Court Opinion

ID: 4481418
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:53.17612+00
Date Added: 2024-06-11T15:03:39.858958
License: Public Domain

TaNNENWAld, /., concurring: There are two essentials of section 2035 which must be met before the “contemplation of death” element comes into play. That section requires (1) the decedent must have had an interest in property and (2) that he must have made a transfer of that interest. Here the consideration for the post-mortem payments was the future services of the decedent. Such consideration has been deemed to constitute property in which the decedent had an interest and which he transferred for purposes of other estate tax provisions having a requirement comparable to that contained in section 2035. E.g., Rosenberg v. United States, 309 F. 2d 724, 727 (C.A. 7, 1962); Worthen v. United States, 192 F. Supp. 727, 734 (D. Mass. 1961); cf. Estate of William L. Nevin, 11 T.C. 59, 65 (1948).1 Moreover, because of the intangible character of such consideration, its value can be deemed equal to the commuted value of the payments at the date of death. See Estate of William S. Miller, 14 T.C. 657, 662 (1950). Where the consideration furnished by the decedent is tangible in character, a different standard for measuring what property has been transferred may be required. Cf. Estate of Inez G. Coleman, 52 T.C. 921 (1969), on appeal (C.A. 5, Jan. 5 and 30, 1970). But, as I see it, it is not necessary to rest our decision on the equating of the consideration of decedent’s services with an interest in property which was transferred. It is entirely possible to conclude that, on January 29, 1964, decedent could have obtained the promise of the corporations to make the payments in question to Ms estate. At least, petitioner has not sustained its burden of proof to the contrary in this regard. On this basis, I would hold that petitioner had a constructive interest in property which he transferred and that, consequently, the two above-mentioned essentials of section 2035 have been met. Cf. Chase Nat. Bank v. United States, 278 U.S. 327 (1929) ; Adeline S. Davis, 27 T.C. 378 (1956). See also Estate of Inez G. Coleman, supra, where the insurance policy was taken out more than 3 years prior to the decedent’s death. I also agree with the majority that the fact that the payments were conditioned on the decedent being in the employ of the corporations at the time of his death does not affect the foregoing conclusions. Such a condition did no more than make the interest of the decedent contingent. It did not prevent that contingent property interest from arising. Cf. Estate of Albert B. King, 20 T.C. 930 (1953); Adeline S. Davis, supra; Estate of Frederick John Twogood, 15 T.C. 989 (1950), affirmed on another ground 194 F. 2d 627 (C.A. 2, 1952) ; Estate of William J. Higgs, 12 T.C. 280 (1949), reversed on another ground 184 F. 2d 427 (C.A. 3, 1950). The situation is to be sharply distinguished from that which exists where the payments to be made upon the employee’s death remain subject to the discretion of the employer. Estate of William E. Barr, 40 T.C. 227 (1963); Estate of Albert L. Salt, 17 T.C. 92 (1951). It is also clear to me that section 2033 is not applicable. As Estate of Edward H. Wadewitz, 39 T.C. 925 (1963), affd. 339 F. 2d 980 (C.A. 7, 1964), holds, the decedent herein had no interest in property which he was capable of transferring at the time of his death. Miller v. United States, 389 F. 2d 656 (C.A. 5, 1968), and Bernard v. United States, 215 F. Supp. 256 (S.D.N.Y.1963), involved merely the question of “income in respect of a decedent” under section 691' — a question which does not require any determination of an interest in property or a transfer thereof by a decedent. They are therefore inapplicable. In Riegelman's Estate v. Commissioner, 253 F. 2d 315 (C.A. 2, 1958), affirming 27 T.C. 833 (1957), the estate of the decedent was entitled to the post-mortem payments. It was this right of the estate which was equated with an interest in property. In the instant case, the decedent’s estate had no such right so that Riegelman’s Estate is also not applicable. Cf. Estate of Inez G. Coleman, supra. Nor do I think that it can be successfully maintained that the power of the decedent and the three corporations, by mutual agreement, to modify the arrangements so as to provide that the payments should be made to decedent’s estate constituted an interest in property within the meaning of section 2083 or a retained power so as to bring section 2036 or 2038 into play. Cf. Landorf v. United States, 408 F. 2d 461, 471 (Ct. Cl. 1969); Kramer v. United States, 406 F. 2d 1363, 1369 (Ct. Cl. 1969); Estate of Max J. Gorby, 53 T.C. 80, 88 fn. 11 (1969); Adeline S. Davis, supra.