*8 Decision will be entered under Rule 50.
1. Decedent, who died in 1940, irrevocably assigned and transferred to his wife in 1935 insurance policies taken out by him on his own life. Held, under the facts, that the policies were transferred in contemplation of death within the meaning of section 811 (c) of the Internal Revenue Code and are includible in decedent's estate.
2. The value of a certain apartment building determined.
3. Held, ignorance of the law does not constitute reasonable cause for failure to file estate tax return within the time prescribed by law and the penalty provisions of section 3612 (d), Internal Revenue Code, accordingly apply.
*1403 Respondent determined a deficiency of $ 35,042.77 in the estate tax liability of the estate of Arthur D. Cronin. Respondent added a penalty of $ 8,760.69 for failure to file the estate tax return within the time prescribed by law. Certain issues raised by the pleadings have been conceded by petitioner by stipulation. The remaining questions are, (1) whether certain life insurance policies transferred by decedent to his wife are includible in his estate under section 811 (c) of the Internal Revenue Code, (2) the value of an apartment building constituting part of the estate, and (3) whether respondent properly added the penalty for failure to file the estate tax return within 15 months after decedent's death. The case was submitted on oral testimony, exhibits, and a stipulation of facts. The facts as stipulated are so found.
FINDINGS OF FACT.
Decedent died testate on*10 April 5, 1940, at the age of 57 years. Irene E. Cronin, his widow, was duly appointed and qualified as executrix. Decedent also was survived by his five children. The estate *1404 tax return was filed with the collector of internal revenue at Detroit, Michigan, on January 1, 1942. The return was not timely filed for the reason that the attorney representing the executrix of the estate did not know that there was a time limit within which the return was legally required to be filed.
Insurance policies. -- During 1935 decedent assigned to his wife certain life insurance policies which he had taken out on his own life. The net value of these policies at the time of decedent's death was as follows:
| Company | Policy No. | Amount |
| Union Central Life Insurance Co | 730036 | $ 75,225.00 |
| 730037 | 25,056.25 | |
| 779807 | 15,043.72 | |
| 779808 | 15,043.72 | |
| 779809 | 10,029.15 | |
| 779810 | 10,029.15 | |
| 779811 | 26,075.29 | |
| 975300 | 100,472.00 | |
| 276,974.28 | ||
| Northwestern Mutual Life Insurance Co | 723044 | 1,008.04 |
| 990447 | 2,521.13 | |
| 1120308 | 2,521.25 | |
| 1120309 | 2,521.25 | |
| 1977947 | 1,008.90 | |
| 9,580.57 | ||
| Minnesota Mutual Life Insurance Co | 91466 | 21,732.50 |
| 91467 | 21,732.50 | |
| 91469 | 6,519.65 | |
| 49,984.65 | ||
| New York Life Insurance Co | 6856585 | 5,007.13 |
| * 341,546.63 |
At the time of decedent's death there was a premium refund due with respect to one of the Northwestern Life Insurance policies in the amount of $ 15.40. There was a lien on all the above listed policies to the extent of $ 97,440 on account of loans made thereon by the National Bank of Detroit. There was interest due on the amount of the loans at the time of decedent's death in the amount of $ 357.21. There was also a loan in the amount of $ 500, with accrued interest in the amount of $ 5.01, against Union Central Life insurance policy No. 779811.
The eight Union Central Life insurance policies listed above were assigned by decedent to his wife on August 26, 1935. The following language is typical of that used in assigning all eight of these policies:
For Value Received, I hereby assign, transfer and set over the above described policy of insurance, together with all rights reserved to me as the insured under the said policy or as the owner thereof, or as the beneficiary thereunder, or as *1405 the assignee thereof, and all sum or sums*12 of money, interest, benefit and advantage whatsover, now due or hereafter to become due to me by virtue thereof, unto Irene E. Cronon, my wife.
On December 3, 1934, decedent had exercised his power to change the beneficiaries of these policies and had irrevocably designated the Pine Ridge Coal Co., a corporation, hereinafter referred to as the coal company, as beneficiary. On August 26, 1935, the coal company had assigned its entire interests in these policies back to decedent, which enabled decedent to make the assignment to his wife despite his prior irrevocable designation of the coal company as beneficiary.
