*261 Decision will be entered under Rule 50.
Decedent, by transfers made in December, 1940, and January, 1941, conveyed to his wife 437 shares of stock in a corporation of which he was the sole stockholder. Incident to the transfers, agreements were executed between decedent and his wife, and decedent, his wife, and the corporation, containing provisions which gave the corporation the right to hypothecate any and all of its stock for corporate loans and a 30-day option to repurchase its shares at the same price and on the same terms as any bona fide offer received by its stockholders, and required decedent's wife to will any stock which she might own or to which she might be entitled at death to the corporation. Held:
(1) That the transfers of 437 shares in the Gilbert Casing Co. made by decedent to his wife in December, 1940, and January, 1941, were not made in contemplation of death.
(2) That the transfers made by decedent to his wife were intended to take effect in possession or enjoyment at or after his death, and under the terms of the transfers decedent retained for a period which did not in fact end before his death the possession or enjoyment of the property transferred. *262 Therefore, the 437 shares of stock are properly includible in decedent's gross estate under the provisions of section 811 (c) of the Internal Revenue Code.
*349 This proceeding involves a deficiency of $ 19,039.46 in estate tax. The issues for decision are whether the transfers by decedent to his wife of 437 shares of stock of the Gilbert Casing Co. in December, 1940, and January, 1941, were made in contemplation of death, or *350 *263 were transfers intended to take effect in possession or enjoyment at or after decedent's death within the provisions of section 811 (c) of the Internal Revenue Code.
Pursuant to an agreement between petitioner and respondent, the Court at the hearing authorized an additional deduction of $ 3,000, for attorney fees in connection with the handling of this estate, in the computation of the estate tax under Rule 50. Other adjustments made by the respondent to estate tax liability in the notice of deficiency are not contested by the petitioner.
FINDINGS OF FACT.
Decedent James Gilbert died on April 19, 1945, domiciled in the City, County, and State of New York, where his will was probated. The return of the estate of James Gilbert was filed with the collector of internal revenue for the third district of New York on April 11, 1946.
Petitioner Charlotte K. Gilbert, wife of the decedent, is the duly appointed and acting executrix of his last will and testament. She and the decedent were married November 5, 1923, in New York, New York. There was no issue of this marriage.
During his lifetime, decedent was actively engaged in exporting, importing, and selling casings for sausages. Prior*264 to March, 1932, the decedent had been in partnership in the casing business with his brother, Milton Goldberg, and Harry Levi. Because of difficulties among the partners, the partnership was dissolved.
On his wife's urging, the decedent thereafter conducted his business in corporate form. A corporation known as the "Gilbert Casing Co. Inc." was organized by decedent in March, 1932, under the laws of the State of New York, with a capital of $ 100,000, consisting of 1,000 shares of stock having a par value of $ 100 each. At the time of incorporation, all of the corporate stock was issued to decedent and until December, 1940, decedent was the sole stockholder and at all times president of the corporation.
The decedent was admitted to the Lenox Hill Hospital in New York City on July 12, 1939, where he underwent an operation for acute diverticulitis of the sigmoid. A diagnosis at the time revealed an abscessed condition. During part of the recuperation period, he conducted business and dictated correspondence from his hospital bed. The decedent was discharged as cured and returned to his home and business on August 30, 1939.
In December, 1940, decedent's brothers and Harry Levi *265 were unemployed and sought to be taken into the decedent's business. Decedent's wife opposed their request and urged her husband to make a gift to her of shares of stock to assure her that neither of the former partners nor his brothers would be associated *351 with her husband in the corporation. On or about Christmas, 1940, decedent informed his wife that he was giving her a Christmas gift of 37 shares of the stock of the corporation. On December 31, 1940, decedent endorsed and surrendered for cancellation a stock certificate previously issued to him for 100 shares of stock. On the same day, the corporation issued to Charlotte K. Gilbert a stock certificate for 37 shares and likewise issued to decedent a stock certificate for 63 shares. At this time, decedent advised his wife to go to the office of John F. Schweiters, an attorney, where she received a certificate for 37 shares.
