*1843 Certain gifts made by the decedent in March, 1922, to his wife and children, prior to his death in January, 1923, held, on the evidence, not to have been made in contemplation of death within the meaning of section 402(c), Revenue Act of 1921.
*500 This is a proceeding for the redetermination of a deficiency in estate tax determined by the respondent in the amount of $246,696.79. The sole issue for decision is whether certain gifts made by the decedent to members of his family during his lifetime were made in contemplation of death. All other issues raised by the pleadings and involving questions of valuation and attorney fees, were settled by stipulation of the parties.
*501 FINDINGS OF FACT.
The petitioner is the executor of the estate of John B. White, deceased, with his principal office in Kansas City, and maintains this proceeding in such capacity. The decedent died on January 5, 1923, a citizen and resident of the State of Missouri.
On March 7, 1922, the decedent, by an instrument of writing*1844 executed and delivered on that date, transferred and conveyed to his wife and three children each an undivided one-fiftn interest in certain stocks, bonds, and accounts receivable, the decedent retaining a one-fifth interest in said assets, as follows:
| Item | Shares | Kind of property | Value of four- |
| No. | fifths determined by | ||
| Commissioner and | |||
| included in gross | |||
| estate | |||
| STOCKS | |||
| 1 | 4,796 | Forest Lumber Co | $647,460.00 |
| 2 | 370 | Grandin-Coast Lumber Co | 45,606.20 |
| 3 | 1,500 | Louisiana Central Lumber Co | 600,000.00 |
| 4 | 400 | Louisiana Long Leaf Lumber Co | 200,000.00 |
| 5 | 1,186 | Louisiana Sawmill Lumber Co | 160,110.00 |
| 6 | 280 | Missouri Lumber & Mining Co | 7,000.00 |
| 7 | 1,936 | White-Grandin Lumber Co | 222,640.00 |
| 8 | 88 | R. B. White Lumber Co | 6,600.00 |
| 9 | 673.92 | Fisher Flouring Mills Co | |
| 10 | 168.49 | Gallatin Valley Milling Co | 112,322.25 |
| 11 | 56.16 | The White Dulaney Co | |
| 12 | 104 | The Fisher-White-Henry Co | 2,600.00 |
| 13 | 24 | Metropolitan Bank of Seattle | 5,700.00 |
| 14 | 16 | First National Bank of Seattle | 4,800.00 |
| 15 | 200 | New England National Bank | 46,000.00 |
| 16 | 16 | North American Manufacturing Co | 0.00 |
| Total | 2,060,838.45 | ||
| BONDS | |||
| 17 | 6 | Metropolitan Building Co. (5 for $1,000 | 3,740.00 |
| and 1 for $500) | |||
| 18 | 2 | Sunset Hill School Association, $500 each | 400.00 |
| NOTES | |||
| 19 | 1 | Note for $9,500 | 7,600.00 |
| 20 | 2 | Notes (1 for $1,000 and 1 for $500) | 1,200.00 |
| BILLS RECEIVABLE | |||
| 21 | White-Grandin Co | 20,000.00 | |
| 22 | Do | 32,000.00 | |
| 23 | Louisiana Sawmill Co | 28,000.00 | |
| 24 | Do | 20,000.00 | |
| 25 | W. S. Dickey | 8,000.00 | |
| 26 | R. B. White | 8,800.00 | |
| 27 | Do | 5,912.00 | |
| Total value of bonds, notes and bills | 135,652.00 | ||
| receivable | |||
| Total value of stocks | 2,060,838.45 | ||
| Total value of assets (four-fifths) as | 2,196,490.45 | ||
| determined by Commissioner |
*1845 The instrument by which the above property was transferred contained, among other things, the following:
I am moved to make this gift to my wife and children by two considerations, namely, (a) the sudden death of my son-in-law, A. T. Hemingway, as a result of which it is desirable that my said daughter Arabell should have *502 a certain and adequate income during my life for her support and maintenance, for the support, education and maintenance of her children, and for the proper handling of the estate which my said son-in-law left; and, (b) the maturity and sound judgment of my son Raymond, who, to my entire satisfaction, has demonstrated his ability to care for, manage, and handle such property as I can now afford to give him, and for whose best development I think the responsibility of the management of such property is desirable. The gifts to my wife and daughter Ruth follow as a matter of course from the foregoing, because I would not consider it fair or just to make such gift to my daughter Arabell or my son Raymond without doing the same thing for my wife and my daughter Ruth.
