*3876 The decedent, in February, 1921, within approximately six months of his death, but while his health was about the same as it had been for a number of years, transferred stock to his wife in payment of a note, given for cash, to his daughter in payment of a demand note, given as a wedding present in 1907, and to his son in fulfillment of a promise of a wedding gift in 1914. Held, that the transfers of stock were not in contemplation of death within the meaning of section 402(c) of the Revenue Act of 1918.
*92 This is a proceeding for the redetermination of a deficiency in estate tax asserted under the Revenue Act of 1918 in the amount of $3,813.58, not all of which is in controversy. The only question is whether certain stock valued at $65,000 is to be included in the gross estate of the decedent as a transfer in contemplation of death.
*93 FINDINGS OF FACT.
On February, 1921, the decedent, Louis J. Goldman, gave his wife 50 shares, his son 300 shares and his daughter 300 shares of stock. He died August 23, 1921, at the age of 71. *3877 The executors of his estate did not include in the Federal estate-tax return the value of the above stock. The respondent, in determining the deficiency here in issue, increased the taxable estate by the amount of $69,620. Of this amount, $65,000 was the value of the stock the decedent gave to his wife, son, and daughter.
In 1907, when the decedent's daughter, Edna, was married, the decedent gave her a demand note for $30,000 carrying interest at 6 per cent per annum, as a wedding present. The interest was paid in monthly installments from the date of execution of the instrument until some time in 1914, when the decedent's financial affairs became so involved that payment of interest was suspended.
At the time his son, J. A. Goldman, became engaged to marry, the decedent promised him a gift of $30,000, and at the time of the wedding in 1914 decedent stated to his son that the promise held good and that he would make payment in due time.
In 1916, when the decedent needed money, his wife, not wishing her relatives to know that she had any money, gave $5,000 to the decedent's brother, Nathan Goldman, with the request that he loan this money to Mr. Louis J. Goldman. This*3878 was done, and decedent executed a note for $5,000 to his brother, who in turn endorsed it over to Mrs. Louis J. Goldman.
During the month of February 1, 1921, Louis J. Goldman gave 300 shares of stock in the Cincinnati Electrical Tool Co. to his daughter, Edna Goldman Hoidingsfeld, 50 shares of the same stock to his wife, and 300 shares to his son, J. A. Goldman, in the fulfillment of these obligations. This stock had a par value of $100 per share. These transfers were made at the request of members of the family because they considered the time opportune and Louis J. Goldman's affairs were in such shape that he was able to do it, as his Cincinnati Electrical Tool stock was then freed from the pledge to the bank. The decedent desired to keep his control of the Cincinnati Electrical Tool Co., and did not make these gifts until the company declared a 200 per cent stock dividend.
Louis J. Goldman suffered from a heart affection for fifteen or sixteen years. At all times up to his last illness he was optomistic and hopeful. He never told his family that he expected to die in the near future, but on the contrary often stated that his family was long-lived. His mind was good*3879 and he took an interest in his business and in affairs in general, and during February, 1921, he visited *94 his office nearly every day. The immediate precipitating cause of his death was probably an embolus in the right leg, and the fatal illness continued for a period of three or four weeks. Prior to this last illness the heart attacks of the decedent had been no more frequent than for some years theretofore.
A doctor testified that persons suffering from such a heart affliction are rarely subjected to a subsequent diseased condition of the leg such as caused the death of the decedent. He testified that numerous complications are known to physicians, but they can not be actually foreseen, and the fatal illness of the decedent was not necessarily caused by his heart trouble. The decedent never inquired of his physician as to his condition. The doctor had seen the decedent survive many heart attacks without being weakened thereby.
OPINION.
SIEFKIN: The only question in this proceeding is whether the respondent erred in including in the estate of Louis J. Goldman, hereinafter called the decedent, stock in the Cincinnati Electrical Tool Co., of the par value of*3880 $65,000 which was given by him in February, 1921, to his son, his daughter and his wife, approximately six months prior to his death on August 23, 1921.
Section 402 of the Revenue Act of 1918 provides:
That 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 - * * *
(c) To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this act), except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his property in the nature of a final disposition or 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; * * *
In the instant proceeding*3881 we find from the evidence that the $5,000 stock which the decedent transferred to his wife in February, 1921, was in payment of a note which the decedent had executed in return for a loan of $5,000. This transfer of stock was then a payment of an obligation.
In 1907 when the decedent's daughter, Edna, was married, the decedent gave her as a wedding present a demand note for $30,000 carrying interest at 6 per cent per annum. The interest was paid in monthly installments until sometime in 1914, when the decedent's financial affairs became so involved that payment of interest was suspended.
*95 The testimony shows that at the time J. A. Goldman, son of the decedent, became engaged to marry, the decedent promised him a gift of $30,000, and that at the wedding which occurred in 1914, the decedent stated to his son that the promise held good, and that he would make payment in due time.
The testimony further shows that the decedent, in February, 1921, transferred to his daughter, Edna, and his son, J. A. Goldman, each, $30,000 stock in the Cincinnati Electrical Tool Co. These transfers were made after the Cincinnati Electrical Tool Company had declared a 200 per cent stock*3882 dividend. It was testified that the decedent was not willing to make such transfers until this time because he desired to retain control of the Cincinnati Electrical Tool Company.
In , and , we quoted with approval the language employed by the court in the case of , which was as follows:
The language referred to was not intended to include that general expectation of death which is the essential concomitant of the inherent knowledge of the inevitable termination of all life, and which is in the young and physically robust as well as in the aged and the infirm. No similar statute has been so construed. A reasonable and just view of the law in question is that it is only where the transfer of property by gift is immediately and directly prompted by the expectation of death that the property so transferred becomes amenable to the burden; or, as counsel for the respondent with singular aptness states the proposition:
"It is only when contemplation of death is the motive without which the conveyance would not*3883 be made that a transfer may be subjected to the tax."
The evidence discloses that for a number of years prior to his death, at the age of seventy-one years, the decedent had suffered from a heart affection and that his death was caused by an embolus in the right leg, which was not necessarily a result of the condition of the decedent's heart. Medical testimony introduced showed that an embolus rarely developed in such a case and that such an affliction could not be foreseen. The fatal illness lasted about three or four weeks. Prior to this last illness the heart attacks of the decedent had occurred no more frequently than for some years theretofore.
At all times up to his last illness the decedent was optimistic and hopeful, never inquired of his doctor concerning his condition, took an active interest in his business and affairs in general, and never expressed to his family a fear of death in the immediate or reasonably distant future. From all the evidence in the case we are of the opinion that the transfer of the $65,000 stock was not made in contemplation of death, within the meaning of section 402(c) of the Revenue Act of 1918, and the respondent has erred in including*3884 this amount in the estate of the decedent.
Judgment will be entered for the petitioner.