Feuerbacher v. Commissioner

MAX W. FEUERBACHER AND WALTER L. FEUERBACHER, EXECUTORS OF THE ESTATE OF MINNA FEUERBACHER, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Feuerbacher v. Commissioner Docket No. 32836. United States Board of Tax Appeals 22 B.T.A. 734; 1931 BTA LEXIS 2078; March 13, 1931, Promulgated *2078 The proceeds, in excess of $40,000 of insurance policies taken out by the decedent upon her life in 1898 and 1903, in which decedent reserved the right, which was never exercised, to change the beneficiaries, provided the policies were not assigned, it being made to appear that the policies were not assigned, held properly included in gross estate of the decedent under the Revenue Act of 1924. Louis M. Weiller et al.,18 B.T.A. 1121, followed. John E. McClure, Esq., for the petitioners. Frank T. Horner, Esq., for the respondent. MCMAHON *734 This is a proceeding for the redetermination of an asserted deficiency in estate tax in the amount of $2,517.08, upon the estate of Minna Feuerbacher, who died February 11, 1925. Not all of this deficiency is in controversy in this proceeding. The respondent, in the deficiency letter, found a deficiency in the amount of $3,356.11, but allowed as a credit one-fourth of this amount on account of payment of State inheritance taxes, and, therefore, proposed for assessment only the amount of $2,517.08 with accumulated interest. It is alleged that the respondent erred in including as*2079 a part of the gross estate of the decedent subject to taxation, the amount of insurance carried on the life of the decedent in excess of $40,000, although this insurance was payable to specific beneficiaries, other than the estate, named in the policies for more than 20 years prior to decedent's death on February 11, 1925. The parties have stipulated the facts, from which we make our findings. FINDINGS OF FACT. The petitioners are the duly appointed, qualified and acting executors under the last will and testament of Minna Feuerbacher, deceased, with their principal office at St. Louis, Mo. A notice of deficiency was mailed to petitioners October 13, 1927. On November 7, 1898, the deceased, Minna Feuerbacher, caused her life to be insured by the Equitable Life Assurance Society, by its Policy No. 888009, for the sum of $50,000, in which policy there were named as beneficiaries, each in his/her own behalf and not as executor or other representative of the estate of the assured, the children of the assured, to wit: Lydia D. Buder, Max W., Arthur H., and Walter L. Feuerbacher. This policy contained the following privilege: *735 This policy is issued with the express*2080 understanding that the assured may, providing this policy has not been assigned, change the beneficiary, or beneficiaries, at any time during the continuance of this policy by filing with the Society a written request, duly acknowledged, accompanied by this policy; such change to take effect upon the endorsement of the same on the policy by the Society. On February 12, 1903, the deceased, Minna Feuerbacher, caused her life to be insured by the Equitable Life Assurance Society, by its Policy No. 1202718, for the sum of $50,000, in which policy there were named as beneficiaries, each in his/her own behalf and not as executor or other representative of the estate of the assured, the children of the assured, to wit: Lydia D. Buder, Max W., Arthur H., and Walter L. Feuerbacher. This policy contained a privilege which is, for our purposes, substantially the same as the section set forth above. Minna Feuerbacher died on February 11, 1925. These policies were never assigned; nor were the beneficiaries ever changed; nor was any change of beneficiary or beneficiaries ever requested; and after the death of the assured, there was paid to the four named beneficiaries, each in his/her*2081 own behalf, and not as executor or other representative of the estate of the decedent, the sum of $101,146.76, being the proceeds of the policies, of which sum the excess over $40,000, to wit, the sum of $61,146.76, represents the amount which the respondent has included in the gross estate of the decedent and which is the basis for a portion of the deficiency in tax involved in this proceeding. OPINION. MCMAHON: Section 302 of the Revenue Act of 1924 provides: SEC. 302. The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated - * * * (g) To the extent of the amount receivable by the executor as insurance under policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of the amount receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life. (h) Subdivisions * * * (g) of this section shall apply to the transfers, trusts, estates, interests, rights, powers, and relinquishment of powers, as severally enumerated and described therein, whether made, *2082 created, arising, existing, exercised, or relinquished before or after the enactment of this Act. It is the contention of the petitioners that under the Revenue Act of 1924 the proceeds of these life insurance policies are not includable in the gross estate, and, if they are includable under the provisions of the act, then such act is unconstitutional and void. *736 In a recent case, , we held, upon authority of , and , that under the Revenue Act of 1924 the proceeds of insurance policies taken out in 1907, 1908, and 1909, where the insured reserved the right to change the beneficiary, should be included in the gross estate of the decedent. See also , and . The case of , is distinguishable from the instant proceeding, since that case involved the Revenue Act of 1918, which does not contain a provision similar*2083 to subdivision (g) of section 302 of the Revenue Act of 1924, supra. Upon the authority of our prior decisions, we approve the respondent's determination of a deficiency in the amount of $2,517.08. Judgment will be entered for the respondent.