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Home > Journals > Michigan Law Review > MLR > Volume 45 > Issue 4 (1947)

 

Abstract

On December 19, 1930 the petitioner created two trusts, placing in the first five $100,000 life insurance policies on the life of her husband, and in the second, securities, the income from which was to pay premiums on the policies, excess if any to be paid to the petitioner; after the death of her husband the whole of the income from the securities was to be paid to her for life. On death of the husband the proceeds of the life insurance policies were to be used to provide life estates for four named beneficiaries followed by remainders over; and on the death of the petitioner the securities in the second trust were to be added to the proceeds of the policies, thus augmenting the trust estates. The petitioner reserves the exclusive right to revoke the trusts during the lifetime of her husband, and after his death the right to repossess herself of any amount up to 50 per cent of the corpus of the securities trust. The husband of the petitioner died . March 10, 1939, but she reported no taxable gifts for that year. The commissioner assessed a deficiency on $503,314.15, the face value of the policies plus post mortem dividends. Petitioner appealed the assessment to the Tax Court. In that court she, first contended that she had made no gift in 1939, but the court overruled her on the basis of Burnet v. Guggenheim. She then contended "that the value of the gift is the value of property which passes from the donor and not the value of the property receivable by the donee." The Tax Court, however, found the value of the gift to be $503,314.15. Petitioner appealed, disputing only the finding on the issue of valuation. Held, affirmed. Goodman v. Commissioner of Internal Revenue, (C.C.A. 2d, 1946) 156 F. (2d) 218.

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