*929 Decedent at the time of his death was insured under life insurance, some of the premiums on which had been paid prior to his marriage and others had been paid out of community funds after his marriage. Held:
(1) The value of the policies measured by one-half of the premiums paid out of community funds may not be included in decedent's gross estate. DeLappe v. Commissioner, 113 Fed.(2d) 48, followed.
(2) Only one-half of a certain attorney fee paid out in the administration of the entire community on decedent's death is deductible from decedent's estate.
*991 The respondent has determined a deficiency in estate tax against the petitioner in the sum of $2,810.12. There are two issues presented: (1) Whether the respondent erred in including in decedent's estate more than that portion of the proceeds of life insurance policies measured *992 by one-half of the premiums paid out of community funds; (2) whether deduction should be allowed for the full sum or only one-half of an attorney's fee incurred in administration*930 proceedings.
The facts have been largely stipulated and are so adopted as our findings. The material portions are set out hereinafter.
FINDINGS OF FACT.
The decedent, Oscar Levy, died testate on April 26, 1938, a resident of St. Joseph, Louisiana. His wife, the petitioner, and their three children survived him as his only heirs. The petitioner was duly appointed executrix of the decedent's estate and filed a Federal estate tax return on November 26, 1938.
On December 30, 1903, and March 8, 1904, the decedent purchased two "twenty-pay life" insurance policies, the value of which at the time of decedent's death were, respectively, $7,934.70 and $5,320.29. The first four annual premiums on these two policies were paid by the decedent before his marriage out of his separate property.
Petitioner and decedent were married on May 27, 1908. Thereafter the premiums on the policies above mentioned, as well as the premiums on sixteen additional policies taken out subsequently on decedent's life, were paid out of the community property of decedent and his wife; the value of the sixteen policies purchased after decedent's marriage was $78,213.80 at the time of his death.
*931 Of the eighteen policies thus outstanding on decedent's life at the time of his death, fourteen, including those two taken out prior to his marriage, with a value of $70,103.19, were payable to Rietta K. Levy as beneficiary and the remaining four, with a value of $21,365.60, were payable to Rietta K. Levy, "or in the event of her prior death [to] Doris K. Levy, Elaine Levy, Janet Levy, children, equally or to the survivors or survivor, or should none survive, the insured's estate."
In each of the policies there was reserved to the insured the right to change the beneficiary, to surrender and receive the surrender value of the policy, or to use it as collateral on a loan. The decedent died without exercising any of those rights.
There was included in the estate tax return filed one-half the value of the sixteen policies purchased subsequent to decedent's marriage. The two policies purchased prior thereto were included in the estate at three-fifths of their value.
The decedent's entire estate was administered through the Court of the Parish of Tensas, State of Louisiana. The community interest of Rietta K. Levy was administered together with decedent's interest in the community. *932 An attorney's fee of $3,000 was paid by the estate for these administration proceedings and this expense was allowed by the court.
*993 OPINION.
ARUNDELL: The principal question here is whether the eighteen insurance policies on decedent's life must be included in his estate at their full value or only at a figure representative of the premiums which were paid by him. The first position is the view of the respondent, who relies on our decision in . The facts there were with the exception of minor differences similar to those in the instant proceeding. The decision of the Board in that case has been reversed sub nom. , and we think the views of the court given there must control our decision.
The basis for the holding of the Circuit Court is made plain by the following quotation from its opinion:
* * * In Louisiana the wife has a present, vested interest in one-half of the community property and not a mere expectancy. Upon the death of the husband she does not take by inheritance but in her own right as owner. * * * In computing estate*933 taxes on the proceeds of life insurance the question to be decided is whether the decedent paid all or only part of the premiums. * * * if the premiums have been paid out of community funds the wife has paid one-half of the cost of the insurance and the decedent has paid the other half.
Ownership of the policies under local law determined in Louisiana by the source of the premiums, therefore, is the significant factor in the settling whether any part of their value should be included in the decedent's estate. In the instant case the amount of the premiums paid by decedent's wife is plain and that proportion of the proceeds of the policies is not includable in decedent's estate. The presence of the provision in four of the policies making the decedent's estate the beneficiary in certain contingencies, and the provisions reserving certain rights to the decedent found here and in the Sporl case, supra, do not vary the conclusion reached. While these rights are normally some evidence of ownership, in the present case the decedent is invested with them not because of ownership of the policies involved, but as an agent of the community. Nor does the possibility that the decedent's*934 estate might receive the proceeds of the policies, standing alone, place in the petitioner such an important incident of ownership as to alter this result when the contingency did not mature.
We conclude, therefore, that the decedent's estate should include the policies purchased subsequent to decedent's marriage at only one-half their value and those purchased prior thereto must be included at three-fifths of theirs. This result is in keeping with . The case of , in so far as it conflicts, is overruled by the decision of the Circuit Court in the Sporl case, supra.
*994 There remains for disposal the question of the deduction of attorney's fees paid in the administration of the community which included decedent's and petitioner's properties. It is stipulated that the entire community was administered, the community interest of Rietta K. Levy along with that of the decedent. In these circumstances our decision is controlled by *935 ; reversed on another point, . See also .
Those cases involve estates administered under Washington law. No contention is made by the parties that the Louisiana law on this point is different. We, therefore, think they should be followed and since only one-half the fees are attributable to the administration of decedent's portion of the estate, only one-half may be deducted in computing the estate tax.
Reviewed by the Board.
Decision will be entered under Rule 50.
LEECH and TURNER dissent.