The decedent on March 21, 1922, executed and delivered to his wife a deed to their*1846 home located in Kansas City, Mo., which had a value of $10,450. It was the intention of the decedent, in giving the home, to give the furniture and furnishings therein also, which had a value of $1,500 as of the date of the decedent's death. Respondent included in the gross estate the value of said real estate at $10,450 and the household goods at $1,500.
Some five or six years prior to his death, decedent had expressed his intention to give the Kansas City home to his wife. At about that time he had given certain real estate in New York State to his daughters, and in that connection, advised his wife that he would give the home to her. Thereafter, he repeatedly referred to the home as being the property of his wife, although the deed was not executed and delivered until March 21, 1922.
Early in 1922, Mrs. White, wife of the decedent, who, prior to her marriage, had taught school for some ten years and was much interested in school matters in Kansas City, was requested by her friends to become candidate for school trustee. However, only a property owner was qualified to hold said office, and when the matter was brought to the attention of the decedent, he at once executed*1847 and delivered to his wife the deed to their home on the date above mentioned. The transfer was made at that time for the specific purpose of enabling decedent's wife to become a school trustee, but was also pursuant to the intention of the decedent expressed in prior years to give this property to his wife.
At the time of the aforesaid transfer on March 7, 1922, the decedent was 74 years of age.
The valuations made by the respondent of the various properties of the estate of the decedent, as set out above, are correct, except in the following particulars:
Stock in the Louisiana Central Lumber Co. had a fair market value at the date of decedent's death of $325 per share;
Stock in the Louisiana Long Life Lumber Co. had a fair market value on said date of $450 per share;
*503 Stock in the New England National Bank had a fair market value on said date of $52 per share;
Stock in the Fisher Flouring Mills Co., which is inclusive of the stock in the Gallatin Valley Milling Company and stock in the White-Dulaney Co., had a fair market value on said date of $130 per share;
Stock in the White-Grandin Lumber Co. had a fair market value on said date of $112.50 per share;
*1848 The real estate in New York, consisting of four parcels, had a fair market value on said date of $38,000.
The values stated were stipulated by the parties, and are to be used in the determination of the estate-tax liability of the estate of the decedent for all purposes.
Decedent was survived by his wife, Emma S. White; his son, Raymond B. White, petitioner herein; and two daughters, Ruth and Arabell. At the time of decedent's death his daughter, Ruth White, was unmarried. She has since married and is now Mrs. Ruth White Lowrey. Decedent's daughter, Arabell, at the time of his death, was a widow, her first husband, Alfred Tyler Hemingway, having died in February, 1922. She has since remarried, and is now Mrs. Arabell Hemingway Shepard.
Decedent during his lifetime was interested mainly in the lumber business, but his interests were varied. He was interested as a director and officer in approximately fifty different corporations. Most of these companies were in the business of manufacturing lumber. One company was a retail lumberyard company, which later branched into the manufacturing business. He was also interested as a director and officer in a flouring mill company*1849 on the Pacific Coast, as well as a number of other smaller companies.
Decedent's original company was located in southeastern Missouri. Other companies started about 1900 were located in Louisiana, and one lumber company in the State of Washington. The more important of these companies were: Missouri Lumber & Mining Co., Forest Lumber Co., Louisiana Sawmill Co., White-Grandin Lumber Co., Louisiana Long Leaf Lumber Co., Grandin Coast Lumber Co., Louisiana Central Lumber Co., Exchange Sawmill Sales Co., Fisher Flouring Mills Co., and three or four short-line railroads connected with lumber-manufacturing plants, as well as smaller companies, such as land companies and abstract and title companies.