At the time of the receipt of the certificate, Charlotte K. Gilbert executed an agreement with respect thereto which contained the following conditions:
1. To authorize Gilbert Casing Co. Inc. to pledge said stock as security for any loan hereinafter made for the benefit of said corporation.
2. To*266 refrain from selling said certificate of stock without first giving James Gilbert the first opportunity to reacquire said stock at the same price and terms as that of a bona fide offer from a third party in writing. Said option must be exercised by said James Gilbert within thirty days from receipt of written notice from me, of my intention to sell pursuant to the terms of such bona fide offer. Reference to such restrictive provision for the transfer of my stock of Gilbert Casing Co. Inc. may be affixed to the face of each stock certificate registered in my name and I hereby consent to such endorsement.
3. In the event I predecease said James Gilbert, I hereby agree that any stock of Gilbert Casing Co. Inc. which I have acquired, shall revert to him at my death and I agree with reasonable promptness hereafter to bequeath to him by my Will any and all stock of Gilbert Casing Co. Inc. owned by me at the time of my death.
The agreement further provided that in the event of any loss through the hypothecation or pledging of the stock, decedent agreed to indemnify his wife. Decedent likewise executed the agreement.
On January 7, 1941, decedent executed his last will and testament, leaving*267 everything of which he might die seized or possessed to his wife, Charlotte K. Gilbert. Decedent had previously executed a last will and testament, dated June 22, 1937, which was identical with his will of January 7, 1941, except for a change in the name of the alternate executor.
Decedent's wife was doubtful that the 37 shares of stock transferred to her by decedent were sufficient to block any effort of decedent's family or former partner to buy into the business. Therefore, she pressed the decedent for a further transfer of stock.
On January 11, 1941, decedent stated at a meeting of the stockholders that he had made a transfer of 37 shares of stock to his wife and intended to transfer a further substantial block of stock to her. A resolution was then adopted which contained the following statement:
* * * It was deemed for the best interest of the Company that the transfer of the stock of this close corporation, actively managed by Mr. Gilbert, should be *352 reasonably restricted in order that the stock may not fall in the hands of strangers and persons not interested in the business of this corporation. It was, therefore, proposed to give the corporation the first option*268 and privilege of acquiring any stock offered for sale by any stockholder at any time hereafter.
On January 20, 1941, decedent endorsed and surrendered for cancellation certain stock certificates previously issued to him and in lieu thereof the corporation issued to decedent two new certificates, one for 500 shares and one for 63 shares. At the same time, a certificate for 400 shares was issued to Charlotte K. Gilbert. The stock certificate for 37 shares previously issued to Mrs. Gilbert on December 31, 1940, was surrendered and a new certificate for 37 shares was issued to her in exchange. The delivery of the certificate representing 400 shares to Charlotte Gilbert was made at the office of decedent's attorney. All of the aforementioned transfers were recorded in the stock ledger of the Gilbert Casing Co.
The value of the 437 shares of stock transferred by decedent to his wife as of the date of his death was $ 51,685.51, or $ 118.27 per share. A gift tax return was filed by decedent, in which the value of the 400 shares transferred on January 20, 1941, was given as $ 42,800. The 37 shares transferred on December 31, 1940, were valued by decedent at a figure less than $ 4,000*269 at the time of the transfer and for that reason no gift tax return was filed in respect to that transfer. 1
On January 20, 1941, Charlotte Gilbert and the decedent executed a new agreement with respect to the shares of stock issued to her. The agreement recited in part as follows:
Whereas * * * said Gilbert Casing Co. Inc. is a close, family corporation under the active management of the [decedent] who is the President and sole stockholder thereof * * *.
Whereas * * * [decedent] in making an absolute gift to [Charlotte Gilbert] of certain shares of said stock desires to safeguard the efficient continuance of the business of the [corporation] under the present management and avoid the possibility of any of the stock of said corporation falling into the hands of parties not actively engaged or interested in the operation of said business;
Whereas the [decedent] also desires to insure the return of any stock owned by [Charlotte Gilbert] *270 to the Treasury of the Corporation upon the death of [Charlotte Gilbert] * * *.
The agreement further provided as follows:
First: The [decedent] does hereby transfer, assign and convey to [Charlotte Gilbert] four hundred (400) shares of the common capital stock of the [corporation] (receipt and delivery of which is hereby acknowledged) as her own personal property and with all the benefits of ownership.
