*56 Decision will be entered for the petitioner.
Separate agreements under which each of her four children agreed to make future payments to the petitioner during her lifetime were made in consideration of the transfer of certain shares of stock by petitioner to each of such children. No payments were received by petitioner during the year in which the agreements were made, the taxable year. Held, on the evidence, petitioner realized no taxable gain for the taxable year, whether the transaction be treated as the purchase of an annuity by petitioner and so taxable under
*992 Respondent determined a deficiency in income tax in the amount of $ 2,261.55 against petitioner for the taxable year 1941. On December 9 of that year the petitioner transferred*58 certain securities to each of her four children in exchange for their separate written promises to pay the petitioner an annuity for her lifetime. Respondent treated this transaction as taxable under
*993 FINDINGS OF FACT.
The petitioner filed her return for the taxable year 1941 with the collector of internal revenue for the twenty-third district of Pennsylvania, at Pittsburgh, Pennsylvania.
On December 9, 1941, the petitioner transferred*59 to each of her four children certain securities, in consideration of each of the four children agreeing to pay to the petitioner during her life the annual sum of $ 2,132, commencing with the year 1942.
A separate annuity agreement was thereupon entered into between petitioner and each of her four children, and the securities transferred to each of the children were set forth on exhibits attached to each of the annuity agreements.
The amount of the annuity payable by each of the children, as provided in their respective annuity agreements, was determined on the basis of the annuity payment offered by companies engaged in the business of writing annuity contracts.
At the time of the execution of all of these agreements, each of the four children of petitioner who were parties thereto was the possessor of property of his own and had an independent income.
Under the terms of the annuity agreements, the agreement was to remain in full force and effect during the lifetime of the petitioner and, during her lifetime, was binding on the heirs, executors, administrators, and assigns of the petitioner's four children.
No payments were due or paid to petitioner in 1941, pursuant to the terms*60 of the annuity agreements, the first payment under each agreement being due and payable in 1942.
Pursuant to the terms of the agreements, petitioner received the sum of $ 2,132 from each of her four children in 1942, or total receipts of $ 8,528 in that year.
The cost or other basis to petitioner of the securities exchanged for the respective annuity contracts was $ 102,223.78, and these securities had a total fair market value of $ 96,768.52 as of December 9, 1941.
The fair market value of the securities transferred to each child under each annuity agreement was approximately $ 24,192.13.
Respondent treated the transaction as a sale by petitioner of the several specified securities to each of her four children. In so doing he disallowed all losses, under section 24 (b) of the code, but recognized short term capital gains in the amount of $ 172 and long term capital gains in the amount of $ 5,076.98.
OPINION.
Since both parties have obviously assumed the fact, we also assume from the record, as an entirety, that petitioner was on the cash basis.
*994 Thus, if the transaction is to be treated as being a sale of securities, as both parties have done, since petitioner received *61 no cash therefrom in the taxable year, her gain must be limited to the amount by which the fair market value of the annuity contracts when received exceeded her basis for the securities sold.
On the other hand, if, despite the treatment accorded these agreements by both parties, the transaction be considered a purchase of an annuity by petitioner, the same conclusion must follow, since petitioner received nothing from the contracts in the taxable year.
Decision will be entered for the petitioner.