Petition for Review of Order of United States Board of Tax Appeals.
Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.
This is an appeal from a determination of the Board of Tax Appeals in regard to an asserted deficiency in estate taxes. The facts are quite free of dispute.
Mrs. Nettie Fowler McCormick died July 5, 1923. Respondents herein are the executors of her estate. On July 27, 1918, decedent executed a trust agreement conveying certain securities to the United States Trust Company of New York as Trustee, under a trust agreement, the material portions of which are herewith set forth.*fn1
The Board found that the transfer was not made in contemplation of death, nor intended to take effect in possession or enjoyment at or after death; that it was not testamentary in character and bore no relation to the privilege taxed, and that the value of the property in the trust at decedent's death should not be included in decedent's gross estate for purposes of the federal estate tax.
The pertinent provisions of the Revenue Act of 1921 (42 Stat. 278) read:
"Sec. 402. That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated * * *
"(c) To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money's worth."
Asserted reasons for including the property covered by this trust within the statute are:
(1) The conveyance in trust was revocable.
(2) Mrs. McCormick's retention of the life use of the estate transferred negatived any alleged intent to transfer the use and enjoyment of the economic benfits before her death.
(3) The transfer of the corpus of the trust was not complete until Mrs. McCormick's death because of the provision in the trust agreement which necessitated the transfer of the trust property to the decedent in case she survived her three children.
The statute called for the imposition of a tax on the corpus of a trust executed in contemplation of death or which was "intended to take effect in possession or enjoyment at or after" the ...