*140 Decision will be entered in Docket No. 112781 that there is an unpaid liability as transferee for gift tax for 1938 of $ 3,000, with interest as provided by law. Decision will be entered in Docket No. 112782 that there is an unpaid liability as transferee for gift tax for 1938 of $ 2,993.87, with interest as provided by law.
1. Pursuant to agreements previously entered into with a corporate trust company, as trustee, the donor transferred, by gifts, certain property to the trustee in 1938. Held, that the trustee is liable as transferee and as fiduciary of a transferee for the unpaid gift tax of the donor for such year.
2. Under section 510 of the Revenue Act of 1932, a donee is liable to the extent of the value of the gift received for the gift tax thereon and the value of the gift is a question of fact to be determined on the evidence. Petitioner was the donee of a future interest in certain property transferred to trust. Value of the said future interest as of the date of the gift determined.
3. Notices of a deficiency in gift tax of a donor mailed to the trustee and the donee within one year from the expiration of the period of limitations for assessment against the*141 donor are timely, and it is immaterial that no notice was ever mailed to the donor and that he was at all times financially able to pay the deficiency.
*670 The respondent has determined that the petitioner, Fidelity-Philadelphia Trust Co., is liable, as trustee and transferee of property of William W. Bodine, for a deficiency in gift tax for the calendar year 1938 in the amount of $ 3,000, plus interest, on gifts made by William W. Bodine during that year. In addition, the respondent has determined that the petitioner, Samuel T. Bodine, as transferee and donee of property transferred by William W. Bodine, is liable for said deficiency plus interest.
FINDINGS OF FACT.
The greater part of the facts have been stipulated and are found as stipulated.
*671 The petitioners have their respective principal places of business in Philadelphia, Pennsylvania.
By separate agreements entered into on November 27, 1934, with petitioner Fidelity-Philadelphia Trust Co., as trustee, William W. Bodine, *142 by gifts, established four irrevocable trusts. Each of the trusts was for the benefit of a specified child. The corpus of the respective trusts consisted of cash and securities. The names of the children, the dates of birth, and the total value of cash and securities contributed to the trusts were as follows:
| Name | Date of birth | Total value |
| Samuel T. Bodine | Mar. 18, 1916 | $ 77,469.38 |
| William W. Bodine, Jr | May 29, 1918 | 69,610.07 |
| Jane Bodine | Mar. 14, 1920 | 65,940.09 |
| James Bodine | June 16, 1921 | 62,055.74 |
The instrument in case of the trust for the benefit of petitioner Samuel T. Bodine provides that the trustee shall apply the net income of the trust to the payment of premiums on ten specified policies of insurance, totaling $ 68,000, upon the life of Samuel T. Bodine, of which policies the trustee previously had been or was to be named as beneficiary. In event the net income is insufficient for that purpose, the trustee is authorized to pay the difference from the corpus of the trust. Should trust income be more than sufficient for such purpose, the excess, during the minority of Samuel T. Bodine, was to be added to corpus, or, in the discretion of the trustee, *143 used to defray his educational expenses. After Samuel T. Bodine reached the age of 21, any excess of trust income over the amount required to pay the insurance premiums was to be distributed to him currently. If and when the insurance policies mature by reason of the endowment provisions therein, the proceeds are to be collected and added to the corpus of the trust, and thereafter the entire net income of the trust is to be distributed currently to Samuel T. Bodine. In event of the death of Samuel T. Bodine, the trustee is to hold the proceeds of the policies and add them to the corpus of the trust. It is further provided that the trustee shall distribute to Samuel T. Bodine $ 10,000 in cash, or securities of an equivalent market value, when he reaches the age of 30, one-fourth of the trust corpus as it then exists when he reaches the age of 35, and the remainder of the corpus when he reaches the age of 40. If he dies prior to becoming 40 years of age, without widow or issue surviving him, the corpus of the trust is to be divided per stirpes among the descendants of William W. Bodine. Other provisions relate to the distribution of income or corpus to a surviving widow, children, *144 or others in event of the death of Samuel T. Bodine prior to his becoming 40 years of age. There is also a provision permitting *672 William W. Bodine to transfer additional property to the corpus of the trust. The trust instrument contained a clause against the anticipation of distributions and against alienation of interests by the beneficiaries.
