.
The Commissioner included the value of the property of the trust created by the decedent in her gross estate and upon review the Tax Court held such action erroneous, stating
It is apparent, however, that in the event all the beneficiaries mentioned were to predecease the settlor, the trust corpus would revert to her. The Tax Court's decision does not consider Sec. 81.17 of Treasury Regulations 105, providing
* * *"(Emphasis supplied.)
Since the Tax Court's decision, the Supreme Court has held that where the settlor, as here, has created a life interest in the income with the remainder in the settlor's children, the more or less...
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