Second: Reference is herein made to a transfer of thirty-seven (37) shares of the common capital stock by the [decedent] to [Charlotte Gilbert] subject to the conditions in a tentative memorandum of agreement dated December 31, 1940, * * * This tentative contract is revoked with respect to any provisions *353 that are inconsistent with this indenture of agreement but ratified and confirmed with respect to all other provisions which are in accord with this agreement.
Third: Reference is herein made to the due adoption and the addition of Section 3 of Article V of the By-Laws of the [corporation] duly adopted on the 11th day of January, 1941. Pursuant to said By-Laws the transfer of all stock of said Corporation shall be subject to an option held by the Corporation to acquire said*271 stock in the event of an intended sale by any stockholder of record. [Decedent] and [Charlotte Gilbert] hereby ratify and confirm this arrangement and represent that it shall be effective not only for the stock herein before referred to, but all stock owned by both [the decedent] and [Charlotte Gilbert].
Fourth: The parties hereto hereby ratify and confirm that provisions of said Section 3 of Article V of the By-Laws shall hereafter be attached to, embodied in, or written, printed or stamped upon each certificate of stock of said Corporation, known as Gilbert Casing Co. Inc. Said Section 3 of Article 5 of the by-laws reads as follows:
No stockholder shall have the right or power to pledge, sell or otherwise dispose of except by Will or except by the pledge of stock for the benefit of this Corporation, any share or shares of the capital stock of said Corporation, without first offering the said share or shares of stock for sale to the Corporation, at the actual price per share at which it is proposed to sell or otherwise dispose of the same to a person other than this Corporation except by Will. If any stockholder of record proposes to sell such share or shares of stock and receives*272 a bona fide offer therefor from a third party, said stockholder of record shall submit said offer in writing to the Corporation and the Corporation shall have the right and option within thirty days upon receipt of said written notice to purchase said stock from said stockholder of record upon the same price and terms.
* * * *
If the Corporation fails to exercise said option within thirty days thereafter said record holder shall be entitled to sell said stock to the party making said bona fide offer.
* * * *
Sixth: The parties hereby agree to authorize the [corporation] at any time to take necessary steps to pledge for the benefit of said Corporation any and all stock now or hereafter owned by [the decedent] and [Charlotte Gilbert]. Said parties hereby authorize James Gilbert, President of [the corporation] to act for the parties in interest in arranging for the hypothecation, pledge or transfer of any or all of said stock in connection with collaterally securing any corporate loans.
Seventh: In view of the active management and control of the business of the [corporation] by [the decedent], [the decedent] agrees to hold [Charlotte Gilbert] harmless in case of possible loss of *273 any stock of the [decedent] 2 by hypothecation or pledge for the benefit of the [corporation] when offered as security for a corporate loan * * *.
* * * *
Tenth: It is mutually agreed that all stock of the corporation owned by [Charlotte Gilbert] at the time of her death, shall at that time revert to the corporation pursuant to a specific bequest made by [Charlotte Gilbert] to said corporation in her Will.
*354 Eleventh: It is mutually agreed that the covenants and conditions herein contained shall inure to the benefit of and be binding upon the heirs, personal representatives, successors and assigns of the parties hereto.
The decedent executed the above agreement on January 17, 1941, and his wife executed it on January 20, 1941.
Upon receipt of the certificates of stock, Charlotte Gilbert endorsed and returned them to decedent, who thereupon placed them in his safe deposit box. She*274 insisted on a formal receipt from him to show he was holding her stock. By an undated letter mailed January 20, 1941, at New York, New York, Charlotte Gilbert wrote decedent, then traveling on business, in part as follows, after thanking him for the 400 shares:
All the papers have been signed and taken care of, and I want you to keep my stock certificates in your private vault so that you can get them at a moment's notice if I happen to be out-of-town. I do hope that nobody but you has a key to your private box. * * *
Do you want me to lock the stock certificates in your closet, or give them to Pierson to hold until you arrive? Better sign the receipt and return it to me direct immediately and let me know what you want me to do. [Italics by Mrs. Gilbert.]