The operations of these companies were comparatively large. Decedent was president and general manager of the majority of the companies. In addition to the duties prescribed by the by-laws of the corporations for the president and general manager, decedent was very active in the executive, and also the operative, duties of the businesses. He decided all questions of policy as far as his position *504 would permit. Together with the boards of directors, he looked after the*1850 financing of the operations of the companies. He also presided over the deliberations of the boards of directors. His duties made it necessary for him to visit the sawmills of the companies from time to time. He visited the companies from Louisiana and Missouri to the State of Washington quite frequently. In all matters of policy, and such matters as buying boundaries of timber and establishing new mills, decedent was the moving spirit. He personally conducted investigations and made reports to his boards of directors. These activities of the decedent continued up to the fall of 1922.
Decedent's son, petitioner herein, left college in the fall of 1914 and went into the retail lumber business at Newark, Ohio. Decedent advised with his son about the matter, and, after going over the ground at Neward, approved of the location.
After his son finished college, decedent gave him $5,000 in cash with which to start in business. The son then negotiated a loan of $10,000, putting up as collateral certain stocks which he owned by virtue of gifts made to him by his father from time to time in prior years. With this $15,000 and the $10,000 contributed by a partner whom he took into*1851 the business, petitioner started the retail lumber yard at Newark. He personally conducted this business at that place until April, 1920.
In 1917 decedent purchased a lumber yard in Fostoria, Ohio, which he placed in charge of one Bredbeck, who was then a clerk of the Forest Lumber Co., at Oakdale, La. The decedent organized a corporation to operate this lumber business, and financed its purchase by taking all of the corporation's stock, of which he immediately gave $15,000 to his son and $15,000 to his daughter, Mrs. Arabell Hemingway. Desiring to make a similar gift to his daughter Ruth, decedent gave her $5,000 in cash and arranged that Bredbeck would give her his note for $10,000, representing the cost of the stock which Bredbeck took in the Fostoria Lumber Co., which stock was put up as collateral to secure payment of the note.
Between the date of the purchase of the Fostoria yard and April, 1920, decedent's son purchased three additional yards. Decedent advised with his son regarding the purchase of only one of these yards. The son remained in business in Ohio from early in 1915 to April, 1920. About a year prior to said last mentioned date, decedent expressed a desire*1852 to have his son come to Kansas City to take a position in his office. Thereafter, decedent's son set about arranging his business affairs in Ohio, and finally went to Kansas City in April, 1920, where he was made assistant manager of the Exchange Sawmill Sales Co. He was assigned an office next to his *505 father's office. His duties were directly connected with the sale of lumber of the associated mills, but he was also frequently consulted in other matters, and gradually assumed more and more an executive position in the business.
In April, 1920, decedent went to Indianapolis, Ind., where he met his son and inspected three lumber yards which he contemplated buying. From Indianapolis, decedent, accompanied by his son, went to Chicago to attend a meeting of the National Lumber Manufacturers Association. During the convention, decedent made a number of talks and addresses from the floor. From Chicago, he went to Newark, Ohio, where he spent two or three days with his son looking over the lumber yards. A change in location of one of the yards was contemplated, and decedent walked with his son from the old location to the proposed new location, a distance of about a mile*1853 and a half.
From Newark, Ohio, decedent went to Atlantic City to attend a meeting of the Chamber of Commerce of the United States, held on April 27, 28, and 29, 1920. He was very active in that convention. He met there a number of his old friends, and made a talk from the convention floor of some five or ten minutes. From Atlantic City he went to Bemus Point, N.Y., and from there to Kansas City.
In 1921 decedent, who was then in California, went to Louisiana, where he met his son and attended a meeting of the southern mills companies, consisting of the Louisiana Sawmill Co. and the White-Grandin Lumber Co.
Decedent was president of both of these companies and as such conducted the meetings. He made inspection trips from one mill to the other by automobile, over hard, rough roads, and made short walks into the timber to inspect the logging operations. He had no difficulty with his speech at that time, nor in walking.
