(dissenting).
I agree with the majority that the district court erred in its judgment that decedent’s transfer of property to the trust was made for adequate and full consideration within the meaning of 26 U.S.C. § 2036. I disagree, however, with the majority’s acceptance of the district court’s finding that each spouse “contributed one-half of the property to the trust.” Of itself, the finding may not be clearly erroneous, but the transactions incident to the separation and divorce of the spouses and their adjustment of their property dispute should be viewed as a whole. It should be the substance of the total result which should control our determination here. For this proposition, the authorities are numerous. Greene v. United States, 237 F.2d 848, 852 (7th Cir. 1956), First National Bank of Shreveport v. United States, 342 F.2d 415 (5th Cir. 1965), Estate of Gregory, 39 T.C. 1012, 1018 (1963). Moreover, in the court below, the burden of proof rested upon the appellee. Germantown Trust Co. v. Lederer, 263 F. 672 (3rd Cir. 1920), Mayes v. United States Trust Co., 280 F. 25 (6th Cir. 1922), Estate of Green, 22 T.C. 728, 732 (1954).
By the property settlement agreement which attended the unfortunate dispute, there was set aside to the husband, as his share of the previously existing community property in which each spouse was the owner of an undivided interest of fifty per cent, property interests valued, at the time of the agreement and of the creation of the trust, at $293,888.1 This property included fifty-five per cent of the outstanding shares of two corporations. The majority opinion seems to ignore the fact that one-half of that which the husband received had previously been owned by the wife, and, moreover, no importance is attributed to the probability that control of the corporations represented a valuable acquisition by the husband and the fact that under the agreement there could be no protest by the holder of the forty-five per cent of stock in the two corporations set aside to the wife’s benefit of the husband’s right to receive a salary of $60,-000 per year.
I object to the method employed by the majority in its computations, believing that in this case, an injustice is worked upon the Government, and in other circumstances, the application of the majority’s method could work injustice upon the taxpayer.
There are three possible approaches which could be adopted in the case before us. First, it could be held that the total value of the corpus of the trust is includible in the decedent’s estate for the assessment of federal estate taxes. This approach, which I prefer, could have been taken had the trial court found as a fact, as it well might have done, that the original source of the whole trust corpus was the property, or a part of the property, which had been set aside to the wife as her share of the community assets. The wife’s participation in the creation of the trust was voluntary; and whether, in the division, she received more or less than one-half of the community property would ordinarily be immaterial. Furthermore, the mere fact that the husband joined and cooperated in making direct transfers to the trust under the requirement of the property division agreement, would not, of itself, operate to bring about a result different from one which would be proper if there had been a direct transfer to the wife without restriction and her subsequent creation of the trust without the necessary joinder of her husband. As indicated, however, respect for the trial court’s findings, at least insofar as they find that a part of the property of the original trust corpus *16was property which was contributed by the husband, renders this first possible approach improper.
Second, we see the approach or method adopted by the majority which, in brief, begins with the justified acceptance of $487,978 as the value of the property placed in the trust at the time of the creation of the trust. Then, accepting one of the district court’s findings, incomplete of itself, the majority divides this amount in half and determines that the decedent, in the beginning, contributed property of the value of $243,989. Following the pattern of this equal division which I view as improper, the majority determines that fifty per cent of the value of the trust corpus, as of the date of decedent’s death, is the amount which should finally be taken as decedent’s contribution.
My disagreement with the majoriiy’s analysis leads to consideration of a third approach which accepts the fact ihat some contribution to the trust was made by the husband. It is more equiiable than that taken by the majority, and, under the facts of this case, it is supported by existing authority. This is an approach which recognizes the total economic effect of the whole transaction and calls for more precise examination, based upon all of the district court’s findings, of the source of the corpus. As I see it, the sources are made clear by the following recapitulation:
Total value of community property at time of property settlement agreement..................................... $848,746
Less clean-up fund for payment of expenses.............. 45,880
Net value of community property at time of property settlement agreement ..................................... $802,866
CONTRIBUTION TO TRUST BY HUSBAND
Husband’s one-half of net community property........... $401,433
Less value of property set apart to husband (disregarding value of control of corporations and right to receive fixed salary) ........................................ 293,888
Value of husband’s contribution to trust................. $107,545
CONTRIBUTION TO TRUST BY DECEDENT WIFE
Decedent wife’s one-half of net value of community property . $401,433
Less value of property set apart to wife without restriction .. 21,000
Net contribution of decedent wife to trust................ $380,433
Adding the wife’s and husband’s contribution to the trust, we arrive at a total contribution of $487,978. Now, turning to the value of the trust corpus at the time of the wife’s death, we see that it was $642,789. I would arrive at the value of the decedent’s contribution by applying a proportionate ratio. At the time of the creation of the trust, she contributed $380,433 of a total value of $487,976, and applying the proportion of her contribution as of the time of the creation of the trust to the value of the trust at the date of her death, namely, $642,789,1 would hold that she contributed $501,125 and not only $321,394, as determined by the majority.
