1941 BTA LEXIS 1490 | B.T.A. | 1941
Lead Opinion
Our findings of fact dispose of the first issue by the ultimate determination that the property in question was transferred in contemplation of death. We have arrived at that result because of our belief that petitioner has failed to produce convincing evidence that decedent’s compelling motive was associated with life rather than death. The transfers were made shortly after decedent’s will was executed and disposed of her property similarly and to the natural objects of her bounty. Rengsdorff v. McLaughlin (Dist. Ct., N. Dist. Calif., S. D.), 21 Fed. (2d) 177; Travelers Bank & Trust Co., Executor, 29 B. T. A. 88. Decedent was at the time suffering from the physical infirmity which later carried her off.
The only suggestion of a motive not describable as contemplation of death is testimony to the effect that decedent expressed a desire to relieve the financial distress of one of her two daughters. But this condition is shown to have been of long standing and no effort is made to account for the bestowal of so large and unusual a generosity at that particular time. Moreover, although only the pecuniary straits of one of the daughters is shown, the gift was made equally to both. And, while decedent was evidently in the habit of making comparatively small contributions to both of her daughters from time to
The second issue involves the valuation for estate tax purposes of preferred and common shares of McKesson & Robbins, Inc. Although the provision of the statute
The stock in question was traded on the New York Stock Exchange and there is no dispute that respondent’s valuation is proper if, under the circumstances, such quotations are the appropriate measure of fair market value. Petitioner, however, advances the apparently novel
If we were seeking to fix a fair value, rather than a market value which is fair, such considerations would not be without appeal. Cf. Boyd v. Wyly, 124 U. S. 98, 106; Buck v. Commissioner (C. C. A., 9th Cir.), 83 Fed. (2d) 786. That this stock, however, had a market value is conceded, and it must be further recognized that the very shares owned by this estate could have been sold at the quoted prices. Indeed, the only market prices shown are those employed by respondent. Petitioner insists that the market value could not have been fair if based upon general misconception as to the underlying facts. But this goes beyond what we conceive to be the significance of the aspect of fairness as it modifies the existence of market value. It may be that a showing of general market prices is not a demonstration of the fair market value of a particular block of stock where it can be shown that general conditions or those affecting particularly the sales which have actually transpired do not “fairly” reflect the circumstances surrounding the specific property to be valued. Such
* * * Sales are always evidence of a market price, but the statute requires that, in “ascertaining the gain derived from the sale,” there must be not simply a “market price,” but a “fair market price”. * * * Sales made under peculiar and unusual circumstances, such as sales of small lots, forced sales, and sales in a restricted market, may neither signify a fair market price or value * * *.
Of this the familiar “blockage” rule is another example. Estate of Leonard B. McKitterick, 42 B. T. A. 130.
But here there was nothing “peculiar” or “unusual” about either the actual transactions on the Exchange or the situation in which the estate found itself. Its securities could have been sold, and would have been had they been offered, under identical circumstances and at a comparable price with all of the stock which actually was traded in. What petitioner’s position would require us to hold, therefore, is that a universally accepted market price, thei result of numerous transactions in which the general public freely participated, should be disregarded because more than two years later concealed facts were disclosed which, had they been known, might have created a different market from that which the facts show actually existed. This does not prove that the market did not exist or that the sales did not take place. Nor does it show that they did not fairly evaluate petitioner’s stock at the time. We think it unnecessary to proceed so far in applying the phrase “fair market value.” And the administrative and judicial difficulties which would be involved! in the adoption of any different rule convince us that petitioner’s position is untenable. If it were always necessary to discover whether every material fact was known to the public! before stock exchange prices could be relied upon in fixing fair market value, and indeed to determine what factors are and what are not material in the operations of the whole body of the trading public, it would, we think, be impossible for administrative officers or taxpayers to make an intelligent approximation of their own situation. Nothing in the position of petitioner or others similarly situated requires any such result.
If, in fact, our determination were to be affected by equitable considerations, we think the same result would be required.
On the final issue it is shown that petitioner has become obligated for attorneys’ fees and other expenses in connection with the settlement of the estate. There is no countervailing proof on behalf of respondent. Petitioner is sustained on this point. Otis Weld Richardson et al., Executors, 1 B. T. A. 1196.
Decision will he entered under Rule 50.
The cause of death, and length of last illness, as given on the estate tas return, was “Arterio-scelerosis and myo-carditis Approximately 18 months.”
Sec. 302, Revenue Act of 1926.
The only case relied on as a precedent is one construing’ a California statute, In re Spitly’s Estate, 124 Cal. App. 642; 13 Pac. (2d) 385.
Sea Hughes, Federal Death Taxes, p. 270 :
ii* * * If a farmer died leaving valuable farm lands, and oil, which was unknown to exist on it at the time of his death, should be subsequently discovered, that could not be used to increase the known value at the time of his death. Similarly, if at the time of a taxpayer’s death, the quoted market prices were at a depression low, it would be as logical for the Treasury to claim that they were not fair prices as it would be for a taxpayer to claim that inflated quotations were not fair prices.”