UNITED STATES TAX COURT



     ESTATE OF SARAH H. NEWMAN, DECEASED, MARK M. NEWMAN,
CO-EXECUTOR AND MINNA N. NATHANSON, CO-EXECUTOR, Petitioner v.
         COMMISSIONER OF INTERNAL REVENUE, Respondent



   Docket No. 17516-96.                      Filed July 28, 1998.


        Decedent (D) executed a power of attorney
   appointing her son (S) attorney-in-fact. Prior to D's
   death, S drew six checks against D's checking account
   payable to himself, his wife, his brother, his nieces,
   and two other individuals. These checks were neither
   accepted, nor paid, by the drawee bank until after D's
   death. Petitioner argues that these checks represent
   completed gifts of funds in D's checking account that
   are not includable in D's gross estate.

        Held: D maintained dominion and control over the
   amounts in her checking account against which the
   checks were written until her death. Accordingly, the
   checks were not completed gifts during her lifetime.

        Held, further: These noncharitable gifts are not
   deemed to be complete under the theory that the payment
   of the checks after D's death relates back to the date
   of delivery prior to D's death. Estate of Metzger v.
   Commissioner, 

(1993), affd. 

                                 - 2 -

     (4th Cir. 1994), distinguished. Thus, the funds
     represented by the checks written on D's bank account
     and not paid until after her death are includable in
     her gross estate. Secs. 2031, 2033, I.R.C.; Estate of
     Gagliardi v. Commissioner, 

(1987).


     Mark M. Newman (a co-executor), for petitioner.

     Charles M. Ruchelman and William J. Gregg, for respondent.


     RUWE, Judge:   Respondent determined a deficiency in

petitioner's Federal estate tax of $46,724.    After concessions,

the sole issue for decision is whether funds in decedent's bank

account, upon which checks were written before but paid after

decedent's death for purported noncharitable gifts, are

includable in the gross estate.


                          FINDINGS OF FACT


     Some of the facts have been stipulated.   The stipulation of

facts, the supplemental stipulation of facts, the second

supplemental stipulation of facts, and the stipulation of agreed

adjustments are incorporated herein by this reference.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect as of the date of decedent's

death, and all Rule references are to the Tax Court Rules of

Practice and Procedure.

     Sarah H. Newman, hereinafter referred to as decedent, died

testate on September 28, 1992.    She was domiciled in Washington,

D.C., at the time of her death.    Her son Mark M. Newman (Mark)
                               - 3 -

and daughter Minna N. Nathanson (Minna) were appointed personal

representatives by the Register of Wills, Superior Court of the

District of Columbia.   Mark resided in Washington, D.C., at the

time of filing the petition for redetermination.    At the time of

her death, decedent had another surviving child, Paul H. Newman

(Paul).

     On May 14, 1985, decedent and her husband, Simon M. Newman,1

granted Mark a written power of attorney.     This power of attorney

provided that Mark, as attorney-in-fact, could:


          1) collect, recover and receive any and all
     moneys, sums, profits, dividends, interests, claims,
     debts, things, and assets regardless of what form and
     including real and personal property whatsoever now due
     or in the future to become due to anyone or group of
     us; and to execute and deliver receipts, releases and
     other discharges of debt to anyone or group of us;

          2) pay, settle, compromise, arbitrate and adjust
     all monies, sums, claims, and debts whatsoever now or
     in the future owed by anyone or group of us;

          3) receive, endorse and collect any checks payable
     to the order of anyone or group of us now or in the
     future in existence;

          4) make, negotiate, sell, deliver any lease,
     mortgage or deed pertaining to or including any real
     property, real estate, lands, minerals or other rights
     now or in the future, anyone or group of us owns or has
     any ownership or controlling (full or partially)
     interest in;

          5) to take possession of and/or enter upon any
     real property, real estate, lands, tenements or
     hereditaments which may now or in the future belong to
     anyone or group of us, the possession of which anyone

     1
      Simon M. Newman died on June 6, 1985.
                                 - 4 -

     or group of us now or in the future will be entitled;
     and

          6) to employ, hire, retain and contract for
     attorneys, architects, contractors, clerks, laborers
     and others, to remove them and/or appoint others in
     their place and to pay such persons fees, wages,
     salaries, expenses and other remuneration as he/she
     shall deem proper.


