Court Opinion

ID: 4474715
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:11:06.773234+00
Date Added: 2024-06-11T15:02:34.077291
License: Public Domain

Johnson, J., dissenting: I am unable to agree with the majority’s reasoning and conclusion on the second issue. In selling the community leases to the corporation for a price equal to cost, but less than fair market value, the husband acted within his powers as manager of the community estate under Texas law. I do not understand that the conveyance was set aside or ever questioned by his wife, although it was made four years before her death in 1944, and it has not been challenged by her executor. Conceivably, it could be set aside if made in fraud of her interest, and because “petitioner has failed to prove that the transfer was not in fraud of the wife,” the majority sustain the inclusion in her estate of one-half the excess of market value over the purchase price paid. The petitioner rested under no such burden. As was said in Budd v. Commissioner (C. C. A., 3d Cir.), 43 Fed. (2d) 509, upon similar facts, petitioner proved “a sale, transfer of title, a valuable consideration, and the other positive elements upon which he relied,” and the transaction must be recognized for tax purposes “unless the sale was a pretense and a fraud.” But the Commissioner must: * * * bear the-burden of establishing this by clear proof, Bamberger v. Schoolfield, 160 U. S. 149; 16 S. Ct. 225, 40 L. Ed. 374; Lolone v. United States, 164 U. S. 255, 17 S. Ct. 74, 41 L. Ed. 425 * * *. See also Marshall v. Commissioner, 57 Fed. (2d) 633, 634, and Commissioner v. Neaves, 81 Fed. (2d) 947, 949. He has not done so here. The title to the leases was not in decedent at the time of her death, but was vested in the corporation and had been for four years. The fact that decedent might have had the right to sue to set aside the transfer for inadequate consideration, but did not do so, in my judgment does not authorize the Commissioner to include the difference in the value of the stocks as the property of decedent for estate tax purposes. Kern, Arundell, Black and LeMire, //., agree with this dissent.