During the summer of 1922 decedent was in and out of Kansas City. He traveled back and forth to and from his farm and his summer home in New York. Decedent's movements from 1919 to 1922 were as follows: July, 1919, Wequetonsing, Mich.; September, 1919, *1854 Kansas City meeting; October, 1919, Atlantic City for the International Trade Conference; Baltimore wedding; November 26, California. He remained in California until February, 1920. March, 1920, Kansas City and Louisiana; April, 1920, Indianapolis, Chicago, Newark, Ohio, Atlantic City; May, 1920, Kansas City meeting; July, 1920, Seattle, Wash.; August and September, 1920, California; October and November, 1920, Kansas City. On November 30 he left California; December 21, 1920, returned to Kansas City; and on January 19, 1921, went back to California. February 17, 1921, Chautauqua, N.Y., or Bemus Point, N.Y. March 6, 1921, *506 Louisiana meetings; May, 1921, Muskogee, Okla., Grandin, Mo., and Bowlder, Colo,; June, 1921, Kansas City meetings. Summer of 1921, Bemus Point, N.Y.; returned to Kansas City for the winter. Summer of 1922, Bemus Point; returned to Kansas City in the fall.
Prior to March, 1922, the decedent had made gifts to his son of the total approximate value of $30,000, and he had made gifts of approximately the same value to his other children. He had a firm conviction that whatever was done for one child should be done for the others, and he consistently*1855 followed such practice in making gifts to his children. He also made gifts to his wife. Among other things, he gave her the home on 36th Street in Kansas City. He expressed an intention to give this home to his wife some five or six years prior to 1922, but the deed was not executed and delivered to her until early in that year.
Decedent smoked cigars to a moderate extent, and during the latter years of his life also took whiskey medicinally in small amounts. He was a member and trustee of the Westminster Congregational Church. He was much interested in the church and attended its meetings when in Kansas City. He was also interested in establishing churches in his sawmill towns. He personally employed ministers and contributed financially to the churches.
On or about March 6, 1922, decedent's secretary made up tentative figures regarding decedent's income tax for 1921. These figures, which his secretary brought to the attention of the decedent, disclosed that his income tax for 1921 would be approximately $154,000. At the request of decedent's son, the secretary also made up figures showing the total amount of income tax based on the distribution of decedent's property*1856 among the members of his family. On the basis of a division of decedent's property into five equal parts, the figures so presented indicated a total income tax of $49,460.99.
Decedent was disturbed about the large amount of tax he would be required to pay for 1921. He discussed the matter with his son at the office on March 6, 1922, at his home in the evening, and again going down to his office on the morning of March 7. He also discussed with his son the financial situation of his daughter, Mrs. Hemingway, and then called his attorney to his office for a conference. Decedent's office was on the eleventh floor of the R. A. Long Building, and the attorney's office at that time was on the fifth floor of the same building.
As a result of this conference, decedent's attorney prepared, and the decedent executed, the written instrument dated March 7, 1922, hereinabove set out, providing for the distribution among the members of his family of decedent's property therein described.
*507 Pursuant to the provisions of this instrument, decedent's son, petitioner herein, procured the stock certificates which represented the property to be transferred, and sent them to the secretary*1857 or transfer department of the various corporations, requesting that they be transferred to the new owners. On March 10, 1922, decedent's son wrote a letter addressed to his father, sending copies to his two sisters and mother, and retaining a copy for his own files, outlining what had transpired in respect to the transfer of the property. The new stock certificates were issued in due course and sent to decedent's son or to the new owners in his care. The stock certificates of the Missouri corporations were reissued on March 13, 1922, and the stocks of the other corporations at later dates. The new certificates were all made out to the respective owners under the transfer agreement and were delivered to the new owners within a period of thirty days after March 7, 1922.
Decedent's son, acting as trustee, also liquidated the assets other than the stocks, which passed under the transfer document. There were certain bills receivable and obligations payable which decedent had on March 6, 1922. The trustee opened a set of books to record the transactions, and when interest was paid on the bills receivable, it was credited as income to the trustee. This income was segregated and*1858 remitted periodically to the members of the family. Decedent's obligations, which were to be paid out of the trust estate, included a "Liberty Memorial" pledge and a pledge to the Boy Scouts organization, as well as decedent's income tax for 1921. These obligations were paid out of the trustee's funds.