The five Northwestern Mutual Life insurance policies listed above were assigned by decedent to his wife in one instrument dated November 23, 1935, the pertinent language of which is as follows:
I, Arthur D. Cronin, the insured under policies * * * issued by the Northwestern Mutual Life Insurance Company and payable to Irene E. Cronin, wife, as beneficiary, hereby request and direct that in event no beneficiary or contingent beneficiary survives the insured, and provided there be no lawful child or children of the contingent beneficiaries living, the proceeds of said policies*13 shall be payable when due to the executors, administrators or assigns of Irene E. Cronin.
The Power to exercise the rights and privileges specified in and/or conferred upon the insured by the terms of said policies, including the right to change or revoke the designation of beneficiary, contingent beneficiaries, further payees and option settlement shall be vested solely in Irene E. Cronin, her executors, administrators or assigns.
The three Minnesota Mutal Life insurance policies listed above were assigned to decedent's wife in a single instrument dated September 3, 1935, signed by decedent as the insured and by the coal company as irrevocable beneficiary. This instrument of assignment, after designating Irene as beneficiary irrevocably, requested that the following endorsement be attached to the policies, which request was granted:
Notwithstanding any provisions in the Policy to the contrary, the Insured shall not have the right to receive dividends or exercise any of the options or privileges contained in the Policy, but the Beneficiary may, without the concurrence of the Insured, collect and receive dividends, effect loans on the Policies, exercise all the options and privileges, *14 and receive all the benefits provided for in the Policies, (including disability benefits, if any).
The New York Life insurance policy listed above was assigned by decedent to his wife on September 12, 1935. The pertinent language of this assignment is as follows:
For Value Received, I, being of legal age, hereby assign and transfer unto Irene E. Cronin, my wife, * * * the Policy of Insurance * * * upon the life of Arthur D. Cronin, * * * and all dividend, benefit and advantage to be had or derived therefrom, subject to the conditions of the said Policy, and the Rules and Regulations of the Company * * *.
*1406 On December 5, 1934, decedent had designated the coal company as beneficiary irrevocably of this New York policy. On September 11, 1935, the coal company had assigned all its interests in such policy back to decedent. On September 12, 1935, decedent had, in addition to assigning the policy, also designated his wife as beneficiary thereof.
After decedent had assigned the above policies of insurance to his wife she used such policies as security to obtain loans from the National Bank of Detroit. The money so borrowed was used by Irene either to pay premiums*15 on the policies or to repay amounts borrowed by her from the coal company. Irene borrowed money from the coal company from time to time which she used to pay premiums on the policies. Irene also used money received as dividends on stock she owned in the coal company to pay premiums on these policies. The premiums on all the policies listed above which were assigned by decedent to his wife were at all times after the assignment of such policies paid by Irene from her own funds and from money borrowed on the policies. It was contemplated, understood, and intended by decedent and his wife that the policies would not be surrendered by the latter after the transfers. Decedent and his wife considered and intended the right to receive the insurance proceeds at decedent's death as the principal and primary right transferred. The other rights and privileges acquired by decedent's wife as a result of the transfers were not intended to be exercised by her except in so far as necessary or desirable to preserve or enhance the right to receive the proceeds at decedent's death.
At the time of the assignment all eight of the Union Central Life insurance policies designated Irene as beneficiary. *16 Some but not all of these policies designated decedent's children as contingent beneficiaries. The five Northwestern Mutual Life insurance policies also designated Irene as primary beneficiary and decedent's children as contingent beneficiaries. On November 12, 1935, Irene directed that the proceeds from these five policies be retained and that the interest thereon be paid to her in monthly installments. She directed that after her death the proceeds be divided in equal portions for each surviving child and the interest thereon paid to each child until each child reached the age of 25 years, at which time one-third of the principal was to be made available. When each child should attain the age of 30 years he or she was entitled to withdraw the remaining two-thirds of the principal. On November 22, 1935, the decedent directed the Northwestern Mutual Life Insurance Co. to distribute the proceeds of the policies to the children in a manner similar to that directed by his wife in the event his wife should not survive him. Irene was primary beneficiary and the children were contingent beneficiaries of the three Minnesota Mutual Life insurance policies on *1407 December 4, *17 1935, at which time Irene further directed that the proceeds be distributed to such contingent beneficiaries in a fashion essentially the same as had been directed with respect to the Northwestern Mutual Life insurance policies described above. Irene was the beneficiary of the New York policy.
