Hardenbergh v. Comm'r of Internal Revenue

• Decision Date: 06 August 1951
• Docket Number: Docket Nos. 25614,25615.
• Citation: 17 T.C. 166
• Parties: IANTHE B. HARDENBERGH, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.GABRIELLE HARDENBERGH, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

17 T.C. 166

IANTHE B. HARDENBERGH, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.GABRIELLE HARDENBERGH, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket Nos. 25614

25615.

Tax Court of the United States.

Promulgated August 6, 1951.

GIFT TAX.— Held, petitioners, as heirs of decedent, a resident of Minnesota, who died intestate, had no power to prevent by renunciation passage of title to themselves to their shares in his estate immediately upon his death, and an instrument which was executed by them after his death, labeled a ‘renunciation‘ effected a transfer of such title to decedent's other heir, subject to gift tax under section 1000, Internal Revenue Code. Robert F. Leach, Esq., and Leland W. Scott, Esq., for the petitioners.

Thos. A. Steele, Jr., Esq., for the respondent.

In these consolidated proceedings, respondent determined deficiencies in petitioners' gift tax for the calendar year 1944 as follows:

+---------------------------------------------------------+
                ¦Docket No.  ¦Petitioner           ¦Amount of deficiency  ¦
                +------------+---------------------+----------------------¦
                ¦25614       ¦Ianthe B. Hardenbergh¦$12,885.61            ¦
                +------------+---------------------+----------------------¦
                ¦25615       ¦Gabrielle Hardenbergh¦$11,325.00            ¦
                +---------------------------------------------------------+
                

The question for decision is whether the petitioners made a taxable gift of $83,000 each within the meaning of the gift tax provision of the Internal Revenue Code by their renunciation or relinquishment of their respective interests in the estate of George S. Hardenbergh, deceased.

FINDINGS OF FACT.

From facts stipulated and the evidence we find:

Petitioners Ianthe B. Hardenbergh and Gabrielle Hardenbergh are mother and daughter, respectively, and reside in White Bear Lake, Minnesota, and each filed a gift tax return with the collector of internal revenue at St. Paul, Minnesota, for the year 1944, showing no gift tax due by them. Gabrielle became 21 years of age on August 23, 1944.

George S. Hardenbergh (hereinafter called decedent), husband of Ianthe and father of Gabrielle, died intestate in St. Paul, Minnesota, on April 2, 1944, leaving petitioners and a son, George Adams Hardenbergh (hereinafter called George), aged 26, by a former marriage, as his sole surviving heirs at law. Ianthe was the stepmother of George and Gabrielle was his half sister. George was 4 years old when his father married Ianthe, who reared him, and a devoted family relationship existed between all of them.

During 1943, the year prior to his death, decedent had several conversations with petitioners in which he proposed leaving practically his entire estate to George in order to equalize somewhat the financial worth of his two children. ¹ This arrangement was agreeable to petitioners and they assented thereto. Prior to March 31, 1944, decedent and his attorney had conferred on several occasions with regard to preparing decedent's will. On March 31, 1944, two days before his death, decedent gave his attorney final instructions as to the terms of his will. On Saturday, April 1st, the attorney brought the typewritten document to him to be executed, but his condition had grown worse and he was too ill on that date to execute the will. It was decided to delay its execution until Monday, April 3rd, but he died on April 2nd, before the will could be executed. The unexecuted will had a bequest of $2,000 to Gabrielle and a devise of decedent's home to Ianthe and left the residue to George.

On April 12, 1944, George filed in the Probate Court of Washington County, Minnesota, a petitioner for general administration of decedent's estate, and requested that Ianthe be appointed administratrix, but she declined to serve, whereupon the court appointed Matt W. Miller administrator, who qualified and served as such.

On September 20, 1944, petitioners filed in the probate court, where the estate of decedent was then being administered, ‘a renunciation or relinquishment of their respective interests in said estate,‘ the body of which instrument reads:

We, Ianthe B. Hardenbergh and Gabrielle Hardenbergh, widow and daughter respectively of the above named George S. Hardenbergh, deceased, do hereby, coincidentally and jointly, definitely and finally renounce and reject, as of April 2, 1944, the date of death of said George S. Hardenbergh, any and all interest which we may then have had or may now have in and to the estate of said George S. Hardenbergh. We do hereby release and forever discharge the said estate and every part thereof from any claim or interest which may heretofore have accrued or might at any time hereafter accrue to us or either of us by reason of the laws of succession of the State of Minnesota; and we further agree that we will not at any time hereafter assert any claim or interest of any kind, nature or description in or to said estate or any portion thereof.

We further respectfully state to the above named Court and to anyone interested in said estate that our purpose in renouncing any and all interest we may have in said estate is as follows: just prior to the death of George S. Hardenbergh, he, knowing that I, Ianthe B. Hardenbergh, had a large independent estate, and that I, Gabrielle Hardenbergh, had been amply provided for by trusts created by my grandfather, R. . . . Bronson, and by my mother, Ianthe B. Hardenbergh, with our full knowledge and consent, had prepared a Last Will and Testament in which he devised and bequeathed substantially all of his estate to certain named trustees in trust for the sole benefit of his son, George Adams Hardenbergh. The provisions of said Last Will and Testament were agreeable to us. However, George S. Hardenbergh died before execution of said Last Will and Testament could be completed. We renounce all of interest in said estate so that the intention of the said George S. Hardenbergh may be carried out without delay or the intervention of other interests.

Other than executing the above instrument, petitioners signed no other document of any kind pertaining to the estate or the property belonging thereto, and had no part in the administration of the estate, and received no funds or property therefrom, except that Ianthe did purchase from the administrator of the estate the homestead of decedent and herself.

The probate court issued the final decree of distribution on July 24, 1945, in part as follows:

* * * that * * * Ianthe B. Hardenbergh and Gabrielle Hardenbergh have filed with this court a renunciation of their interest in the above named estate, and that George Adams Hardenbergh is the person entitled to the residue of said estate of said decedent.

NOW, THEREFORE, on motion of Matt W. Miller, representative of said estate, and by virtue of the power and authority vested in this court by law, IT IS HEREBY ORDERED, ADJUDGED AND DECREED and the said court does hereby ORDER, ADJUDGE AND DECREE, that all and singular the above described property and all other estate of said decedent in the State of Minnesota, subject to any lawful...