Estate of Allen v. Comm'r of Internal Revenue, Docket No. 399.

• Decision Date: 15 May 1944
• Docket Number: Docket No. 399.
• Citation: 3 T.C. 844
• Parties: ESTATE OF BENJAMIN L. ALLEN, BY BENJAMIN L. ALLEN, JR. AND LOUIS S. ALLEN, EXECUTORS OF THE WILL OF SAID DECEDENT, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

3 T.C. 844

ESTATE OF BENJAMIN L. ALLEN, BY BENJAMIN L. ALLEN, JR. AND LOUIS S. ALLEN, EXECUTORS OF THE WILL OF SAID DECEDENT, PETITIONERS,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 399.

Tax Court of the United States.

Promulgated May 15, 1944.

ESTATE TAX— TRANSFER TO TAKE EFFECT IN POSSESSION OR ENJOYMENT AT OR AFTER DEATH— SECTION 811(c), I.R.C.— A transfer in trust made by the decedent in 1919 under which he reserved a possibility of reverter in case numerous named beneficiaries should all die without issue, held, not a transfer to take effect in possession or enjoyment at or after death within the meaning of section 811(c), I.R.C., following Frances Biddle Trust, 3 T.C. 832. Jacob Mertens, Jr., Esq., for the petitioners.

Scott A. Dahlquist, Esq., for the respondent.

OPINION.

MURDOCK, Judge:

An opinion in this case was promulgated on April 4, 1944. It was thereafter reconsidered and rejected by the Court, so that the present opinion now becomes the opinion of the Court in this case.

The Commissioner determined a deficiency in estate tax in the amount of $1,626.64. The error assigned is the action of the Commissioner in including in the gross estate a remainder interest in property held by a trust created by the decedent on June 6, 1919. The parties are in agreement upon all of the facts, and the stipulation filed, together with admissions in the pleadings, are adopted as the findings of fact.

The decedent, Benjamin L. Allen, died on November 5, 1939, a resident of the State of New York. His executors filed an estate tax return for his estate with the collector for the first district of New York.

The decedent, by deed of trust dated June 6, 1919, created an irrevocable trust in which he provided that the income should be paid to his daughter, now Catharine St. George Smith, for life after she became 21, and upon her death the principal and accrued income should be paid to her issue, and in default of issue to such of her brothers and sisters who might then be living, and to the issue of such of them as might have died leaving issue. It further provided:

In case said Catharine Allen and all her brothers and sisters shall die without leaving issues before the death of the Grantor, said Trustee shall pay over and deliver to the Grantor, or any such person or persons as he may direct during his life or may designate by will, all said trust estate and such income as may remain in its hands at the time of such payment.

The decedent was survived by his daughter, Catharine; Audrey St. George Smith, a child of Catharine; Evelyn Allen Pierson, Benjamin L. Allen, Jr., and Louis S. Allen, a sister and brothers of Catharine; and June Pierson and Jacqueline Pierson, children of Evelyn. Louis S. Allen, Jr., and Mary L. Allen, children of Louis S. Allen, have been born since the decedent's death.

The executors did not include any part of the corpus of the trust in the gross estate of the decedent for estate tax purposes. The respondent, in determining the deficiency, included in the gross estate $7,438.91 representing the value of the remainder interest in the trust estate after the life estate of Catharine, as a transfer to take effect in possession or enjoyment at or after the death of the decedent. Sec. 811(c), I.R.C. There is no contention that the transfers to the trust were made in contemplation of death.

This case is decided for the petitioner upon authority of Frances Biddle Trust, 3 T.C. 832, since the facts in the two cases are sufficiently similar in all important respects to require similar results.

Reviewed by the Court.

Decision will be entered under Rule 50.

SMITH, dissenting: Decision in this case is for the petitioner upon the authority of Frances Biddle Trust, 3 T.C. 832. I think that that case is distinguishable from the instant one upon its facts. There, the decedent had created a trust for the benefit of her son. By the trust instrument the decedent provided:

* * * if there are no children or the issue of deceased children of Sydney G. Biddle living at the time of his decease, then this Trust shall forthwith cease and terminate and the property made the subject of this Trust shall revert to and become a part of the Estate of Frances Biddle, and Philadelphia Trust Company shall have full and complete power and authority to transfer, assign and set over all and any of the securities and property at that time held in this Trust to the legal representatives of the said Estate of Frances Biddle.

The decedent in that case did not provide that any part of the assets of the trust should revert to her if living at the date of the death of her son and descendants. She simply provided for a complete disposition of the trust assets in case there were no descendants of her son living...