17 T.C. 166">*166 In these consolidated proceedings, respondent determined deficiencies in petitioners' gift tax for the calendar year 1944 as follows: 17 T.C. 166">*167

The question for decision is whether the petitioners made a taxable gift of $ 83,000 each within the meaning of the gift tax provision of the Internal Revenue Code by their renunciation or relinquishment of their respective interests in the estate of George S. Hardenbergh, deceased.

FINDINGS OF FACT.

From facts stipulated and the evidence we find:

Petitioners Ianthe B. Hardenbergh and Gabrielle Hardenbergh are mother and daughter, respectively, and reside in White Bear Lake, Minnesota, and each filed a gift tax return with the collector of internal revenue at St. Paul, Minnesota, for the year 1944, showing no gift tax due by them. Gabrielle became 21 years of age on August 23, 1944.

George S. Hardenbergh (hereinafter called decedent), husband of Ianthe and father of Gabrielle, died intestate in St. Paul, Minnesota, on April 2, 1944, leaving petitioners and a son, George1951 U.S. Tax Ct. LEXIS 112">*114 Adams Hardenbergh (hereinafter called George), aged 26, by a former marriage, as his sole surviving heirs at law. Ianthe was the stepmother of George and Gabrielle was his half sister. George was 4 years old when his father married Ianthe, who reared him, and a devoted family relationship existed between all of them.

During 1943, the year prior to his death, decedent had several conversations with petitioners in which he proposed leaving practically his entire estate to George in order to equalize somewhat the financial worth of his two children. ¹ This arrangement was agreeable to petitioners and they assented thereto. Prior to March 31, 1944, decedent and his attorney had conferred on several occasions with regard to preparing decedent's will. On March 31, 1944, two days before his death, decedent gave his attorney final instructions as to the terms of his will. On Saturday, April 1st, the attorney brought the typewritten document to him to be executed, but his condition had grown worse and he was too ill on that date to execute the will. It was decided to delay its execution until Monday, April 3rd, but he died on April 2nd, before the will could be executed. The unexecuted1951 U.S. Tax Ct. LEXIS 112">*115 will had a bequest of $ 2,000 to Gabrielle and a devise of decedent's home to Ianthe and left the residue to George.

On April 12, 1944, George filed in the Probate Court of Washington County, Minnesota, a petition for general administration of decedent's 17 T.C. 166">*168 estate, and requested that Ianthe be appointed administratrix, but she declined to serve, whereupon the court appointed Matt W. Miller administrator, who qualified and served as such.

On September 20, 1944, petitioners filed in the probate court, where the estate of decedent was then being administered, "a renunciation or relinquishment of their respective interests in said estate," the body of which instrument reads:

We, Ianthe B. Hardenbergh and Gabrielle Hardenbergh, widow and daughter respectively of the above named George S. Hardenbergh, deceased, do hereby, coincidentally1951 U.S. Tax Ct. LEXIS 112">*116 and jointly, definitely and finally renounce and reject, as of April 2, 1944, the date of death of said George S. Hardenbergh, any and all interest which we may then have had or may now have in and to the estate of said George S. Hardenbergh. We do hereby release and forever discharge the said estate and every part thereof from any claim or interest which may heretofore have accrued or might at any time hereafter accrue to us or either of us by reason of the laws of succession of the State of Minnesota; and we further agree that we will not at any time hereafter assert any claim or interest of any kind, nature or description in or to said estate or any portion thereof.

We further respectfully state to the above named Court and to anyone interested in said estate that our purpose in renouncing any and all interest we may have in said estate is as follows: just prior to the death of George S. Hardenbergh, he, knowing that I, Ianthe B. Hardenbergh, had a large independent estate, and that I, Gabrielle Hardenbergh, had been amply provided for by trusts created by my grandfather, R. H. Bronson, and by my mother, Ianthe B. Hardenbergh, with our full knowledge and consent, had prepared 1951 U.S. Tax Ct. LEXIS 112">*117 a Last Will and Testament in which he devised and bequeathed substantially all of his estate to certain named trustees in trust for the sole benefit of his son, George Adams Hardenbergh. The provisions of said Last Will and Testament were agreeable to us. However, George S. Hardenbergh died before execution of said Last Will and Testament could be completed. We renounce all of interest in said estate so that the intention of the said George S. Hardenbergh may be carried out without delay or the intervention of other interests.