The power of attorney also provided a clause which ratified

Mark's actions in carrying out the powers granted above:


          Each of us further gives and grants to said
     Attorney-In-Fact full power and authority to do and
     perform every act necessary and proper to be done in
     the exercise of any of the foregoing powers as fully as
     either of us might or could do if personally present
     hereby ratifying and confirming all that said Attorney-
     In-Fact shall lawfully do or cause to be done for us.


Finally, the power of attorney granted to Mark was not to be

changed orally.   No reference to making gifts is contained in

this document.

     From December 15, 1989, until her death, decedent maintained

checking account No. 05-011258-6 with Columbia First Bank (CFB).

Decedent maintained this account solely in her name until

sometime between September 14 and October 14, 1992, when Mark's

name was added to the account.    The following checks drawn on

this account are relevant to the issue in this case:
                                    - 5 -


                                              Date on   Date Accepted and
Check No.   Amount          Payee              Check       Paid by CFB

 1652       $10,000    Mollie Nathanson       9/23/92        10/05/92
 1653         5,000    Minna Lev              9/23/92        10/07/92
 1654        60,000    Paul & Joyce Newman    9/24/92        10/02/92
 1655         5,000    Robert Davidson        9/24/92        10/02/92
 1656        10,000    Mark & Diana Newman    9/24/92        10/01/92
 1657         5,000    Tina Reiss             9/24/92        10/05/92


All the above checks were signed by Mark and dated prior to

decedent's death.     However, none of these checks were accepted or

paid by the drawee bank until after decedent's death.

Petitioner claims that the above checks were gifts made during

decedent's lifetime.     Petitioner also contends that it was

decedent's desire that the $60,000 given to Paul be distributed

amongst himself, his children, and his grandchildren and that

each of the distributees received $10,000 or less per person.

     On or about June 1, 1993, a United States Estate (and

Generation-Skipping Transfer) Tax Return, Form 706, was filed on

behalf of decedent's estate.        This return indicated that decedent

did not make any taxable gifts during her lifetime.       Furthermore,

the Schedule C attached to the Form 706 reflects the value of

decedent's checking account No. 05-011258-6 as $5,212 at the date

of her death.


                                 OPINION


     The sole issue in this case is whether the funds in

decedent's bank account represented by the six checks, which were
                                - 6 -

outstanding at the time of decedent's death are includable in her

gross estate.    Petitioner argues that the amount in question

constitutes nontaxable completed gifts and should be excluded

from decedent's gross estate.    Respondent, however, argues that

the checks do not represent completed nontaxable gifts and that

the value of the underlying funds should be included in

decedent's gross estate.    Respondent bases his argument on the

fact that the checks were not accepted or paid by CFB before

decedent's death and that, therefore, decedent maintained

dominion and control over the underlying funds until her death

with the result that the gifts were incomplete during decedent's

lifetime.2   Furthermore, respondent disagrees with petitioner's

argument that the payment of the checks by CFB after decedent's

death relates back to the date on the checks.

     Section 2001(a) imposes a tax on the transfer of the taxable

estate of every decedent who is a citizen or resident of the

United States.    The taxable estate is defined in section 2051 as

the gross estate less deductions.    Pursuant to sections 2031 and

2033, the value of the gross estate generally includes the value

of all property to the extent of the interest therein of decedent


     2
      Respondent also argues that Mark, as attorney-in-fact, had
no authority to make gifts on behalf of decedent. Alternatively,
respondent argues that the $60,000 check to Paul and Joyce Newman
exceeds the $10,000 exclusion under sec. 2503(b) and, therefore,
$40,000 of that check is an adjusted taxable gift, which is added
to decedent's reported gross estate. Because we find for
respondent on other grounds, we need not address these arguments.
                                - 7 -

at the time of her death.    Estate of Gagliardi v. Commissioner,

, 1210 (1987).   Section 20.2031-5, Estate Tax Regs.,

provides that "The amount of cash belonging to the decedent at

the date of his death, whether in his possession or in the

possession of another, or deposited with a bank, is included in

the decedent's gross estate."   If the checks in question

constitute completed gifts during decedent's lifetime, the funds

represented by those checks would not be includable in decedent's

gross estate.3

     A gift is not consummated until put beyond the donor's

recall.   Burnet v. Guggenheim, 

, 286 (1933).    Section

25.2511-2(b), Gift Tax Regs., provides in relevant part:


