Court Opinion

ID: 4481333
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:50.360983+00
Date Added: 2024-06-11T13:25:10.877714
License: Public Domain

TxetjeNS, /., dissenting: I respectfully dissent on the issue of the includability of a portion of the life insurance proceeds in decedent’s estate. As I see it the problem is really not whether there was a “transfer” in contemplation of death. The taxpayer concedes there was such a transfer, but says it was of money only, i.e., the amount of the premiums paid by decedent. The real question is how to value that transfer. I think it should be valued at what the amounts paid as premiums purchased in the way of insurance protection and not at what was actually paid for that protection. In essence this is what the Commissioner argues. He says that the transfer was of more than the net cash outlay made to pay the premiums. His argument goes that decedent had participated in purchasing life insurance protection on her own life for the benefit of her children by paying part of the premiums in contemplation of death which then ripened into insurance proceeds by reason of her death, and that the date on which the transferred property is to be valued is her death date and not when the premiums were in fact paid. Accordingly, the Commissioner would include in decedent’s estate, not all, but the proportionate part of the proceeds which decedent’s premium payments had purchased. This method of valuation, though in a different factual 'situation, was approved in Liebmann v. Hassett, 148 F. 2d 247. And see discussion in Scott v. Commissioner, 374 F. 2d 154, reversing 43 T.C. 920. The action taken by the Commissioner in including the insurance proceeds in the mother’s estate is supported by the following excerpt from Chase Nat. Bank v. United States, 278 U.S. 327, 337: Obviously, the word “transfer” in the statute, or. the privilege which may constitutionally be taxed, cannot be taken in such a restricted sense as to refer only to the passing of particular items of property directly from the decedent to the transferee. It must, we think, at least include the transfer of property procured through expenditures by the decedent with the purpose, effected at bis death, of having it pass to another. Sec. 402(c) taxes transfers made in contemplation of death. It would not, we assume, be seriously argued that its provisions could be evaded by the purchase by a decedent from a third person of property, a savings bank book for example, and its delivery by the seller directly to the intended beneficiary on the purchaser’s death, or that the measure of the taw would he the cost and not the value or proceeds at the time of death. [Emphasis supplied.] In other words, the transfer here is not to be measured or valued by the cash premiums paid, but by the insurance purchased with those premiums. The cash itself was never transferred as such to the children. It purchased insurance which is what she intended for her children to receive on her death and which they did receive. I would sustain the Commissioner. Eaum, Dawson-, and Simpson, JJ., agree with this dissent.