M. Louise Collins, Administratrix v. Commissioner of Internal Revenue

MAGRUDER, Chief Judge

(concurring).

I concur. In prescribing for the valuation of the gross estate of a decedent, § 811 does not speak of “market value”, but “the value at the time of his death”. If the particular property has an ascertainable fair market value, that value is normally determinative. But a United States Savings Bond, Series G, obviously has. a “value”, though according. ,to its ternjs it is. non-assignable and non-marketable. Other criteria for valuation must be applied.

Petitioner claims- that the sole criterion is the redemption value of the unmatured bond, because under the applicable conditions of the bond that is what the decedent could have got for it at the moment of her death. Even this- is not technically accurate, for the prescribed redemption value was not payable except upon one month’s notice in writing, and the decedent had not given such notice at the date of her death. Furthermore, the bond had no redemption value during the first six months after the date of its issue; and yet if the holder of such a bond had died within that period, it surely could not have been concluded that the bond had no value for estate tax purposes.

It seems to me, therefore, that the redemption right is not the only feature, or indeed the most important of the “bundle of rights”, bearing on the value of the bond. Suppose the bond had contained no provision for redemption prior to maturity. Still, if in 1941 the decedent had paid $1,000 for such a bond, repayable in that amount in twelve years, with interest meanwhile, it may be fair to infer that the decedent thought the bond was worth what she paid for it; that is, that it was presently worth $1,000 to obtain the obligation of the United States to pay her $1,000 in twelve years, with interest at 2% per cent per annum during that interval.

Of course it is possible that the bond might have depreciated in value between the date of its iss.ue in 1941 and the date of the decedent’s death. If, for instance, there were evidence that the trend of interest rates, reflected in quotations on the bond market, were such that an unmatured bond of a perfectly solvent corporation, bearing interest at 2% per cent, could' not at the date of the decedent’s death be sold on the bond market .except at a price less than par, it might perhaps have been warrantable for the trier of the facts to infer that the decedent’s Series G bonds had depreciated in value since the date of their acquisition.

But no such evidence was presented to the Tax Court in this case. All we have is. that the decedent paid $1,000 each for the bonds in 1941; that the bonds are payable by the United States at their .face value upon maturity, with interest at 2Y2 per cent meanwhile; indeed that, without waiting for the maturity of the bonds, the legal representative of a deceased owner is entitled to demand redemption of the bonds at par, upon the taking of certain formal steps within six months after the date of the death of the owner. In the circumstances presented in this record, it cannot be concluded that the Tax Court was clearly erroneous in finding that the “value” of the bonds at the date of the decedent’s death “was the price she paid for them, or par.” The burden was on the taxpayer to convince the Tax Court that the Commissioner’s determination was wrong. Not only was the Tax Court’s finding not clearly erroneous; on this showing, I don’t see hów the Tax Court could have *525found to the contrary. That is to say, I think a finding by the Tax Court that the Commissioner’s determination of value was wrong would have been reversible error for lack of substantial evidence to sustain such a finding.