          (b) As to any property, or part thereof or
     interest therein, of which the donor has so parted with
     dominion and control as to leave in him no power to
     change its disposition, whether for his own benefit or
     for the benefit of another, the gift is complete. But
     if upon a transfer of property (whether in trust or
     otherwise) the donor reserves any power over its
     disposition, the gift may be wholly incomplete, or may
     be partially complete and partially incomplete,
     depending upon all the facts in the particular case.
     Accordingly, in every case of a transfer of property
     subject to a reserved power, the terms of the power
     must be examined and its scope determined. * * *



     3
      Although sec. 2501 imposes a tax on the transfer of
property by gift, sec. 2503(b) provides that the first $10,000 of
gifts made to any person during a year is excluded in computing
the total amount of gifts made during that year. Estate of
Cristofani v. Commissioner, 

, 78 (1991). Consequently,
a gift of $10,000 or less completed prior to decedent's death is
neither included in her gross estate nor taxed as a gift.
                                 - 8 -

Therefore, a gift is not considered complete until the donor has

parted with dominion and control so as to leave her with no power

to change its disposition.   Estate of Metzger v. Commissioner,

, 208 (1993), affd. 

(4th Cir. 1994).

     We turn to local law to determine whether decedent parted

with dominion and control over the funds in her checking account

such that she had no power to change their disposition.     Estate

of Dillingham v. Commissioner, 

, 1575 (1987), affd.

(10th Cir. 1990).    In the District of Columbia, a

check is generally considered conditional payment.     Daine v.

Price, 

, 768 (D.C. 1949).     Under the law of the

District of Columbia, in effect in 1992, "A check or other draft

does not of itself operate as an assignment of any funds in the

hands of the drawee available for its payment, and the drawee is

not liable on the instrument until he accepts it."     D.C. Code

Ann. sec. 28:3-409(1) (1981).

     In Estate of Metzger v. 

, we interpreted

an identical provision adopted in the State of Maryland.4

     4
      In Estate of Metzger v. Commissioner, 

, 209
(1993), affd. 

(4th Cir. 1994), we stated:


          Md. Com. Law I Code Ann. section 3-409(1) (1992)
     provides:

               (1) A check or other draft does not of
          itself operate as an assignment of any funds
          in the hands of the drawee available for its
          payment, and the drawee is not liable on the
                                                   (continued...)
                                - 9 -

Because the donor could revoke the gift by stopping payment on

the check or withdrawing the funds prior to the drawee's5

acceptance of the check, we stated that in the State of Maryland,

if a check is intended as a gift and is delivered to the donee,

the gift remains incomplete until the donee presents the check

for payment and the check is accepted by the drawee.    

     Petitioner does not argue that D.C. Code Ann. sec. 28:3-

409(1) (1981) is distinguishable from the aforementioned Maryland

statute.    Rather, petitioner argues that because of decedent's

condition, she was essentially unable to stop payment on the

checks.    Petitioner claims that decedent's condition was such

that she was unable to go to the bank or to get to a telephone in

order to request a stop order from CFB.    Thus, petitioner

asserts, the checks were not revocable and were complete when

delivered to the donees.    We do not find petitioner's argument

persuasive.

     Prior to the time that a drawee bank accepts a check, a

customer may order the bank to stop payment by telephone, which

would be effective for a period of 24 hours.    D.C. Code Ann. sec.

28:4-303(1) and (2) (1981).    After that time, a written stop

     4
      (...continued)
          instrument until he accepts it.
     5
      In commercial law, the term "drawee" means the bank in
which the donor has funds on deposit and against which the check
is drawn. D.C. Code Ann. sec. 28:3-103(a)(2) (Supp. 1995) (the
term drawee "means a person ordered in a draft to make
payment.").
                               - 10 -

payment order made by the customer would be effective for 6

months.   D.C. Code Ann. sec. 28:4-403(2) (1981).   Although

testimony was presented which portrays decedent as "bedridden"

prior to her death, there is no evidence that she had absolutely

no access to a telephone.   Further, because Mark was also a

customer6 on the account in question, he could have ordered CFB

to stop payment at decedent's request.