The disbursements made by the trustee under the document of March 7, 1922, were as follows: Federal income tax, $154,439.85; Liberty Memorial, $2,500; revenue stamps, $204.18; notary fees, $5; postage, Western Union, etc., $22.10; safe-deposit box, $5; Liberty Memorial pledge, $5,000; Boy Scouts pledge, $66.66; total, $162,280.79.
The bills receivable belonging to the trust estate organized in March, 1922, consisted of notes, except $8,000 in bonds, all of which were paid during the year 1922. At the end of 1922 there was virtually nothing left in the trustee account but the Bredbeck note of $9,500 and a bond of the Sunset Hill School for $1,000. The bonds of the Metropolitan Building Co. were sold to one or more members of the family at a fair value, payment being received by the trustee.
The trial balance of December 31, 1922, disclosed that there were on hand the following: *1859 Bredbeck note for $9,500; Sunset School Association bond, $1,000; Metropolitan Building Co. bond, $2,000; New England National Bank balance, $2,425.87. There were no liabilities.
*508 The trustee realized on the Bredbeck note by taking over the stock that was deposited as collateral security for its payment. The surplus of the trust estate, after payment of the taxes and other obligations, was distributed to the owners by the trustee, that is, one-fifth went to each of the beneficiaries under the document of March 7, 1922.
No dividends were paid in 1921 by the Louisiana Sawmill Co. nor by the White-Grandin Co. The Forest Lumber Co. paid dividends in 1921 amounting in all to 42 per cent. A large part thereof was not from earnings. This company finished cutting its timber shortly after that time.
After the division of the decedent's property in 1922, he continued as director and officer of the various companies with which he was connected. He did not relinquish his office with any company prior to his death, except that during 1922 he resigned as president of some of the companies to become chairman of the boards of directors. This change was made at his own request, *1860 and resulted in an increase rather than a decrease of responsibility. He performed substantially the same duties afterwards as he did before. As president of the companies, decedent selected all important personnel, such as sawmill managers and others, and after he ceased to be president and became chairman of the boards of directors, he continued personally to select such employees. When decedent became chairman of the boards, the sawmill managers were made presidents of the companies in most instances. In the case of the Forest Lumber Co. the decedent's son succeeded him as president. Decedent was as active in the affairs of the corporations after the changes as before. Decedent did not own the controlling stock in any of these corporations. His stockholdings were in the minority at all times.
During the last three years of his life, decedent was absent from Kansas City a great deal of the time; he was in and out, but he did not delegate authority to anyone to act for him in his absence. The sales manager resigned in 1921 while decedent was in California, and he returned to Kansas City to handle the matter personally. In his absence, when matters arose requiring the attention*1861 of the executive head, they were referred to him by telegram for decision. Decedent drew a total salary, apportioned among the various companies, of about $10,000 or $12,000 per year.
The income taxes of the decedent disclosed by his tax returns were as follows: for 1917, $27,468.36; for 1918, $23,899.32; for 1919, $62,076.84; for 1920, $99,036.58; for 1921, $154,439.85. Decedent's net income for 1922 was $54,331.33 and his tax liability was $5,982.83.
*509 Decedent discussed with his son and his attorney the matter of income taxes, but did not discuss the matter of estate or inheritance taxes.
About the year 1917, decedent developed a mild case of diabetes. In March, 1920, decedent underwent a thorough medical examination, which disclosed a chronic condition of diabetes and arteriosclerosis. His blood sugar was relatively low, around 160 milligrams. Normal is 120. Diabetes varies in severity according to the age at which it is acquired. In the case of children, before the introduction of the drug insulin, diabetes was very serious, usually fatal. It becomes less serious as one grows older. Beyond 60, diabetes is not recognized as a serious disease, and rarely*1862 if ever requires the active treatment necessitated in the more serious forms.