Mrs. Gilbert had no key to the safe deposit box. She never again had actual physical possession of the certificates and they remained in decedent's custody until the day of his death.
Decedent made no transfers of stock to his wife other than the two referred to above. There was no valuable consideration given for those transfers. No dividends were ever declared on the stock.
On January 17, 1941, Charlotte Gilbert*275 executed a last will and testament, reading in part as follows:
Second: I hereby Give and Bequeath to Gilbert Casing Co. Inc., a Corporation duly organized under the laws of the State of New York, with offices at 239 Front Street, Borough of Manhattan, City and State of New York, all shares of capital stock of said Corporation which may be registered in my name or to which I may otherwise be entitled at the time of my death.
Decedent was the sole manager of the corporation and its business at all times both before and after the issuance of the certificates to Mrs. Gilbert. Mrs. Gilbert knew nothing whatsoever about the casing business, could not have operated it, and never did operate it. Immediately upon the death of decedent, Mrs. Gilbert began the liquidation of the corporation.
On August 25, 1941, decedent was admitted to Wickersham Hospital in New York City and again underwent an operation for an intestinal ailment similar to that for which he had been treated before. Decedent was discharged from the hospital on September 9, 1941. Except for the periods when he was actually in the hospital, decedent was actively engaged in extensive traveling for the business throughout *276 the *355 United States. He frequently wrote to his wife that he was in good health.
On April 17, 1945, the decedent spent the evening entertaining a customer and evidenced no signs of illness. On the morning of April 18, 1945, he complained of a headache and was taken to Wickersham Hospital, where he died within about 36 hours from a cerebral hemorrhage. He was 65 years of age at the time of his death.
The transfers of 437 shares of stock in the Gilbert Casing Co. made by decedent to his wife in December, 1940, and January, 1941, were not made in contemplation of death.
The transfers made by decedent to his wife in December, 1940, and January, 1941, were intended to take effect in possession or enjoyment at or after his death, and under the terms of the transfers decedent retained, for a period which did not in fact end before his death, the possession or enjoyment of said property.
OPINION.
Two issues arise herein under the provisions of section 811 (c) of the Internal Revenue Code: 3 First, whether the transfers of stock by decedent to his wife in December, 1940, and January, 1941, were made in contemplation of death, and, secondly, whether such transfers were intended to*277 take effect in possession or enjoyment at or after decedent's death within the meaning of the statute.
*278 *356 A transfer is regarded as made in contemplation of death where the dominant motive or impelling cause of the transfer is the thought of distributing property in anticipation of death rather than a purpose associated with life. "Death must be 'contemplated', that is, the motive which induces the transfer must be of the sort which leads to testamentary disposition." United States v. Wells, 283 U.S. 102">283 U.S. 102; Allen v. Trust Co. of Georgia, 326 U.S. 630">326 U.S. 630.
In the instant case, decedent died more than four years after the transfers in controversy and therefore no statutory presumption exists in support of the respondent's determination. Moreover, we are of the opinion that the evidence substantiates petitioner's claim that the transfers were not in the nature of testamentary dispositions of property made in contemplation of death.
Decedent's principal motive for transferring 37 shares of Gilbert Casing Co. stock to his wife in December, 1940, was to allay his wife's fears and suspicions that he would yield to the demands of his brothers and former partners to be admitted to the business. The record shows that decedent*279 had formerly been associated with these men and had experienced difficulties which led him to abandon a prior business and establish the Gilbert Casing Co., of which he was president and sole stockholder until the time of the transfers in question. Decedent's transfer of an additional 400 shares approximately a month later appears to have been in response to his wife's objections that the transfer of a mere 37 of the 1,000 shares of stock outstanding did not put her in a position where she could effectively prevent the intrusion of his family and former partners into the business.
In our opinion, there was no relation between decedent's decision to transfer the shares of stock to his wife in December, 1940, and January, 1941, and the intestinal ailment from which he suffered and in connection with which he was hospitalized in July, 1939. The hospital records indicate that decedent made an uneventful recovery and was discharged as cured on August 30, 1939. Except for a short period in August and September, 1941, at which time decedent was again hospitalized for the purpose of undergoing a second intestinal operation, he apparently enjoyed good health.