     Petitioner does not direct us to, nor have we found, any

State that recognizes delivery of a check to be a completed gift

of the underlying funds.    See 38A C.J.S., Gifts, sec. 56 (1996)

("The gift of the donor's own check is but the promise of a gift

and does not amount to a completed gift until payment or

acceptance by the drawee.").   Furthermore, mere possession of a

power to revoke, not the ability to exercise it, is controlling.

Estate of Alperstein v. Commissioner, 

, 353-354

(1978), affd. 

(2d Cir. 1979).   Accordingly, we find

that decedent possessed the power to revoke the checks until

accepted or paid by CFB.    Because CFB did not accept or pay the

checks until after decedent's death, they were not completed

gifts under the law of the District of Columbia.

     Nevertheless, petitioner argues that under the relation-back

doctrine, the payment of checks by the drawee relates back to the

     6
      D.C. Code Ann. sec. 28:4-104(1)(e) (1981), defines
"customer" to mean "any person having an account with a bank or
for whom a bank has agreed to collect items and includes a bank
carrying an account with another bank". (Emphasis added.)
                                - 11 -

date the checks were issued which was prior to decedent's death.7

We have applied the relation-back doctrine under certain

circumstances in prior cases.    Estate of Metzger v. 

at 215; Estate of Belcher v. Commissioner, 

, 232

(1984) (held that checks mailed to charitable donees prior to the

donor's death but not paid until after death related back to the

date of delivery, thus reducing the donor's gross estate); Estate

of Spiegel v. Commissioner, 

(1949) (held that

charitable contributions made by check delivered in 1942 but

deposited in 1943 related back to 1942 for deduction).     However,

we have specifically declined to extend the relation-back

doctrine where noncharitable gifts were made by check and the

donor died while the checks were still outstanding.      Estate of

Gagliardi v. Commissioner, 

.

     In Estate of Gagliardi v. 

, the donor,

through his son acting as attorney-in-fact, issued checks,

representing gifts, to his children.     Some of these checks were

paid by the drawee prior to the donor's death.     We held that the

funds represented by those checks should not be included in the

donor's gross estate.   

    However, some of the checks

were not paid until after the donor died.     In regard to the

outstanding noncharitable gift checks paid by the drawee after

the donor's death, we declined to extend the relation-back

     7
      Petitioner relies on the dates written on the checks in
question.
                              - 12 -

doctrine, distinguishing those checks from the charitable

contributions made in Estate of Belcher v. 

,

and Estate of Spiegel v. 

, stating:


     Our decision in Estate of Belcher was based on the
     special characteristics of charitable contributions,
     including the possibility that the estate would receive
     an offsetting deduction under section 2055 if the funds
     represented by the checks were included in the gross
     estate (

) and, more importantly, our
     prior decision in Estate of Spiegel v. Commissioner, 

(1949), involving the deductibility of
     charitable contributions for income tax purposes. In
     Estate of Spiegel we held that charitable contributions
     made by check were deductible in the year the check was
     issued rather than the year paid. Not following this
     case in Estate of Belcher would have led to the result
     that payments that had been deducted for income tax
     purposes were still includable in the gross estate.

          These bases of decision are not present in the
     noncharitable gift situation--gifts are not deductible
     for income tax purposes and, if made after death, do
     not reduce the gross estate for estate tax purposes.
     Thus, the reasoning of Estate of Belcher does not
     warrant extension of the relation-back doctrine to
     noncharitable gifts. * * * [Estate of Gagliardi v.
     

at 1212.]


     The Court of Appeals for the Seventh Circuit also declined

to extend the relation-back doctrine under similar circumstances.