Other than executing the above instrument, petitioners signed no other document of any kind pertaining to the estate or the property belonging thereto, and had no part in the administration of the estate, and received no funds or property therefrom, except that Ianthe did purchase from the administrator of the estate the homestead of decedent and herself.

The probate court issued the final decree of distribution on July 24, 1945, in part as follows:

* * * that * * * Ianthe B. Hardenbergh and Gabrielle Hardenbergh have filed with this court a renunciation of their interest in the above named estate, and that George Adams Hardenbergh is the person entitled to1951 U.S. Tax Ct. LEXIS 112">*118 the residue of said estate of said decedent.

Now, Therefore, on motion of Matt W. Miller, representative of said estate, and by virtue of the power and authority vested in this court by law, It Is Hereby Ordered, Adjudged and Decreed and the said court does hereby Order, Adjudge and Decree, that all and singular the above described property and all other 17 T.C. 166">*169 estate of said decedent in the State of Minnesota, subject to any lawful disposition heretofore made, be and the same is hereby assigned to and vested in George Adams Hardenbergh.

Whereupon all property of the estate available for distribution was delivered to and became the property of George and petitioners never claimed or asserted any title thereto.

The estate of decedent consisted of both real and personal property, the gross value of which was $ 320,659.41, the value of the real estate being $ 29,378.08 and of the personalty, $ 291,281.33. All of the real estate was sold by the administrator of the estate under orders of the probate court for the payment of debts, expenses incurred in the administration, etc., and there remained for distribution the sum of $ 252,317.63, and it was stipulated that if the acts of 1951 U.S. Tax Ct. LEXIS 112">*119 petitioners constituted a taxable gift, the interest of each petitioner in the estate was of the value of $ 83,000.

OPINION.

In effect section 1000 of the Internal Revenue Code imposes a gift tax upon "the transfer of property by gift," and stipulates "that the tax shall apply whether the gift is direct or indirect."

Within the meaning of this provision of the Code, as interpreted by the courts, did petitioners, heirs of George S. Hardenbergh, deceased, by the renunciation or relinquishment of their interest in his estate, thereby make a gift of same to George Adams Hardenbergh, decedent's only other heir?

Petitioners, in support of their contention that such renunciation or relinquishment did not constitute a gift, cite Brown v. Routzahn (C. A. 6), 63 F.2d 914, certiorari denied 290 U.S. 641">290 U.S. 641. It was there held that a renunciation and refusal to accept a bequest under a will, with the result that the property so bequeathed passed to another, was not a "transfer" of such property within the meaning of section 402 (c), Revenue Act of 1921. While there an estate rather than a gift tax was involved, however, in both instances1951 U.S. Tax Ct. LEXIS 112">*120 the basis of the tax is a "transfer of property," without which there is no tax liability.

In Brown v. Routzahn, supra, the court reasoned that the beneficiary in the will, so long as the estate was being administered, had the right either to accept or reject the bequest, and having seasonably rejected same, he never owned or controlled the property, and declared that in their opinion the statute in question did not "contemplate the taxing of the renunciation of testamentary gifts."

Respondent says "the facts and basic issue" here are "radically different" from those in Brown v. Routzahn, supra, in that here the decedent died intestate. There was no will and hence no testamentary gift which the devisee could accept or reject. The property involved 17 T.C. 166">*170 was inherited by petitioners as heirs under the laws of descent and distribution of the State of Minnesota, and, respondent contends, an heir has no power to prevent by renunciation the vesting of title in himself immediately upon the death of the decedent. Bostian v. Milens (Mo. 1946), 193 S.W.2d 797, 170 A. L. R. 424, 435,1951 U.S. Tax Ct. LEXIS 112">*121 and cases cited therein; Page, Wills, § 1401.