Until the very day of his death, *280 decedent was unusually active in the management of his business affairs and traveled extensively throughout the country. There is evidence that decedent started a new business in Chicago in 1944.
There appears to have been no recurrence of decedent's intestinal ailment after September, 1941, and his sudden death on April 19, 1945, from a cerebral hemorrhage came without warning.
Respondent argues that the conditions incorporated in the stock transfers and the decedent's execution of a new will on January 7, 1941, are evidence of a testamentary state of mind. However, in our *357 opinion, the conditions attached to the stock in the hands of his wife are in accord with petitioner's explanation that decedent's real motive was to satisfy his wife's demands without endangering the best interests of the business. Nor do we feel that petitioner's drawing of a new will identical in terms with a prior will executed in 1937 necessarily indicates that the decedent made the stock transfers as an adjunct to some over-all testamentary plan.
After careful consideration of all the evidence, it is our conclusion that the decedent's transfers of 37 shares of stock in December, 1940, and 400*281 shares of stock in January, 1941, were not made in contemplation of death within the meaning of section 811 (c).
The remaining question is whether such transfers were intended to take effect in possession or enjoyment at or after decedent's death. Respondent contends that the stock transfers were so limited by the agreements executed by the parties and by other concurrent events as to indicate clearly a retention of control by the decedent and an intent that the transfers should not be complete until at or after the time of his death.
Incident to the transfer of 37 shares of stock in December, 1940, decedent and his wife executed an agreement on December 31, 1940, providing that the Gilbert Casing Co. was authorized to pledge that stock as security for loans; that the decedent was to have the right to reacquire the stock at the same price and on the same terms as any bona fide offer made by a third party in writing within 30 days of receiving notice of the offer; that the stock would revert to decedent upon his wife's death; and that the wife would bequeath to him by will any and all such stock owned by her at the time of her death.
The bylaws of the corporation were amended on January*282 11, 1941, in connection with decedent's contemplated transfer of a larger block of stock to his wife, and the 30-day option requirement was thereby imposed upon all of the corporation's outstanding stock.
By agreement dated January 20, 1941, decedent transferred, assigned, and conveyed to his wife 400 shares of stock in the corporation "as her own personal property and with all the benefits of ownership." This agreement, signed by the decedent, his wife, and the secretary of the corporation, by its terms revoked the agreement of December 31, 1940, in so far as any of its provisions were inconsistent with the new agreement, and ratified and confirmed the earlier agreement otherwise. In the agreement of January 20, 1941, the parties confirmed the option privilege given the corporation over all stock by the resolution of January 11, 1941, and authorized the corporation to pledge the stock owned by them as security for corporate loans. It was also agreed that all stock of the corporation owned by the wife at the time of her death would revert to the corporation by way of a specific bequest made by the wife in her will.
*358 Under both agreements decedent agreed to hold his wife*283 harmless in the event of any loss resulting from the hypothecation or pledge of any of her stock on behalf of the corporation.
Stock certificates representing 437 shares of stock were delivered to the wife on or about January 20, 1941, who thereafter endorsed them and returned them to her husband, requesting a receipt therefor. The certificates henceforth remained in his custody until his death.
Viewing, as we must, the agreements executed by the parties and all the circumstances attendant upon the transfers as interrelated events in a single transaction, it is readily apparent by the terms and conditions attached to the gifts of stock that decedent, by the express terms of the instrument of transfer, retained to himself or to his estate a reversionary interest in the property transferred.
The testimony of the wife is that the impelling reason for the transfer of the stock to her was because she had "nagged" her husband over a period of time to give her a sufficient stock interest in the corporation to bar the possibility that decedent's brothers or former partners would be brought into the business.
The agreement of January 20, 1941, specifically recites the intention of decedent, *284 wherein it states that in making "an absolute gift" of certain shares to his wife, he desired "to safeguard the efficient continuance of the business * * * under the present management and avoid the possibility of any of the stock * * * falling into the hands of parties not actively engaged or interested in the operation of said business." Decedent further stated in the agreement that it was his desire to insure the return of any stock owned by his wife to the treasury of the corporation upon her death. That it was the intention of the parties that the wife's interest in the stock was to be limited to nominal ownership is evidenced by the express provisions contained in the instruments of transfer relating to the corporation's right to repurchase or pledge the stock, and the final condition which required her to will such stock as she owned at her death to the corporation. Apparently to provide for the possibility that the wife might find a purchaser for the stock, the agreement provided that all the conditions and covenants therein were binding upon the heirs, personal representatives, successors, and assigns of the parties.