On October 22, 1935, decedent executed his last will and testament. After making minor bequests, decedent left the residue of his estate to his wife. In the event she predeceased him, the will provided that the residue of the estate be held in separate and equal trusts for the benefit of each surviving child. Under the terms of these testamentary trusts the trustees were directed to use such income or principal of each trust as was necessary to support and maintain the children beneficiaries during their minority.
After each child reached the age of 21 and until becoming 23 he or she was to receive all the income derived from the real property in trust and all or a lesser portion of the income from the personal property in his trust, together with such part of the principal thereof which in the trustee's discretion might be necessary for his support and education. After each child reached*18 23 years of age he or she was entitled to receive all the income. When each child became 25 years of age he or she was entitled to one-third of the principal and on attaining 30 years of age could withdraw the remaining two-thirds of the principal.
During 1935 decedent was president and general manager of the coal company. He and his wife were its principal stockholders. The coal company was in the business of selling coal and had had for a considerable period of time a very favorable cost-plus contract with the Detroit & Cleveland Navigation Co. This contract constituted the major portion of the coal company's business. Under this contract the coal company furnished coal to the navigation company's boats. This contract terminated on December 31, 1935, but was continued on a month-to-month basis during 1936 and 1937. The coal company lost the contract after 1937. During 1935 decedent was aware of the prospective termination of this profitable contract. In order to fulfill its contract with the Detroit & Cleveland Navigation Co., the coal company leased a dock from the Grand Trunk Railroad Co. This lease expired on January 1, 1936. It thereafter became necessary for the *19 coal company to obtain docking facilities, which it did in the latter part of 1936 at a cost of approximately $ 137,000. During 1935 decedent was aware of and concerned about the prospective termination of the dock lease and realized that the coal company would incur substantial expenses in obtaining new docking facilities. In August 1935 the coal company's coal lighter, the steamer C. H. Green, was condemned as unseaworthy. To continue its business activities the coal company *1408 bought and converted the steamer Charles Heiden, later the steamer Pine Ridge, which cost the coal company approximately $ 65,000. After finally losing the Detroit & Cleveland Navigation Co. contract, the coal company obtained a contract from the city of Detroit in 1938 for disposing of rubbish, which required the purchase of additional boats and facilities.
At the time decedent transferred the insurance policies here involved he was aware of and concerned about these problems facing the coal company. Decedent realized that by irrevocably transferring these policies to his wife he thereby made it impossible for himself to assign such policies to the coal company or otherwise to similarly*20 subject them by his own actions to the hazards of the coal company's business. This realization, however, was not the dominant motive actuating the transfers.
Prior to and during 1935 decedent was in normal health for a man of his age. He was very active in business, but moderate in his eating and drinking habits. His health did not perceptibly begin failing until the latter part of 1939, at which time he was subject to high blood pressure. His death resulted from coronary thrombosis after an illness of four or five days.
The estate tax return reported a gross estate of $ 112,605.73 and total deductions of $ 61,687.84, or a net estate of $ 50,917.89 before exemptions. On schedule D of the estate tax return it was stated:
The insurance policies, copies of which are hereto attached, are exempt from taxation owing to the fact that said policies were fully and completely assigned and transferred by the insured to beneficiary named therein during the period from August 25th, 1935 to December 12th, 1935, for which period a gift tax return was duly filed therein.
Respondent, in including the insurance policies in question stated in the explanation accompanying the notice of deficiency:
*21 It is held that the insurance policies transferred to the decedent's wife Irene E. Cronin should be included in decedent's gross estate as transfers intended to take effect at death within the meaning of Section 811 (c) of the Internal Revenue Code.
The insurance policies were transfered in contemplation of death.
Valuation of apartment. -- The estate tax return included in the estate an apartment building located at 606 Baldwin Avenue, Detroit, at a value of $ 30,000. The respondent in his deficiency determination increased the value of this apartment to $ 45,000.
The Baldwin Apartment consisted of 19 family units above ground level and 2 family units in the basement. The apartment was fairly well built on a small lot in a neighborhood of small homes. The apartment was furnished.
The reasonable value of the apartment at the time of the decedent's death for estate tax purposes was $ 45,000.
*1409 OPINION.