While the decedent had arteriosclerosis, or hardening of the arteries, in 1920, it was in a mild form and not greater than might be expected in a man of his age, and there was no evidence of paralysis. The physician who examined the decedent in March, 1920, did not prescribe any medical treatment for him, but prescribed hydrotherapy treatments. Thereafter, and until October, 1922, decedent visited the doctor's office from time to time on an average of three or four times a month, for the hydrotherapy treatments. During this period from March, 1920, to October, 1922, there was no impairment in the use of decedent's limbs and no noticeable change in his mentality. His condition remained about stationary, without loss or gain. Particularly during the months of February and March, 1922, decedent's condition was unchanged. He was of a cheerful disposition, and never talked about his death or the possibility of his dying.
In October, 1922, he summoned his doctor and the doctor saw him professionally at his home for the first time. At that time, decedent complained of passing bloody urine. Upon examination, *1863 it was found that he had an enlarged prostate, and the doctor recommended that the decedent go to the hospital for further examination to determine the point of bleeding, and this was done. Prior to that time, decedent had never had any prostate symptoms. On the original examination, when a complete analysis was made of his physical condition, it was found that he had an enlarged prostate, which is usual in men over sixty years of age, but his condition was such that treatment was not indicated unless complicating symptoms either of obstruction or hemorrhage developed. When decedent was sent to the hospital in October, 1922, the doctor anticipated that it would be necessary for decedent to remain there for only a few days, and both the decedent and members of his family were so informed.
Upon admission to the hospital, a cystoscopic examination was made and an enlarged prostate was found to be growing into the *510 bladder, which was the cause of the bleeding. Fulguration of the bladder was attempted, with only partial success, and it was finally agreed by the doctors that the only method of obtaining relief was through surgery, which was inadvisable on account of the*1864 decedent's age.
Decedent died on January 5, 1923. About two weeks before his death, he began to develop a group of symptoms known as uremia, or kidney insufficiency. This condition was caused first by an obstruction resulting in the damming back of the urine, which produced a direct load on the kidneys, which in turn produced a vicious cycle due in part to the diabetic and arteriosclerotic condition of the decedent. This necessarily resulted in involvement of all of the vital organs of his body, but it was the uremia which was the actual cause of his death.
The physical examination of the decedent in 1920 disclosed nothing to indicate that he would probably not live for an indefinite period of time, according to his then life expectancy. At that time there was no apparent reason for anticipating any development pointing to death. It was the intervention of the prostatic condition and the ensuing complications, first manifested in October, 1922, which resulted in his death in January, 1923.
Decedent's physical examination in 1920 disclosed some sugar in the urine, and there was a slight increase over normal of sugar in the blood stream. This was evidence of mild diabetes, *1865 but it had nothing to do with the ultimate kidney failure. Subsequent analyses of decedent's urine did not always show sugar. There were long periods when he was entirely free of sugar. Albumin was relatively absent for the greater part of the time. There were occasional traces of albumin. The specific gravity of the urine was generally slightly increased over normal. Decedent never manifested any mental confusion prior to his last illness, but did at that time.
After recovery from an attack of acute indigestion in May, 1919, decedent suffered no serious illness until the beginning of his last illness in the latter part of October, 1922. During the period from May, 1919, to October, 1922, decedent occasionally consulted his physician for some minor ailment, and at the instance of his family and on his doctor's advice his diet was restricted for a time on account of his diabetic condition.
Alfred Tyler Hemingway, husband of decedent's daughter Arabell, died on February 24, 1922, after an illness of about six days. He had been closely associated in business with his father-in-law since 1902, and at the time of his death was secretary and general manager of the Forest Lumber*1866 Co. He was also secretary of a number of other companies in which the decedent was interested, *511 including the Louisiana Long Leaf Lumber Co. and the Louisiana Sawmills Co. Hemingway was survived by his wife, Arabell, daughter of the decedent White, and two children then 13 and 17 years of age, and an adopted child about 7 years of age. The 17-year-old child was a son, who at the time of his father's death was attending Choate's School at Wallingford, Conn. It cost between $2,500 and $3,000 per year to keep the son in this school. He was to finish at Choate's School in the year of his father's death, and it was planned that he should then attend Princeton University.