Moreover, the conduct of the parties and the status of*285 the wife in respect to the stock subsequent to the transfers add further support to the conclusion that the transaction was one under which the decedent retained a reversionary interest in, and the possession and enjoyment of, the property for a period which, in the language of the statute, would not in fact end before his death.
As we have previously pointed out, decedent's wife, immediately upon receipt of the stock certificates, endorsed them and returned them to decedent, who thereafter until his death retained them in his *359 safe deposit box, to which he alone had access. Even prior to the actual transfer of the stock, the wife executed a will in which she bequeathed to the corporation any and all stock which she might possess or to which she might be entitled at the time of her death.
The wife's technical ownership of 437 shares of stock in the Gilbert Casing Co. gave her no effective power to remove or lessen the restrictions imposed upon her, and, as pointed out by the preamble to the agreement of January 20, 1941, it was intended that the determination of all matters of policy was to remain vested solely in the decedent.
Although the transfer in question conceivably*286 may be viewed as one which gave the wife the power to dispose of the stock at any time by sale, a reasonable appraisal of the whole transaction shows that her right to sell was so hedged with restrictions as to be virtually nonexistent. This conclusion is supported by the fact that the agreement of January 20, 1941, provides, as we have already stated, that the covenants and conditions thereof should be binding upon the heirs, personal representatives, successors, and assigns of the parties. Thus, it would seem that any prospective purchaser which the wife might find would have been confronted with the necessity of purchasing her stock subject to all existing restrictions. As the acquisition of 437 shares of stock would provide no effective means of forcing the removal of the restrictions, the payment of dividends, or the liquidation of the corporation, it is difficult to believe that such a willing purchaser could have been found.
The Supreme Court recently had before it questions arising under the "possession or enjoyment" provision of section 811 (c) of the Internal Revenue Code, in the companion cases of Commissioner v. Estate of Church, 335 U.S. 632">335 U.S. 632,*287 and Estate of Spiegel v. Commissioner, 335 U.S. 701">335 U.S. 701. In those cases it was held that:
* * * a trust transaction cannot be held to alienate all of a settlor's "possession or enjoyment" under § 811 (c) unless it effects "a bona fide transfer in which the settlor, absolutely, unequivocally, irrevocably, and without possible reservations, parts with all of his title and all of his possession and all of his enjoyment of the transferred property. After such a transfer has been made, the settlor must be left with no present legal title in the property, no possible reversionary interest in that title, and no right to possess or to enjoy the property then or thereafter. In other words such a transfer must be immediate and out and out, and must be unaffected by whether the grantor live or dies." * * * it is immaterial whether such a present or future interest, absolute or contingent, remains in the grantor because he deliberately reserves it or because, without considering the consequences, he conveys away less than all of his property ownership and attributes, present or prospective. In either event the settlor has not parted with all of his presently *288 existing or future contingent interests in the property transferred. He has therefore not made that "complete" kind of trust transfer that § 811 (c) commands as a prerequisite to a showing that he has certainly and irrevocably parted with his "possession or enjoyment." [Estate of Spiegel v. Commissioner, supra.]
*360 By its very terms, section 811 (c) applies to transfers "by trust or otherwise." (Italics supplied.)
It is true that the scope of the decisions of the Supreme Court in Commissioner v. Estate of Church, supra, and Estate of Spiegel v. Commissioner, supra, have been considerably limited since the hearing of this case by the Congressional enactment of section 7 (a) of the "Technical Changes Act of 1949," applicable under section 7 (b) of the same act to estates of decedents dying after February 10, 1939. The parties have not discussed on brief the possible effect of these amendments upon the issue herein. However, it is our conclusion that the transfers in question fall within the ambit of the amended statute either as transfers under which the decedent "retained*289 * * * for any period which does not in fact end before his death the possession or enjoyment of * * * the property" within the meaning of section 811 (c) (1) (B) or as transfers "intended to take effect in possession or enjoyment at or after his death" under section 811 (c) (1) (C), for the reason that decedent "retained a reversionary interest in the property, arising by the express terms of the instrument of transfer * * *." It may be noted that there is no evidence in the record, nor has any suggestion been made, that the so-called reversionary interest had a value immediately before the death of decedent of less than 5 per cent of the property transferred. See section 811 (c) (2), supra.