Since, in making her original contribution of $380,433 in exchange for only a life estate in $107,545 contributed by the husband, she obviously did not receive “adequate and full consideration” so that there is exemption under Section 2036, we turn to Section 2043(a) to determine the amount which should be included in the federally taxable gross estate. Un*17der this section, this amount should be the value of that which the decedent contributed, namely, $501,125," less “the value of the consideration received therefor by the decedent.”
There is a problem as to whether the consideration received by the wife should be valued as of the time of transfer to the trust or at the time of decedent’s death, The pertinent statutory language is not clear. Section 2043(a) clearly provides that the property which is transferred is to be evaluated as of the date of death. It can be urged that the section seems to provide that the consideration for the transfer is to be valued at the time of the transfer, and in its Footnote #6, the majority, citing Vardell’s Estate v. Commissioner of Internal Revenue, 307 F.2d 688, 693 (5th Cir. 1962), holds that the time of transfer is the proper time for evaluation. I submit that Vardell’s Estate v. Commissioner of Internal Revenue does not, upon careful analysis, stand for that proposition. There is language to that effect found in the opinion at page 693, but the language is not strictly applied. Adopting the date of transfer as the proper date for the evaluation of the consideration received by the decedent has been justly criticized as leading to extremely harsh and unjust results either to the Government or to the taxpayer when there has been substantial depreciation or appreciation in value as of the date of death. Lowndes and Kramer, Federal Estate and Gift Taxation, 298 (2d ed. 1962), 70 Harv.L.Rev. 1486 (1957), cf. Helvering v. United States Trust Co., 111 F.2d 576 (2d Cir. 1940). In the absence of clear and express statutory mandate, I would adopt an approach which would seem to be fair and just to the Government and to the taxpayer in all cases. Under it, I would interpret “value of the consideration”, as provided in Section 2043(a), as the proportion of the value of the corpus at death which is attributable to the consideration received by decedent.2 The life estate which decedent retained in the property contributed by her cannot be taken as consideration, and the majority opinion so recognizes. We must then ascertain the ratio of the consideration received by the decedent to the contribution made by the decedent to ascertain the value of the corpus at death which is attributable to the consideration received. Utilizing Treasury Regulations (Treasury Regulations on Estate Tax, 1954 Code, § 20.2031-7) in computing the “value of the consideration” we have the following:
Value of decedent’s life estate interest in property contributed
to trust by husband ($107,545 x .58751) ............... $ 63,182
Value of children’s remainder interest in property contributed to trust by decedent ($380,433 x .41249) ............... $156,925
Thus, under Section 2043(a) we establish an applicable ratio of 40.262 per cent. This percentage of $501,125, the value of the decedent’s contribution to the trust as of the date of her death, is $201,763. This amount, in my judgment, should be our determination as to the “value of the consideration” received by the wife in exchange for that which is properly recognizable as a transfer by her.3 3 When this amount is subtracted from the fair market value of the wife’s *18contribution as of the date of death, namely, $501,125, there results a balance of $299,362. This is the amount of the trust corpus which I believe should be included in the decedent’s gross estate for federal estate tax purposes, and it is significantly greater than the sum of $178,-048, the figure reached by the majority. Of course, there should be deducted therefrom all proper exemptions and deductions which are allowed by law, including reasonable attorney’s fees. Moreover, there should be considered in appropriate recomputation, the allowance of credit for gift taxes paid by the decedent at the time of the creation of the trust.
. Fractions of dollars are omitted in the figure to which this note is a reference as well as in all other money sums which are mentioned herein.
. The appellee concedes that this interpretation of “value of the consideration” is fairly and justly proper if we are to hold, as we have, that Section 2043(a) and not Section 2036 is applicable. The majority opinion, while favorable to appellee in its result, adopts, in its overall computation, an approach which neither the Government nor the appellee has advanced.
. I agree with the conclusion of the majority opinion, expressed in its Footnote 3, that a lease arrangement under which the trust was to receive a substantial annual rental of real property conveyed to the trust and leased to the corporations, should not be considered as additional consideration above the accepted standards contemplated by Treas*18ury Regulations, Section 20.2031-7. The controlling interest in the two corporations received by the husband, together with his right to receive a fixed salary, would, in my judgment, equal or exceed any value which might be fixed upon the lease arrangement.