McCarthy v. United States, 

(7th Cir. 1986).    In

McCarthy v. United 

, prior to the donor's death, she

maintained a joint checking account with her son.   The donor's

son wrote several checks which were intended as gifts to various

relatives.   Although these checks were delivered or mailed prior

to the donor's death, they were not cashed until after that time.
                              - 13 -

  The trustees of the donor's estate maintained that

the relation-back doctrine should be extended to noncharitable

gifts made by check.   The trustees argued that there were no

policy considerations which would justify treating charitable

donations differently than noncharitable gifts.   The Court of

Appeals for the Seventh Circuit disagreed, stating:


     there remains sufficient justification compelling the
     inclusion of outstanding checks issued to noncharitable
     donees. The Internal Revenue Code now exempts only
     those gifts made by a decedent up to $10,000 per donee,
     per year. I.R.C. § 2035(b)(2) (1985). To the extent
     of that exemption, application of the relation back
     doctrine fosters estate tax avoidance. By issuing a
     check to a noncharitable donee with the understanding
     that it not be cashed until after his death, a decedent
     may effectively bequest up to $10,000 per donee, thus
     avoiding the estate tax consequences normally attending
     such transactions. * * * [Id. at 132.]


     In Estate of Metzger v. Commissioner, 

(1993),

we extended the relation-back doctrine to a situation involving

noncharitable gift checks.   In that case, the checks were issued

to noncharitable donees in December 1985.   The donees deposited

the checks on December 31, 1985; however, the checks did not

clear the drawee until after the New Year holiday in 1986.      

  The question was whether the gifts occurred in the first

year or in the second.   A critical difference between the facts

in Estate of Gagliardi v. Commissioner, 

(1987), and

McCarthy v. United 

, and the facts in Estate of

Metzger v. 

, was that the donor in Estate of
                              - 14 -

Metzger was still alive when the checks were paid by the drawee.

In addition, the checks were deposited before the end of the year

and cleared the drawee bank immediately after the New Year

holiday.   Therefore, we found Estate of Gagliardi v.

, factually distinguishable and held that the

payment of the checks by the drawee in January related back to

the time the checks were deposited in December.    Estate of

Metzger v. 

at 214-215.    In extending the

relation-back doctrine to noncharitable gifts, we stated:


          We see no reason for refusing to apply the
     relation-back doctrine to noncharitable gifts where the
     taxpayer is able to establish: (1) The donor's intent
     to make a gift, (2) unconditional delivery of the
     check, and (3) presentment of the check within the year
     for which favorable tax treatment is sought and within
     a reasonable time of issuance. * * * [Id. at 215.]


     In claiming that the relation-back doctrine is applicable to

noncharitable gift checks paid after the donor's death,

petitioner relies upon our opinion in Estate of Metzger v.

.   We do not find the quoted portion of our

opinion in Estate of Metzger applicable where the donor dies

prior to the payment of the checks.    The Court of Appeals for the

Fourth Circuit, affirming our decision in Estate of Metzger,

recognized the important distinction between the facts of that

case and those in McCarthy v. United 

, and Estate of

Gagliardi v. 

, stating:
                             - 15 -

     We do not dispute the wisdom of declining to extend the
     relation-back doctrine in the circumstances presented
     in McCarthy and Gagliardi, when the donor died while
     the checks were still outstanding. Clearly there is a
     very real danger of fostering estate tax avoidance in
     cases in which checks are not cashed until after the
     donor dies. However, that is not the situation in this
     case. [Estate of Metzger v. 

.]


Unlike decedent here, the donor in Estate of Metzger v.

, was alive at the time the checks were

presented and paid by the drawee.   The facts in the case before

us are more analogous to those presented in McCarthy v. United

, and Estate of Gagliardi v. 

.8

Therefore, we hold that the relation-back doctrine does not apply

to checks representing noncharitable gifts which were accepted

and paid by the drawee after decedent's death.

     Accordingly, the checks in issue were not completed gifts

during decedent's lifetime, and the value of the underlying funds

is includable in decedent's gross estate.   Because our holding

resolves the sole issue before us, we need not address the merits

of respondent's other arguments.



                                         Decision will be entered

                                    under Rule 155.


     8
      We note that petitioner neither cites nor attempts to
distinguish the factually similar cases of McCarthy v. United
States, 

(7th Cir. 1986), and Estate of Gagliardi v.
Commissioner, 

(1987).