Insurance policies. -- Respondent contends that the transferred insurance policies are includible in decedent's estate as transfers made in contemplation of or intended to take effect in possession or enjoyment at or after decedent's death within the meaning of *22 section 811 (c) of the Internal Revenue Code. 1 Petitioner contends that the policies were not transferred in contemplation of death, but were transferred for reasons associated with life, and that the transfers were not to take effect at or after death, but were absolute transfers when made. We agree with respondent that the transfers in question were made in contemplation of death.
The dominant purpose of the contemplation of death provision of section*23 811 (c) is to reach substitutes for testamentary dispositions and thus prevent evasion of estate tax. United States v. Wells, 283 U.S. 102">283 U.S. 102. The general scope and meaning of this provision was recently summarized in City Bank Farmers Trust Co. v. McGowan, 142 Fed. (2d) 599, as follows:
Little has been added by the Supreme Court to what was said as to the phrase, "in contemplation of death", in United States v. Wells, 283 U.S. 102">283 U.S. 102, 51 S. Ct. 446">51 S. Ct. 446, 75 L. Ed. 867">75 L. Ed. 867, which remains our authoritative guide. * * * Its outlines were indeed not sharp, or intended to be sharp, but some things are clear. Such a gift need not be in contemplation of imminent death; the section applies to gifts made by the young and healthy, as well as by the old and infirm. It covers "substitutes for testamentary dispositions". If they are such "substitutes," the test is the donor's motive, which "must be of the sort which leads to testamentary dispositions" (page 117 of 283 U. S., page 451 of 51 S. Ct., 75*24 L. Ed. 867). Moreover, even though they be "substitutes" and the motive be of that "sort", the donor must not be also actuated by a "dominant" motive of some other kind, which was left vague then, and has not yet been defined. * * *
We are persuaded by the facts and circumstances of this case that the transfers in question were substitutes for testamentary dispositions and were primarily actuated by motives of the sort which lead to testamentary dispositions. The transfers were grouped in time with the execution of decedent's will. On August 26, 1935, decedent transferred the eight Union Central policies. On September 3 he transferred the three Minnesota insurance policies. On September 12 the New York policy was transferred. Decedent made his will on October 22, 1935. On November 12 and 22 instructions were given *1410 concerning the settlement of the five Northwestern policies which were transferred November 23. Directions concerning the settlement of the three Minnesota policies were given December 4. Thus, during a period of less than five months decedent established a plan for the devolution of his entire estate. It is difficult for us to believe that the testamentary*25 motives which prompted decedent to execute his will did not also prompt the transfers of the insurance policies. We are satisfied that the transfers were component parts of an integrated testamentary plan. This conclusion is further supported by the fact that the transfers in question were not part of a previously established or followed donative scheme. We consider it also noteworthy that the provisions contained in the insurance settlement directions are strikingly similar to the trust provisions contained in the will. In addition to these circumstances is the fact that the value of the transferred insurance policies at decedent's death was more than five times as great as the net amount returned as subject to the basic estate tax. Schoenheit v. Lucas, 44 Fed. (2d) 476; McClure v. Commissioner, 56 Fed. (2d) 548.
It is significant too, in our opinion, that the subject matter of the transfers, that is, the insurance policies, was inherently testamentary in nature. 2 We appreciate that the testamentary nature of the thing transferred does not necessarily mean that the motive actuating its transfer is also *26 testamentary in nature. Nevertheless, we do not think the testamentary nature of the thing transferred can properly be ignored altogether. We must presume that decedent intended to achieve the results which would ordinarily flow from the irrevocable transfers of life insurance policies. Thus, the inherent testamentary nature of such policies may and, in this case we think, does throw significant light on the motive actuating the transfers. In the instant case the parties considered and intended that the most valuable right transferred was the right to receive the proceeds of such policies at decedent's death. It is true that other rights susceptible of exercise, consumption, and enjoyment during the decedent's life were transferred, but the parties did not intend that these rights be so enjoyed. The right to borrow money on the policies, for instance, was exercised not for the purpose of consuming or enjoying such money during decedent's lifetime, but for the purpose of paying premiums and thus protecting and enhancing the real subject of the transfer, to wit, *1411 the right to receive the proceeds at decedent's death. Thus, it seems apparent to us that the rights acquired*27 by decedent's wife were not intended to be exercised or enjoyed during the decedent's lifetime except in so far as necessary to preserve and enhance the ultimate right to proceeds at decedent's death. Consequently, the intended operation of the transfers closely approximated that of a testamentary disposition in that no real benefit or enjoyment was intended to be realized until decedent's death. See Updike v. Commissioner, 88 Fed. (2d) 807; Vanderlip v. Commissioner, 155 Fed. (2d) 152; First Trust & Deposit Co. v. Shaughnessy, 134 Fed. (2d) 940. Under all of these circumstances we are convinced that the transfers of the insurance policies were essentially substitutes for testamentary disposition, actuated by motives of the sort which lead to such disposition.