Nor do we think that it is of any avail to the petitioner to argue that the benefits of the various rights reserved by the instruments of transfer flowed to the corporation rather than to the decedent individually. Decedent, from the inception of the corporation until the dates of the stock transfers, was the sole stockholder and directing head of the business, and even after the transfers held a controlling interest in the corporation and continued to exercise full control over its policies*290 and management. Decedent did not agree to will his stock interest to his wife, and he was able, by virtue of his stock ownership, to remove at any time the restrictions as to the sale or hypothecation of corporate stock, including his own. On the other hand, he possessed the power to enforce, in the name of the corporation, as its controlling stockholder, any or all of the conditions attached to the stock held by his wife and thus directly benefit himself.
In our opinion it is not important that decedent transferred the shares directly to his wife under the terms of a contract that she would execute a will leaving her stock to the corporation rather than employing a form of conveyance in which the right to receive the shares on Mrs. Gilbert's death was retained. Distinctions of this type, based upon the "various niceties of the art of conveyancing" and recognized *361 in Helvering v. St. Louis Union Trust Co., 296 U.S. 39">296 U.S. 39, and Becker v. St. Louis Union Trust Co., 296 U.S. 48">296 U.S. 48, were held in Helvering v. Hallock, 309 U.S. 106">309 U.S. 106, to be of no consequence.
It is abundantly clear*291 that the stock transfers at the time they were made were not complete transfers divesting decedent absolutely and unequivocally of all "possession or enjoyment" of the stock. The contract provisions granting to the corporation the right to repurchase or pledge the stock, in conjunction with the requirement that Mrs. Gilbert will her stock to the corporation, all of which provisions were made binding on her heirs, personal representatives, successors, and assigns, were tantamount to the decedent's retention of a reversionary interest in the property transferred. It follows that under the rule of Estate of Spiegel v. Commissioner, supra, and the provisions of section 811 (c), as amended, the value of the 437 shares is includible in the gross estate of the decedent.
Decision will be entered under Rule 50.
Footnotes
1. In 1941 the annual exemption from gift tax was $ 4,000. Sec. 1003 (b) (2), I. R. C.↩
2. The original exhibit appears to be in error on this point, the proper party here not being the decedent, but Charlotte Gilbert.↩
3. SEC. 811. GROSS ESTATE. [As amended by sec. 7 of Public Law 378, 81st Cong., known as the "Technical Changes Act of 1949" and made applicable to the estates of decedents dying after February 10, 1939.]
* * * *
(c) Transfers in Contemplation of, or Taking Effect at, Death:
(1) General rule: To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth) by trust or otherwise --
(A) in contemplation of his death. Any transfer of a material part of his property in the nature of a final disposition, or distribution thereof, made by the decedent within two years prior to his death without such consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this subchapter; or
(B) under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death (i) the possession or enjoyment of, or the right to the income from, the property, or (ii) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom; or
(C) intended to take effect in possession or enjoyment at or after his death.
(2) Transfers taking effect at death -- transfers prior to October 8, 1949: An interest in property of which the decedent made a transfer, on or before October 7, 1949, intended to take effect in possession or enjoyment at or after his death shall not be included in his gross estate under paragraph (1) (C) of this subsection unless the decedent has retained a reversionary interest in the property, arising by the express terms of the instrument of transfer and not by operation of law, and the value of such reversionary interest immediately before the death of the decedent exceeds 5 per centum of the value of such property. For the purposes of this paragraph, the term "reversionary interest" includes a possibility that property transferred by the decedent (A) may return to him or his estate, or (B) may be subject to a power of disposition by him, but such term does not include a possibility that the income alone from such property may return to him or become subject to a power of disposition by him. * * *↩