Except as to beneficiaries, the material provisions of the three other trusts are the same as those of the trust for the benefit of Samuel T. Bodine.
During 1935 William W. Bodine transferred to each of the four respective trusts securities of a value in excess of $ 5,000. During 1936 he transferred securities of a value in excess of $ 5,000 to each of the trusts of which Samuel T., Jane, and James Bodine, respectively, are the beneficiaries. During 1937 he transferred to each of the four trusts securities of a value of $ 4,978.75. On September 9, 1938, he transferred cash and securities in the following total value to the trusts for the indicated persons:
| Samuel T. Bodine | $ 5,733.01 |
| William W. Bodine | 5,733.01 |
| Jane Bodine | 5,733.00 |
| James Bodine | 5,733.00 |
No income has ever been distributed or distributable under any *145 of the four trusts.
The value of the gift to Samuel T. Bodine on September 9, 1938, was $ 2,993.87.
For each of the years 1934, 1935, 1936, and 1937, William W. Bodine filed gift tax returns in which he reported the gifts made by him to the respective trusts and in which he claimed with respect to such gifts exclusions in the amounts of $ 20,000, $ 20,000, $ 15,000, and $ 19,915, respectively, which were subsequently allowed by the respondent.
On January 27, 1939, William W. Bodine filed a gift tax return for 1938 in which he reported the gifts made by him on September 9, 1938. Against the total of those gifts, he took total exclusions of $ 20,000 and reported a tax liability of $ 439.81, which was paid. In an audit of the return the respondent disallowed the exclusions totaling $ 20,000, on the ground that the gifts were of future interests. For the purpose of determining the total net gifts for preceding years, the respondent disallowed the exclusions previously allowed for the years 1934 through 1937 and determined a deficiency of $ 3,000 in gift tax for 1938. The respondent did not at any time prior to the expiration of the three-year statutory period of limitation for assessment*146 of gift tax for 1938 against William W. Bodine notify him, or either of the petitioners herein, of any deficiency in gift tax due from William W. Bodine for 1938. However, on July 24, 1942, the respondent notified petitioner Fidelity-Philadelphia Trust Co. of *673 his determination that, as trustee and transferee of property transferred by William W. Bodine, it was liable for the above mentioned deficiency of $ 3,000 in gift tax, plus interest. On the same day the respondent also notified Samuel T. Bodine of his determination that, as transferee and donee of property transferred by William W. Bodine, he (Samuel T. Bodine) was liable for said deficiency, plus interest. No part of the deficiency has ever been paid. At the time he made the gifts on September 9, 1938, William W. Bodine was, and at all times thereafter material in these proceedings has been, solvent and financially able to pay the deficiency
OPINION
It is at once apparent that the case of petitioner Fidelity-Philadelphia Trust Co. is controlled by the same law as were ; affd., ; and *147 . In Fletcher Trust Co. we held that since a donee, by section 510 of the Revenue Act of 1932, was made personally liable to the extent of the gift received for the tax thereon and his liability so imposed was enforceable under section 526 (a) (1) of the act, , a trustee for a donee was through section 527 (b) of the statute also liable as transferee for the unpaid gift tax. In Fidelity Trust Co. v. Commissioner, the court was of the opinion that, inasmuch as Congress, by specific statutory provision, had made the gift tax of the donor a lien for a period of ten years on the estate given in trust and held by the trustee, Congress had likewise imposed a liability at law on the trustee for the unpaid gift tax and the trustee was therefore liable as transferee under section 526 (a) (1), without resort to the more indirect reasoning of Fletcher Trust Co. Under either or both theories of the statute, the claim of the petitioner falls, and, on authority of the cases cited, the respondent's claim of liability against Fidelity-Philadelphia*148 Trust Co., trustee, is sustained.
