dissenting: I respectfully dissent from the majority opinion. In the view that I take of the law and the facts of this case, petitioner is taxable on the annuities received in 1934 to the extent of 3 percent of the principal amount paid for each annuity.
I agree to the conclusion reached by the majority that none of the annuities received by petitioner in 1933 are taxable to her under the provisions of section 22 (b) (2), Revenue Act of 1932. But in calculating whether the aggregate amount of the payments which petitioner has heretofore received exceeds the amounts paid as consideration for the annuity contracts, I do not agree that the basis of cost of the annuity contracts is what the insurance companies would have charged for similar annuity contracts.
It is this difference which furnishes the ground for my differing from the majority opinion on the amount which is taxable for the year 1934, under section 22 (b) (2) of the 1934 Act.
The conclusion of the majority as to what is taxable in 1934 is based upon the finding that part of the property transferred by Mrs. Raymond to the respective charitable and educational institutions represented gifts to such institutions and that part represented consideration for the annuity contracts. I do not subscribe to the *251theory that the evidence justifies such a finding. Cf. Madeira v. Commissioner, 98 Fed. (2d) 556. The fact that similar annuities could have been purchased from insurance companies at a less price than petitioner paid these educational and charitable institutions, it seems to me is not material.
Outside of the first annuity of $5,000 evidenced by letters on July 24,1925, with the Art Institute of Chicago, the remaining eight annuity agreements were evidenced by formal written contracts executed by the petitioner and the respective institutions. The following agreement with the Field Museum of Natural History, dated July 27, 1925, is given in petitioner’s brief as typical. This reads as follows:
This Agreement, Made and entered into this 27th day of July, A. D. 1925, by and between Anna L. Raymond, of Chicago, Illinois, the party of the first part, and Field Museum of Natural Histoby, a corporation organized and existing under and by virtue of the laws of the State of Illinois, the party of the second part,
WITNESSETH THAT:
The parties hereto, each in consideration of the covenants and undertakings on the part of the other hereinafter contained, covenant and agree to and with each other as follows:
First : The party of the first part covenants and agrees, simultaneously with the execution and delivery of this agreement, to duly assign, transfer and deliver to said party of the second part, as its own absolute property, each and all the following described securities, to-wit:
All those bonds specifically described in Schedule A, hereto annexed.
Second: Said party of the second part, in consideration of, and from and after the transfer to it of the securities hereinabove scheduled by said first party, covenants and agrees to pay to said party of the first part in each and every year during her natural life an annuity in the sum of Fifteen Thousand Dollars ($15,000), in equal quarterly installments of Thirty-seven Hundred Fifty Dollars ($3750.00) each, on the first day of each of the months of July, October, January and April in each year, the first payment to be made on the first day of October, A. D. 1925.
Third : That upon the transfer and delivery of said securities in accordance with this agreement, said securities shall become and be the absolute property of said second party without any limitation or qualification whatever, and further, that from and after the transfer and delivery of said securities to said second party its obligation to pay said annuity to said first party shall become and be binding and effective, and shall so continue during said first party’s natural life, free from any qualifications or limitations, and regardless of whether or not said securities, or the property in which the proceeds therefrom may be invested, or the income therefrom, shall at any time be diminished or altogether cease.
In Witness Whereof, the parties hereto have caused this agreement to be executed under seal all on the day and year first above written.
[Signed] Anna L. Raymond
Field Museum of Natural History
By Stanley Field
President
*252Notwithstanding the foregoing contract between the parties, the majority opinion holds that the transfer made by Mrs. Eaymond to the Field Museum in consideration of that institution agreeing to pay her an annual life annuity of $15,000 was in part consideration paid for an annuity and in part a gift. In F. A. Gillespie, 38 B. T. A. 673, we rejected such a contention, and I do not agree with the majority opinion in saying that the Gillespie case is distinguishable in its facts from the instant case. The amount that was paid as consideration for the annuity is found by the majority opinion to be that which would have been paid to the five leading insurance companies under the American Annuitants’ Mortality Table. The balance of the value of the transfer is found as the amount of the gift.
It seems to me, as I have already said, that in the face of the contract between the interested parties, such a finding is not justified. The property transferred to Field Museum by petitioner in consideration of the $15,000 annuity agreed to be paid her was valued at $302,150 at the time of transfer. Assuming this to be the consideration paid for the annuity, as I do, then 3 percent of this principal amount would be taxable to petitioner in 1934, which would be $9,064.50. The balance of the $15,000 would not be taxable but would be applied under section 22 (b) (2) of the 1934 Act to the principal amount paid for the annuity until such amounts added to the amounts already received tax-free equals the aggregate premiums or consideration paid for such annuity.
The discussion which I have given above as to the annuity agreement between petitioner and the Field Museum would, I think, apply equally to the other annuity agreements.
I am in agreement with the majority opinion following F. A. Gillespie, supra, that the tax imposed by the 1934 Act upon 3 percent of the consideration is constitutional.