*28 Petitioner argues that decedent's dominant motive for the transfers was to prevent himself from assigning such policies to the coal company or otherwise similarly subjecting them, by his own actions, to the hazards of the coal company's business. We are not persuaded by this argument. In the first place, we are not thoroughly convinced by the evidence that decedent's business was of such a kind or was at such a juncture as to prompt decedent to make such transfers predominantly for protective reasons. In the second place, the desire to protect the policies from business hazards and creditors is not necessarily inconsistent with or hostile to the desire to make a testamentary disposition. The desire to make a testamentary disposition may well include a desire to protect the subject matter of such disposition. In our opinion the desire to protect the policies from business risks was incidental and subservient to the dominant desire to make a testamentary disposition. We hold, therefore, that the net value 3 of the insurance policies in question, with proper adjustments for premium refunds and loans and less exemption, is includible in decedent's estate. Vanderlip v. Commissioner, supra;*29 First Trust & Deposit Co. v. Shaughnessy, supra.
Petitioner argues that respondent has the burden of proving that the transfers were made in contemplation of death. On brief petitioner states in this connection:
* * * The claim of the Commissioner is expressed in the following language: "It is held that the insurance policies transferred to the decedent's wife, Irene E. Cronin, should be included in the decedent's gross estate as transfers intended to take effect at death within*30 the meaning of Section 811 (c) of the Internal Revenue Code." Throughout the proceedings which led up to the filing *1412 of the petition in the Tax Court the Commissioner had taken the position that the transfer of the insurance policies was in contemplation of death. In the filing of the petition it was recognized that the Commissioner would desire to litigate this question to the end that there might not be a necessity for amended pleadings the issue of "in contemplation of death" was framed in the pleadings. But inasmuch as this is not an issue raised by the explicit terms of Exhibit A, attached to the petition, the burden of proof, it is submitted, is upon the Commissioner and his position is not strengthened by the theory that the deficiency notice is prima facie correct. * * *
Paragraph VIII of the petition is in part as follows:
The facts upon which petitioners rely as the basis of this proceeding are as follows:
* * * (f) During, or about, the period from August to December of the year 1935, decedent Arthur D. Cronin, contemplating certain business activities and for the immediate financial independence of his family, and not in contemplation of death, *31 made a gift of the insurance policies here in question to his wife, Irene E. Cronin, * * *
The allegation in (f) above is denied in respondent's answer.
In his opening statement at the hearing petitioner said:
There is also an issue framed between us as to whether or not the conveyances were in contemplation of death. We expect to show that neither were the transfers made in contemplation of death, nor were they intended to take effect at or after death. I will come back to that in a minute.
* * * *
As far as the in-contemplation-of-death feature is concerned, we expect to show that in 1935 Mr. Cronin was engaged in many activities. He was a tremendously active, alert individual and at the beginning of 1935, as that year opened, he found that there were three problems which were additional to all his other problems and which were abnormal and unusual.
Petitioner apparently concedes that there is no element of surprise or unfairness in the introduction of the contemplation of death issue. Petitioner presented this issue in the pleadings, introduced evidence on it, and argued it on brief. Petitioner's position seems to be based solely on respondent's failure to specifically mention*32 contemplation of death in the notice of deficiency. However, we are convinced that the evidence of record affirmatively establishes that the insurance policies were transferred by decedent in contemplation of death; hence, the question of the burden of proof is merely academic in this proceeding.
Valuation of apartment. -- The apartment in question was included in decedent's estate on the return at a value of $ 30,000. The Commissioner increased this value to $ 45,000. The burden of proof is on the petitioner to overcome the prima facie correctness of respondent's determination of value. The evidence presented by petitioner has not, in our opinion, sustained this burden.