The above cases and authorities cited by respondent unequivocally support his position on this question. The Missouri Court, in Bostian v. Milens, stated that "the only way an heir may loose or part with his title to property, acquired by descent, is by prescription, adverse possession, estoppel, gift, contract, conveyance, intestacy, testamentary disposition, and perhaps other ways, but not by renunciation." The court defined "renunciation" thus: "* * * when one renounces he refused to accept and, therefore, never has anything to let go." Similarly, Page, Wills, supra, states:

If the owner of property dies without a will, the title to such property passes at common law by force of the rules of law which apply to such a situation. No voluntary act on the part either of the former owner who is dead, or of the subsequent owner who takes by intestate succession, is of any legal significance. As a part of this general theory of intestate succession, the heir, next of kin, etc., have no power to prevent the passage of title to themselves by any renunciation, disclaimer and the like, * * *.

There are, to our knowledge, no cases1951 U.S. Tax Ct. LEXIS 112">*122 on this precise point in Minnesota. However, the Minnesota courts hold that title to real estate of an intestate descends to the heirs immediately on his death. Bengston v. Setterberg, 227 Minn. 337">227 Minn. 337, 35 N.W.2d 623; Benboom v. National Surety Corporation, 225 Minn. 163">225 Minn. 163, 31 N.W.2d 1; Snortum v. Snortum, 155 Minn. 230">155 Minn. 230, 193 N.W. 304; Byrnes v. Sexton, 62 Minn. 135">62 Minn. 135, 64 N.W. 155. Similarly, in Minnesota personal property of an intestate descends to the heirs immediately on his death, subject only to the administrator's right of possession and qualified title for purposes of administration. In re Butler's Estate, 205 Minn. 60">205 Minn. 60, 284 N.W. 889. Furthermore, it is to be noted that in the Minnesota Probate Code, Minnesota Statutes, 1945, under the heading "Wills," there appears a section entitled "Renunciation and Election." No such section appears in the Probate Code under the heading "Intestate Succession."

Title to the property here in question1951 U.S. Tax Ct. LEXIS 112">*123 vesting in petitioners upon decedent's death, some act of theirs was necessary to divest them of such title. Here the act of divestiture was the execution on September 20, 1944, by petitioners of the instrument which they called a renunciation, but which was in reality a release or relinquishment. As stated in Barnes v. Verry, 174 Minn. 173">174 Minn. 173, 218 N.W. 551, "in the absence of fraud, undue influence, or mistake, releases between coheirs of their rights in real or personal property, and agreements entered into between 17 T.C. 166">*171 them for a division of the estate, are valid, and will be enforced." Regardless of the name applied to it, the instrument of September 20, 1944, evidenced the passage of title from petitioners of the property they had inherited under the laws of Minnesota. In our opinion such instrument effected a "transfer" within the meaning of the Federal gift tax law. Upon its execution petitioners' title passed to the estate, and in recognition thereof, upon distribution the probate court distributed all the property of the estate to George A. Hardenbergh. If this was not a "direct" transfer by petitioners to George A. 1951 U.S. Tax Ct. LEXIS 112">*124 Hardenbergh, it was certainly an "indirect" transfer to him, and is therefore subject to gift tax.

Petitioners contend that the decree of distribution of the probate court, rather than any act of theirs, divested them of title. However, the decree was subsequent to the execution of the instrument above referred to and is based thereon, as the terms of the decree itself recite.

As pointed out by the Supreme Court in Commissioner v. Wemyss, 324 U.S. 303">324 U.S. 303, it is unnecessary that donative intent be proved in order for a gift to be taxable within the meaning of the Federal gift tax law, but here donative intent on the part of petitioners as to the transfers in question is affirmatively shown, both by the oral testimony and by the recitals contained in the instrument of September 20, 1944.

Decisions will be entered for the respondent.