Hausmann v. Commissioner

LOUIS HAUSMANN, EXECUTOR, ESTATE OF THERESA R. HAUSMANN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Hausmann v. Commissioner Docket No. 5931. United States Board of Tax Appeals 5 B.T.A. 199; 1926 BTA LEXIS 2914; October 27, 1926, Decided *2914 John F. Hartmann, C.P.A., for the petitioner. Henry Ravenel, Esq., for the respondent. TRAMMELL *199 TRAMMELL: This is a proceeding for the redetermination of a deficiency in estate tax in the amount of $372.06. The deficiency arose from the action of the Commissioner in subjecting to the estate tax the value of a gift made to decedent's grandson in 1921 on the ground that it was made in contemplation of death. FINDINGS OF FACT. The decedent died January 28, 1924, at the age of 79 years. Previous to her death she was in good health and went to the store, in which she was a large stockholder, every day until approximately thirty days before her death. The cause of her death was an injury received by her due to a fall. She was ill approximately thirty days after the fall. On May 10, 1921, the decedent gave to her grandson, Henry Hausmann, 100 shares of stock in a corporation which operated a store in New Orleans. This grandson began working in the store as a clerk when he was 18 years of age and received a salary of $6 per week. *200 He became dissatisfied with this salary. His father, grandmother, and uncle were the principal*2915 stockholders in the store. His father told him that he would be taken care of in the way of an interest in the business later on as he acquired more experience. Later he was given 5 shares of stock which, in the reorganization of the store, was exchanged for 50 shares. The grandson of Mrs. Hausmann was frequently told that he would become a member of the firm. He was, however, dissatisfied with the small amount of stock given to him and frequently expressed his dissatisfaction. In the meantime his salary had increased gradually up to $25 per week in 1917. During that year he had a conference with his father, grandmother and uncle and told them that if something was not done he would leave because of the fact that he could have gotten from $5,000 to $7,500 a year from a competitive firm. Subsequently, the business was reorganized and Mrs. Hausmann's grandson was made secretary-treasurer of the new firm of Hausmann, Inc. There was no agreement as to how much stock he was to receive in the new firm. He was given 5 shares of stock each by T. Hausmann, Louis Hausmann, and Gabe Hausmann. When this amount of stock was given to him he expressed his dissatisfaction again, with the*2916 result that another conference was had and it was agreed that he was to be given more stock by his grandmother, Mrs. Theresa R. Hausmann. There was no agreement, however, as to the particular time this was to be done. From December, 1917, until December, 1919, the grandson was serving in the naval forces of the United States and returned to the store in December, 1919. In May, 1921, his grandmother transferred to him the stock, consisting of 100 shares, which she had agreed to transfer before he entered the naval service in the latter part of 1917. The market value of the stock was $168.31 per share. Judgment will be entered on 15 days' notice, under Rule 50.