The value of Hemingway's gross estate, as returned for the purpose of the Federal estate tax, was $408,924.05, less deductions totaling $257,957.74, leaving a net estate subject to tax of $150,966.31.
Prior to her husband's death, the decedent White had given to his daughter Arabell stock in the Forest Lumber Co. and other companies, amounting to a total value of about $30,000.
Prior to his death Hemingway had purchased stock in the Forest Lumber Co. and other companies in which the decedent White*1867 was interested. Hemingway had purchased said stock largely on credit, and with the understanding that the dividends declared thereon should be applied in payment of the balance due. He also had borrowed money from the banks and at the time of his death owed approximately $170,000. He left life insurance payable to his widow in the amount of $140,000. At and prior to his death Hemingway drew a total salary of about $10,000 per year.
When her husband died, Mrs. Hemingway was much perturbed over her financial situation and lack of ready funds. She discussed the matter at length with her brother, the petitioner herein, and also with her father's attorney. Her brother in turn discussed the matter with the decedent, who announced his intention of making suitable financial provisions for his daughter so that she might have sufficient funds available to maintain herself and family and keep her children in school. These discussions occurred between the dates of February 24, 1922, and March 7, 1922, culminating in the distribution of decedent's property under the instrument executed on said last mentioned date.
The gifts made by the decedent to his wife and children under the instrument*1868 of March 7, 1922, as well as the gift to his wife of their home and its furnishings, were not made in contemplation of death.
OPINION.
TRAMMELL: All issue raised by the pleadings respecting valuations and the allowance of a deduction for attorneys' fees have been settled by stipulation of the parties, and the stipulated facts embodied in our findings of fact, above. The sole issue remaining for decision here in whether or not the gifts made by the decedent to his wife and *512 children under the instrument of March 7, 1922, and the gift of the home and its furnishings made by decedent to his wife on March 21, 1922, were made in contemplation of death, within the meaning of Title IV of the Revenue Act of 1921.
In , we said, in referring to section 402(c) of the Revenue Act of 1921:
This provision * * * has been before the Board and the courts in many cases and the construction uniformly applied is that by the term "contemplation of death" is meant an apprehension of death within the reasonably near future from some existing bodily or mental condition, and not the general expection of ultimate*1869 death entertained by everyone and that such contemplation of death must be the motive which prompted the transfer and without which the transfer would not have been made, in order to include the transferred property in the estate of the decedent subject to tax.
See also the following: ; ; ; ; ; ; ; ; ; . Also, see ; ; *1870 .
Applying the foregoing principles of law to the facts in this case, we encounter no difficulty in reaching the conclusion that the gifts in question were not made in contemplation of death, within the meaning of the statute. We search the record in vain to find any evidence indicating that at the time decedent made the gifts to the members of his family in March, 1922, there was then present in his mind any apprehension or any reasonable cause for apprehension of impending death from any existing bodily or mental condition, nor is there any evidence that he was moved to make the gifts because of any reasonable fear that his death was near at hand. On the contrary, there are abundant facts established by the uncontradicted testimony to show that the decedent in making these gifts was in no wise motivated by any consideration of early death.
The decedent was a man of optimistic and cheerful nature, and never discussed the possibility of death with his friends, his family, or his doctors. Prior to the making of the gifts in March, 1922, the last serious illness of the decedent occurred in May, 1919, when he had an attack*1871 of acute indigestion at West Eminence, Mo.
During the period from May, 1919, to October, 1922, the beginning of decedent's last illness, he suffered only minor ailments and his *513 physical and mental condition in general remained unchanged. This was particularly true during the months of February and March, 1922. His health was as good as it might be expected in a man of his age. There was no condition known to his doctors - and from this fact we may assume there was none known to himself - which would reasonably justify a belief that he would not live for an indefinite time, according to his life expectancy.
