*2282 ESTATE TAX - INSURANCE. - Proceeds of life insurance policies in which the insured reserved the right to change the beneficiaries were properly included in the gross estate. Chase National Bank, v. United States,278 U.S. 327">278 U.S. 327; Louis M. Weiller et al.,18 B.T.A. 1121">18 B.T.A. 1121, followed.
*993 The Commissioner determined a deficiency of $2,562.82 in estate taxes. The petitioner alleges that the Commissioner erred in including *994 in the gross estate of the decedent the proceeds in excess of the $40,000 exemption, of certain life insurance policies paid to specific beneficiaries.
FINDINGS OF FACT.
The petitioner, a resident of Pittsburgh, Pa., is the executor of the estate of A. L. Rauh, who died January 27, 1924. During his lifetime A. L. Rauh procured various policies of life insurance upon his own life. Each policy contained a provision permitting the insured to change the named beneficiary. The last named beneficiaries of these policies were a son, Edwin S. Rauh; the son Edwin S. Rauh in trust for Birdie*2283 Rauh Sunstein, a minor granddaughter; and Amiee M. Rauh, a minor granddaughter. The proceeds of the policies were paid directly to the beneficiaries. The following table shows the name of the insurance company, the number and date the policies were taken out, the beneficiaries named, the date of change and the names of the new beneficiaries, and the amount of the proceeds of the policies.
*995
| Company | Policy | Taken out | Beneficiary |
| No. | |||
| N.Y. Life Ins. Co | 3117318 | Feb. 1, 1901 | Edwin S. Rauh and Birdie |
| Rauh Sunstein | |||
| Do | 329288 | July 1, 1902 | do |
| Reliance Life Ins | 322 | Dec. 18, 1903 | Edwin S. Rauh and Aimee |
| Rauh Sunstein | |||
| Mutual Life Ins. Co. of N.Y | 1573214 | Mar. 20, 1905 | do |
| Do | 1573216 | do | do |
| Do | 1739131 | June 3, 1908 | do |
| Do | 1842409 | Apr. 20, 1910 | do |
| Berkshire Life Ins. Co | 79221 | Dec. 19, 1908 | do |
| Nat'l Life Ass'n of Des | 8948 | Jan. 12, 1907 | Wife |
| Moines, Iowa | |||
| Northwestern Mut. Life | 250274 | Feb. 13, 1892 | Edwin S. Rauh and Aimee |
| Ins. Co | Rauh Sunstein | ||
| Do | 643244 | Dec. 8, 1905 | do |
| Do | 723906 | Nov. 29, 1907 | do |
| Equitable Life Assurance | 167790 | June 7, 1903 | do |
| Society of the U.S | |||
| Do | 940010 | Oct. 2, 1899 | do |
| Do | 2495903 | Sept. 21, 1919 | do |
| Do | 3003818 | July 21, 1922 | Aimee M. Rauh |
| Total proceeds | |||
| The Commissioner allowed | |||
| the specified exemption of | |||
| And determined the | |||
| deficiency upon the balance of |
| Beneficiary changed | |||
| Company | Date | To - | Proceeds |
| N.Y. Life Ins. Co | Nov. 15, 1923 | Edwin S. Rauh | $10,020.00 |
| Do | do | do | 5,010.00 |
| Reliance Life Ins | Nov. 19, 1923 | do | 10,000.00 |
| Mutual Life Ins. Co. of N.Y | Nov. 16, 1923 | do | 3,035.86 |
| Do | do | do | 3,035.86 |
| Do | do | do | 10,124.92 |
| Do | do | do | 5,072.08 |
| Berkshire Life Ins. Co | Nov. 17, 1923 | do | 15,173.55 |
| Nat'l Life Ass'n of Des | Nov. 27, 1923 | do | 4,000.00 |
| Moines, Iowa | |||
| Northwestern Mut. Life | Nov. 17, 1923 | Edwin S. Rauh in trust | 5,000.00 |
| Ins. Co. | for Birdie Rauh Sunstein | ||
| Do | do | do | 5,000.00 |
| Do | do | do | 5,000,00 |
| Equitable Life Assurance | Nov. 21, 1923 | do | 3,320.00 |
| Society of the U.S | |||
| Do | do | do | 10,037.57 |
| Do | do | do | 5,041.33 |
| Do | 5,033.50 | ||
| Total proceeds | 103,904.67 | ||
| The Commissioner allowed | |||
| the specified exemption of | 40,000.00 | ||
| And determined the | |||
| deficiency upon the balance of | 63,904.67 |
*996 OPINION.
MURDOCK: The issue before the Board is whether the proceeds, in excess of the $40,000 exemption, of certain life insurance policies paid to the named beneficiaries, were properly included in the gross estate of the decedent under*2285 the Revenue Act of 1921, the effective statute at the date of the decedent's death. The beneficiaries of these policies had been named subject to the power of revocation retained by the insured. The pertinent provision of the 1921 Act reads:
SEC. 402. That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated -
* * *
(f) To the extent of the amount receivable by the executor as insurance under policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of the amount receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life.
The petitioner, basing his argument on the construction of the above section of the statute, contends that as fourteen of the policies were taken out prior to the Revenue Act of 1918, in which the above section (in identical language) appeared for the first time, the proceeds of these policies should not be included in the gross estate of the decedent, and the proceeds of the other two policies, taken out after the effective date*2286 of the 1918 Act, come within the $40,000 exemption after the exclusion of the proceeds of the first fourteen policies. He cites ; ; ; ; ; .
The respondent contends that if the decedent at the time of his death held any of the incidents of ownership in the policies, then the proceeds in excess of $40,000 were properly included in the gross estate, and it makes no difference when these policies were taken out. He cites , as decisive of the issue.
The opinion of the Supreme Court in , and the opinion of the ) which was affirmed, reveal a pertinent fact, namely, that Frick, the insured, had irrevocably named the beneficiaries or assignees of the policies there involved. *2287 This fact distinguishes the case from the case of , in which the insured retained the right to change the beneficiaries right up to the time of his death. In ;; and , the Board followed the Frick case. But in those cases the findings of fact do not show that the insured reserved the right to change the *997 beneficiaries. The present case, where the decedent reserved the right to change the beneficiaries up until the time of his death, is controlled by the Chase National Bank case. See also ; ; ; ; Means v.United States, decided Court of Claims, April 7, 1930.
Judgment will be entered for the respondent under Rule 50.