It is the contention of petitioner Samuel T. Bodine that he was not the recipient of a gift in respect of which he has a liability at law, under section 510 of the Revenue Act of 1932, for the gift tax thereon and that there is therefore no liability for gift tax enforceable against him under section 526 of the act. The argument, in substance, is that, the gift being that of a future interest, he did not at the time of the gift actually receive any payments or property, nor had he at the time of the hearing received any payments or property, and, since the actual receipt of money or property may still be defeated by his death before he reaches the age of 30, he has received no gift *674 of value which would give rise to a liability at law under section 510, which liability at law is enforceable under section 526. That the problem presented is difficult of solution is obvious, but it is factual, not legal, in character. See the discussion in That the petitioner was the recipient of a gift of a future interest is not open to question. Furthermore, there is no question*149 that a tax is imposed on gifts of future interests to the extent of the value thereof as well as on gifts of present interests, and under section 510 the liability of the petitioner for that tax is fixed and measured by the value of the gift. Value is a question of fact. The gift made by William W. Bodine, donor herein, in respect of which petitioner Samuel T. Bodine received a future interest was a gift of cash and securities having a value of $ 5,733.01 as of the date of gift. It is apparent therefore that under section 510 Samuel T. Bodine is liable to the extent of the value of the future interest received by him. The fact that he received only a future interest in the cash and securities transferred in trust and that certain contingencies might defeat the ripening of the future interest into a presently enjoyable interest are factors which are to be taken into account in determining the value of the gift received by him and for the purpose of determining his liability at law under section 510. If there is no value, there is no liability; but to the extent that there is value, there is, according to the statute, a liability.
In respect of the value of the gift to petitioner*150 Samuel T. Bodine, the parties have stipulated as follows:
The interest of Petitioner, Samuel T. Bodine * * * in the property transferred by the said William W. Bodine on September 9, 1938, in trust for the benefit of the said Petitioner had an actuarially computed value of $ 2,993.87 as of that date. Said Petitioner does not concede that this represents the fair market value of said interest on that date or that said interest had a fair market value. Respondent does not concede that the value of the interest of said Petitioner in said gift is limited to said actuarially computed value.
It is the contention of the petitioner that a showing of an actuarially computed value of the future interest received by him is not proof of value, and the proceeding here being a proceeding for the determination of transferee liability, and the respondent having the burden of proof therein, the decision must be for the petitioner because of failure of proof. Other than the facts stipulated, as set forth above, there is no evidence in the record from which the value of the gift may be determined. Such actuarially computed value is, we think, evidence of value of the said interest, and the petitioner*151 makes no claim that there is any other or better evidence of the value of the future interest received. On the record made in this case, we conclude and have found *675 as a fact that the value of the future interest received by the petitioner was, as of the date of the gift, $ 2,993.87.
Both petitioners allege that, the three-year period of limitation for assessment of gift tax liability against William W. Bodine for the year 1938 having expired, the respondent erred in determining that they are under any liability, as transferees or otherwise, for any deficiency in gift tax of William W. Bodine for that year. Under authority of the cases previously cited herein, the issue stated is resolved against the petitioners.
Each of the petitioners has alleged that the respondent made certain errors in his determination of the deficiency against the donor, William W. Bodine. These assignments of error were not included, however, by petitioners' counsel in his statement of the issues either at the hearing or on brief, and are accordingly regarded as having been abandoned.
Decision will be entered in Docket No. 112781 that there is an unpaid liability as transferee for gift tax for*152 1938 of $ 3,000, with interest as provided by law. Decision will be entered in Docket No. 112782 that there is an unpaid liability as transferee for gift tax for 1938 of $ 2,993.87, with interest as provided by law.
Arundell, J., dissenting: I disagree with so much of the opinion as holds Samuel T. Bodine liable as a transferee. He has not presently received by way of gift or otherwise any part of the property the gift of which by William W. Bodine is the subject of the tax. Samuel's right to receive the property is purely contingent; he has no present control over the property and has received nothing out of which the tax may be paid. The fact that the value of a contingent interest may be computed actuarially is of no importance and the figures so arrived at do not establish the fair market value of the gift. The burden is on the respondent and he has failed in his proof.
Mellott, J., dissenting: I agree with the views expressed in the dissenting opinion of Judge Arundell. I also adhere to those expressed in my dissents in (on appeal, C. C. A., 2d Cir.), and ;*153 affd., .