During the concluding years of his life, and in fact up to the very beginning of his fatal illness in October, 1922, decedent is shown to have been very active in the management of his extensive and varied business interests, and was planning the conduct of matters far into the future. He spent much time in traveling about the country, and up to the last, maintained a firm control of the numerous corporations in which he was interested.
Decedent's death in January, 1923, was due primarily and directly to uremic poisoning resulting from an enlarged prostate, *1872 the first symptoms of which were manifested in October, 1922. It was in that month that his physician visited him professionally at his home for the first time. The doctor recommended that decedent go to the hospital for a more complete examination than could be made in his home, but expressed the opinion that it would be necessary for the decedent to remain in the hospital only a short time.
From all these facts, we can only reach the conclusion that the decedent must have been moved to make the gifts of March, 1922, by some reason other than contemplation of death, as that term has been heretofore consistently construed by us and by the authorities cited above.
However, this conclusion need not rest solely on the uncontroverted facts above referred to. There is ample evidence, in our opinion, to establish other adequate motives actuating the gifts in question.
Decedent's son-in-law, Hemingway, husband of his daughter Arabell, died on February 24, 1922, and while he left a considerable gross estate, it was heavily encumbered, and the assets were producing but little, if any, income which would be available to the widow. Mrs. Hemingway, in this situation, was most disturbed*1873 about her finances, and talked the matter over repeatedly with her brother and with her father's attorney. The brother in turn discussed the matter with his father, who at once expressed his intention to make adequate financial provision for his daughter to the end that she might have sufficient income to maintain her family and keep her children in school without undue worry.
It is shown that decedent throughout his life had adhered rigorously to a rule of impartiality in making gifts to his children. *514 Whenever he was moved for any reason to make a gift to one child, he invariably made gifts of similar value to the others. Therefore, to make financial provision for his daughter, Mrs. Hemingway, required him, from a sense of fairness, to make similar provisions for his other children.
On March 6, 1922, while this matter was thus under consideration by the decedent, his secretary prepared his income-tax return for 1921, indicating a total tax in excess of $154,000. This was a material increase in decedent's tax liability over previous years, and he discussed with his son the large amount of tax which he would be required to pay. The son thereupon directed his father's*1874 secretary to prepare calculations of tax liability on the basis of a division of his father's property, consisting principally of corporate stocks, into five equal parts, and it was found that on such basis the total tax liability would be $49,460.99, effecting a saving of more than $100,000 in income tax on the same income. These figures were brought to the attention of the decedent, who immediately had his attorney prepare, and he on the same date executed, the transfer agreement of March 7, 1922. By this arrangement he made suitable provision for his daughter, Mrs. Hemingway, made similar gifts to his other children and to his wife, and effected a substantial reduction in income-tax liability. These motives, we think, were adequate in the circumstances. See .
In our opinion, the evidence also establishes that a reasonable motive, other than contemplation of death, moved the decedent to give the home in Kansas City to his wife, which was transferred to her by deed executed and delivered on March 21, 1922.
Several years prior to his death the decedent gave certain real estate located in New York State to his*1875 daughters and at that time announced his intention of giving the home to his wife, but for some undisclosed reason he did not at that time transfer the title to her. Prior to her marriage, decedent's wife had taught school for some ten years and was much interested in children and school work. Early in 1922, she was requested by her friends to become a candidate for school trustee. However, only property owners were eligible to hold that office and, when the matter was brought to the attention of the decedent, he immediately on the same day had a deed prepared, which he executed and delivered to his wife, transferring the home to her. Thus, the decedent by the same formal act gave effect to his expressed intention of giving the home to his wife, and also qualified her to hold the position of school trustee, which she desired.
Upon consideration of all the evidence, it is our opinion that the petitioner has overcome the presumption of fact created by the statute, and has discharged the burden of proof cast upon him. We *515 hold, therefore, that the gifts in question were not made in contemplation of death within the meaning of the taxing statute, and that the respondent*1876 erred in including the value thereof in decedent's gross estate.
The tax liability will be recomputed in accordance with this opinion and the foregoing findings of fact.
Reviewed by the Board.
Judgment will be entered under Rule 50.
LANSDON and TRUSSELL dissent.