Burling v. Commissioner

ESTATE OF WILLIAM C. BURLING, PEOPLES TRUST CO. AND WILLIAM RAYMOND BURLING, EXECUTORS, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Burling v. Commissioner Docket No. 14112. United States Board of Tax Appeals 13 B.T.A. 264; 1928 BTA LEXIS 3286; August 17, 1928, Promulgated *3286 The petitioners have failed to prove that certain transfers made by the decedent within two years prior to his death were not made in contemplation of death. Maurice D. Moore, Esq., for the petitioners. Frederick K. Slanker, Esq., and Frank Horner, Esq., for the respondent. ARUNDELL *264 The petitioners seek the redetermination of a deficiency in estate tax of $2,640.93. It is claimed that the respondent erred in holding that certain transfers of stocks and real property were made in contemplation of death. FINDINGS OF FACT. The petitioners are the duly appointed executors of the estate of William C. Burling, who died testate on September 22, 1923, a resident of Brooklyn, N.Y. By an instrument dated October 14, 1921, the decedent assigned and transferred to the Peoples Trust Co. of Brooklyn and Maurice J. Moore, as trustees, for the benefit of his three children, certain shares of stock. Under date of December 27, 1922, the decedent conveyed to his son, William R. Burling, premises located at 1917 and 1919 Church Avenue, Brooklyn. At the time of transfer and decedent's death, each piece of property was subject to a first mortgage*3287 of $9,000. Accrued interest to September 22, 1923, under both mortgages amounted to $90. Under date of January 1, 1923, the decedent and his widow conveyed to the Peoples Trust Co. of Brooklyn, as trustees, for the benefit of his two daughters, three parcels of real property located at 1911, 1913, and 1915 Church Avenue, Brooklyn. Each piece of property was subject to a first mortgage of $9,000 and the properties located at 1913 and 1915 Church Avenue were each subject to a *265 second mortgage of $1,400. At the date of decedent's death, the first mortgages were in the same amount and each of the second mortgages had been reduced to $1,000. Accrued interest to the date of decedent's death under all the mortgages amounted to $840. On Thanksgiving Day, 1914, the decedent suffered a severe attack of chronic myocarditis, and did not sufficiently recover to leave the house for several weeks. In August, 1920, or 1921, the decedent had a stroke of apoplexy and two or three months elapsed before he was able to attend to his business. A second stroke of apoplexy occurred a few days before decedent's death. The decedent's health during the period between 1914 and the date*3288 of his death showed an improvement at times, and at other times was worse than usual. The improvement was most evident in 1917, when the decedent served on a local draft board during the summer and fall. From 1920 until his death the decedent was confined to his house the greater part of the time and during that period was under the care of a physician, who, during 1922 and 1923, visited the decedent not less than every other day to treat him for chronic myocarditis and the effect of his stroke of apoplexy. During the course of the decedent's illness the attending physician consulted not less than six heart specialists concerning the decedent's physical condition. As a result of the first stroke of apoplexy the decedent lost his power of speech but regained it gradually and to such an extent that he was able to talk with some hesitation. After 1920 the decedent was incapacitated to a great extent but his health improved sufficiently during that time to take a few rides in an automobile. The decedent's family physician regarded his patient's ailment as serious and would not have been surprised had the decedent died suddenly at any time after the attack of chronic myocarditis*3289 in 1914. Chronic myocarditis is not an uncommon ailment among men who have reached the age the decedent had in 1914 and persons suffering from it may die at any time from its effect and seldom live longer than 15 years after the first attack. At some time after the decedent suffered the attack of chronic myocarditis, his physician informed him of the nature of his illness and he realized that his condition was serious. He and his family, however, were of the belief until a short time before decedent died, that his condition would improve. The estate-tax return of the estate, showing a tax liability of $8,293.94, was filed with the collector at Brooklyn, N.Y., September 20, 1924. The tax shown by the return was subsequently paid. The return for the estate tax did not include in the gross estate the value of the stocks and properties hereinbefore mentioned as having been assigned to and for the benefit of the decedent's children. On an audit of the return the respondent included the real property conveyed *266 among the assets of the estate at a value of $26,000 for each parcel, and the stocks at a value of $11,697.87, a total of $141,697.87. OPINION. ARUNDELL: *3290 Section 402(c) of the Revenue Act of 1921 provides, in part, that: Any transfer of a material part of his property in the nature of a final disposition of distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title. Other than admissions made by the respondent in his answer of formal matters alleged in the petition, we have only the deposition taken by the respondent of the physician who attended the decedent from 1914 until his death and the estate-tax return with its accompanying schedules. This evidence aids the statutory presumption and petitioners offered no evidence to overcome it. See , and . While no issue was raised by the pleadings as to the value of the property transferred, at the hearing counsel for the respondent conceded that the value of the real estate should be reduced by the amount of the mortgages against the properties. This question is a matter for adjustment between the*3291 parties under their recomputation of the deficiency for decision under Rule 50. Judgment will be entered under Rule 50.