Robinette v. Commissioner of Internal Revenue, Docket No. 103009

• Decision Date: 10 June 1941
• Docket Number: Docket No. 103009,103010.
• Citation: 44 BTA 701
• Parties: META BIDDLE ROBINETTE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. ELISE BIDDLE PAUMGARTEN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

44 B.T.A. 701 (1941)

META BIDDLE ROBINETTE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

ELISE BIDDLE PAUMGARTEN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket Nos. 103009, 103010.

Board of Tax Appeals.

Promulgated June 10, 1941.

Henry A. Mulcahy, Esq., for the petitioners.

Eugene G. Smith, Esq., for the respondent.

The Commissioner determined gift tax deficiencies for 1936 of $3,155.57 as to Meta Biddle Robinette, and $25,044.94 as to Elise Biddle Paumgarten, by taxing certain remainder interests as gifts.

FINDINGS OF FACT.

Elise Biddle Paumgarten was, before her marriage, Elise Biddle Robinson. She is the daughter of Meta Biddle Robinette and the stepdaughter of Edward B. Robinette, all residents of Philadelphia, Pennsylvania. On January 6, 1936, when she was soon to be married, she and her mother and stepfather had a conference with the family attorney, looking to an assurance that her fortune would be kept within the family. It was agreed that if she would create a trust reserving life estates first in herself and then in her mother and stepfather, remainder over to her issue, her mother would make a similar trust and her stepfather would include similar provisions in his will. This was a concerted family arrangement for keeping their respective fortunes in the line of descent should there be issue of the daughter; or, should there be no issue, passing the family fortune under a power of appointment to be exercised by will by the last survivor of the three. Pursuant to this plan, the trust indentures were executed on January 14, 1936, by the mother and daughter in the presence of all three. The stepfather's will had been executed shortly before.

Petitioner Meta Biddle Robinette, who was then fifty-five years old, executed an irrevocable trust indenture, the Pennsylvania Co. for Insurances on Lives & Granting Annuities, Edward B. Robinette, and George Earle Robinette being the trustees. To the trustees she transferred property having a market value of $193,546. The trustees were to pay the entire income to the grantor during her life, and on her death to her husband monthly, and on his death, to her daughter monthly for life. Upon the termination of the life estates, the trustees were to distribute the corpus to the issue of the daughter per stirpes, upon their reaching, respectively, the age of twenty-one, and, in default of such issue, then to such persons, in such proportions, and for such estates as the survivor of the three should by will appoint.

At the same time, this petitioner executed a revocable trust indenture the provisions of which were the same as those of the irrevocable trust, and she transferred to the trustees certain securities.

Petitioner Elise Biddle Robinson, who was then 30 years old, executed an irrevocable trust indenture, the Girard Trust Co., Edward B. Robinette, and George Earle Robinette being the trustees. To the trustees she transferred property having a market value of $680,928.68. The trustees were to pay the entire income from the trust to the grantor during her life, and on her death to her mother and her stepfather, share and share alike, and on the death of either, to the survivor. Upon termination of the life estates, the trustees were to distribute the corpus to the issue of the grantor per stirpes, upon their reaching, respectively, the age of twenty-one, and in default of such issue, then to such persons, and in such proportions, and for such estates as the survivor of the three should by will appoint. Elise Biddle Robinson was married in April of 1936 and now has issue.

At the same time, this petitioner executed an irrevocable trust indenture, the Pennsylvania Co. for Insurances on Lives & Granting Annuities, Edward B. Robinette, and George Earle Robinette being the trustees. The terms were identical with the Girard trust aforementioned, except as to the amount and classification of the properties. To the trustees she transferred property having a market value of $216,709.16. At the same time, she executed a revocable trust indenture to the same trustees, with the same provisions as the irrevocable trust, and transferred certain securities to the trustees.

The petitioners' gift tax returns for the calendar year 1936, filed on March 15, 1937,...