Opinion ID: 583990
Heading Depth: 1
Heading Rank: 2

Heading: The estate tax

Text: 13 There is equally little dispute with respect to the applicable law on estate tax. At the time of Elijah Muhammad's death, 26 U.S.C. § 2035 provided that any transfer made within three years of death, that was not fully compensated in money or money's worth, was presumed to be made in contemplation of death. The facts discussed above showed that there had not been full compensation for the transfers made within three years of Elijah Muhammad's death. Therefore, the presumption applies and the estate has the burden of showing that the decedent had a life-affirming purpose for making the transfers. Estate of Hutchinson v. Commissioner, 765 F.2d 665, 670 (7th Cir.1985); United States v. Wells, 283 U.S. 102, 117, 51 S.Ct. 446, 451, 75 L.Ed. 867 (1931). Whether a transfer was made in contemplation of death is a question of fact, and we thus review the Tax Court's finding under the clearly erroneous standard. Hutchinson, 765 F.2d at 670. 14 The estate suggests two possible life-affirming purposes: to compensate for services and to increase security. Compensation for past services was found not to be the motive when the transfers were found to be gifts. However, even if this were found to be the purpose, it is not life-affirming, since people often leave testamentary gifts to people who have served them in life. Finally, there was no evidence or even argument to explain why it increased Elijah Muhammad's security to transfer title to his four relatives/security guards, when they were already living in the same homes rent free. If anything, transferring title meant that they could sell the houses and decrease security, whereas when Elijah Muhammad owned the houses, he could have evicted them if they stopped providing security for him. The findings of the Tax Court are not clearly erroneous; they are fully supported by the evidence. 15 AFFIRMED.