Court Opinion

ID: 6897198
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:51:04.234339+00
Date Added: 2024-06-11T16:06:02.561848
License: Public Domain

O’CONNELL, Circuit Judge
(dissenting).
In my opinion, a finding of fact essential to the upholding of the deficiency assessment has not been made by the Tax Court. In accordance with Commissioner v. Scottish American Co., 1944, 323 U.S. 119, 123, 124, 65 S.Ct. 169, 89 L.Ed. 113, it was the primary function of the Tax Court to choose from among conflicting factual inferences, and thereby determine whether or not, on July 2, 1930, an agreement to make reciprocal transfers of property existed between decedent and her husband. The language used in the Opinion of the Tax Court in the instant case does not satisfy me that the Tax Court made that finding.
I am constrained, however, to disagree with the majority disposition of this case. Had the finding been made, I am not prepared to say that there would be no “substantial basis” for that finding, in view of the following uncontroverted facts: (1) the close relationship and advanced age of the settlors of the trusts involved, (2) the depletion of the personal resources of decedent’s husband, consequent upon the creation of the 1930 trust, (3) the similarity of the trusts, for which the same attorneys were used, and (4) the similarity of amount, although the securities forming the corpus of the trusts were not the same. As I interpret the Scottish American case, supra, this court has power to make its own factual inferences and conclusions, on appeals from Tax Court decisions, only when there is lacking a substantial basis for inferences made by the Tax Court. Accordingly, I believe that the Tax Court decision should be reversed and the cause remanded to the Tax Court for the purpose of making a specific finding as to whether an agreement did exist on July 2, 1930.
This course of action would appear to have additional value in the case sub judice. As is stated in the majority opinion, the deficiency assessment was originally based upon Section 811(a) of the Internal Revenue Code. The conclusion that the trusts created fell within the doctrine of Lehman v. Commissioner, 2 Cir., 1940, 109 F.2d 99, certiorari denied, 1940, 310 U.S. 637, 60 S.Ct. 1080, 84 L.Ed. 1406, rendered it unnecessary for the majority of the Tax Court to determine whether the bundle of rights granted decedent by the 1930 trust was such as to require the application of the principles exemplified by Helvering v. Clifford, 1940, 309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788. Revérsal of the decision of the Tax Court without remanding of the cause, it seems to me, permits petitioner to avoid liability without its first being determined whether another alleged basis for the deficiency assessment is valid.
For the reasons stated, I believe that the decision of the Tax Court should be reversed and the cause remanded for further appropriate proceedings.