Case Name: Estate of Charles Nathan, Rose N. Straus, Executrix, Petitioner, v. Commissioner of Internal Revenue, Respondent
Court: United States Tax Court
Jurisdiction: United States
Decision Date: 1946-03-29
Citations: 6 T.C. 604
Docket Number: Docket No. 7002
Parties: Estate of Charles Nathan, Rose N. Straus, Executrix, Petitioner, v. Commissioner of Internal Revenue, Respondent.
Judges: TuRner and Opper, JJ., agree with this dissent.
Reporter: Reports of the Tax Court of the United States
Volume: 6
Pages: 604–609

Head Matter:
Estate of Charles Nathan, Rose N. Straus, Executrix, Petitioner, v. Commissioner of Internal Revenue, Respondent.
Docket No. 7002.
Promulgated March 29, 1946.
Myron E. Wisch, Esq., for the petitioner.
Carroll Walker, Esq., for the respondent.

Opinion:
OPINION.
Keen, Judge-.
In his notice of deficiency respondent determined that the transfer of property by decedent to the trust created by him in 1941 was "a transfer in contemplation of death." Considerable testimony was adduced at the hearing herein by petitioner to prove that respondent erred in this determination. In his brief respondent makes no contention that the transfer was made in contemplation of death, and we therefore assume his intention to concede this issue. However, lest there should be any doubt on this question, we have found, as a fact, that the transfer was not one made in contemplation of death. This finding is supported by the clear and uncontradicted testimony contained in the record.
The contention which' respondent does make as set out in his brief, is that where the decedent made a transfer of property to be held in trust for the benefit of his sister during her natural life, reserving a life estate for himself after the death of the original beneficiary with a remainder over to his nieces and nephews, such a transfer was for a period not ascertainable without reference to his death, or for a period which does not, in fact, end before his death, and the value of the trust estate, less the value of the life estate of the first beneficiary, is includible in the decedent's gross estate.
Respondent relies upon section 811 (c) of the Internal Revenue Code, the pertinent provisions of which are as follows:
(c) Transfers in Contemplation of, or Taking Effect at Death. — To the extent of any interest therein of which he [the decedent] has at any time made a transfer, by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death, or for any period which does not in fact end before his death (1) the possession or enjoyment of the property
A case which is squarely in point on the problem posed herein is Estate of Charles Curie, 4 T. C. 1175, in which we decided adversely to respondent's contentions.
Respondent seeks to distinguish the instant proceeding from the Curie case by pointing out the fact that at all times here pertinent Regulations 80, article 18, and Regulations 105, section 81.18, were in effect, whereas at the times pertinent in the Curie case there was in effect E. T. 5, C. B. XIII-2, p. 369, which was an administrative ruling to the contrary.
In the instant case we have the same question which was decided in the Curie case and the same statutory provision under which it must be resolved. The only difference is that we have a change in the respondent's administrative rulings. In the Curie case we specifically approved the administrative construction of the statute contained in the respondent's first ruling, and, unmistakably, disapproved the construction contained in the respondent's later regulations. This disapproval was not limited to its retroactive application to the trust there involved, but was to the effect that it was not supported by the. legislative history of the section of the statute there and here involved, See Helvering v. Reynolds Tobacco Co., 306 U. S. 110. We reached the conclusion in the Curie case (p. 1184) that "since the reservation of the possibility of coming into a life estate does not amount to the retained estate contemplated by the statute, we are of the opinion that the petitioner should prevail." (Emphasis supplied.)
Regulations 80, article 18, and Regulations 105, section 81.18, do not represent an administrative construction of the statute which has been uniform or of long standing, nor has there been a reenactment of the statute subsequent to the change in the regulations which might be construed as a legislative approval of such change. The inclusion of the statutory provision in question in the Internal Revenue Code is not to be considered as a reenactment. See Helvering v. Hallock, 309 U. S. 106. Therefore, we consider our action correct in the Curie case in deciding upon our construction of the statute in question, without giving great weight to the later administrative construction. It is true that in that case a retroactive application of the new and changed regulations was involved, but, as we have pointed out, our decision was not based upon the retroactivity of the regulation, but upon our conclusion that the regulation did not correctly construe the statute. We see no reason to reach a different conclusion in the instant case.
The only case cited and relied upon by respondent as authority for his later construction of the statute, which was not available to us at the time of our decision of the Curie case, is Goldstone v. United States, 325 U. S. 687. That case is clearly distinguishable on its facts.
On the authority of Estate of Charles Curie, supra, we decide this issue in favor of petitioner.
Reviewed by the Court.
Decision will he entered under Rule 50.
These administrative rulings are set out and discussed fully in Estate of Charles Curie,