Petitioner's only evidence on the value of the Baldwin Apartment was the testimony of one witness who had had considerable experience in the real estate field in Detroit, but he was not a licensed real estate *1413 operator or a professional appraiser. His activities in the real estate field had been primarily those of a builder, owner, and operator.
This witness' testimony with respect to the Baldwin Apartment was in vague and general terms. He stated that he had first inspected the apartment some*33 four or five years prior to the time of the hearing and had considered its location, construction, and general character of the neighborhood in making his estimate of $ 30,000. Beyond these general considerations we are not informed as to the basis or method of calculation relied on by Powell in arriving at this figure. We are not told in any detail the type of construction involved or the date when the apartment was built. No information is offered concerning operating and maintenance costs. We therefore are unable to determine the net income from the property. We are given no idea of the apartment's value for insurance purposes. We are given no cost basis, nor is the type or condition of the interior furnishings described.
This witness testified that sometime in 1940 he offered a 38-unit apartment which he owned for sale at $ 55,000, with no success. He further testified that he sold in 1939 a 44-unit apartment owned by him for $ 55,000. However, we are not furnished with sufficient information concerning the nature and character of these apartments to enable us to rely on these transactions as a basis for comparison. Witness further testified that sometime around 1940 *34 he had offered decedent $ 28,000 cash for the Baldwin Apartment, thinking decedent was in need of money. This offer was not accepted. Under the circumstances we do not consider this unaccepted offer of any great probative value in determining the apartment's value.
Since no detailed basis or explanation is furnished in support of the witness' estimate of $ 30,000, and because of the general and vague character of his testimony and the admitted gaps in his knowledge of the apartment's operating costs, we do not feel that we can justifiably rely on the opinion of this one witness. On this state of the record it is our opinion that petitioner has failed to sustain her burden in overcoming the prima facie correctness of respondent's determination. We therefore hold that the apartment's value for estate tax purposes was $ 45,000.
Penalty. -- Respondent added a 25 per cent penalty for failure to file the estate tax return within the time prescribed by law. Decedent died April 5, 1940, and the estate tax return should have been filed July 5, 1941, or 15 months from the date of death. 4 The return was filed January 1, 1942, or almost 6 months late. Petitioner argues that the estate*35 should not be subject to such penalty because the delinquency was due to reasonable cause and not willful neglect within the meaning of section 3612 (d) of the Internal Revenue Code. Petitioner *1414 argues that the delinquency resulted because the attorney who was entrusted with filing the return was not aware that there was any time limit. Petitioner further contends that the attorney's care and caution in assembling the necessary data was time-consuming and was embarrassed by the illness of decedent's secretary. In our opinion this argument reduces itself to ignorance of the law. If there were valid reasons for delay an extension could have been requested. No such request was made. Ignorance of the plain and unambiguous provisions of the statute and regulations prescribing the time for filing returns can not be considered reasonable cause. We hold that respondent correctly added the penalty.
Decision will be entered under Rule 50.
Footnotes
*. The above value is based on the stipulation which is $ 1.10 less in amount than the values appearing in the notice of deficiency.↩
1. SEC. 811. GROSS ESTATE.
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, except real property situated outside of the United States --
* * * *
(c) Transfers in Contemplation of, or Taking Effect at Death. -- To the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise, in contemplation of or intended to take effect in possession or enjoyment at or after his death * * *.↩
2. In this connection it is significant to note that Congress, in amending section 811 (g) of the code by section 404 of the Revenue Act of 1942, recognized the testamentary nature of insurance. The report of the House Committee on Ways and Means (H. R. Rept. No. 2333, 77th Cong., 2d sess., July 14, 1942, p. 57) stated in part as follows:
"Recognizing the testamentary nature of insurance on the life of the decedent, both where premiums are paid, directly or indirectly, by him and where he possessed at the time of his death some incident of ownership, your Committee proposes to include all proceeds of such insurance in the gross estate."↩
3. Petitioner does not raise the question of whether the value of the insurance should be reduced by an amount based on the ratio which Irene's premium payments bear to the total cost of the policies. See Liebmann v. Hassett↩, 148 Fed. (2d) 247. Nor has sufficient evidence been introduced to enable us to consider this question on our own initiative. We therefore accept the stipulated net value of the policies as adjusted for refunds and loans as the proper includible value.
4. Treasury Regulations 105↩, sec. 81.63.