17 T.C. 1149">*1150 The respondent determined a deficiency in estate tax in the amount of $ 291,822.72. The propriety of the determination depends in large part upon whether the respondent was correct in holding that the decedent was a resident of the United States at the time of his death. Other issues deal with the value of properties of the decedent that were located in The Netherlands and other foreign countries at the date of death, including shares and accrued dividends thereon in American corporations. The issue as to properties in foreign countries and accrued dividends turns upon the question of the value of the Dutch guilder at the optional valuation date elected by the executrix in the estate tax return.

FINDINGS OF FACT.

1. Domicile Issue

The decedent, Jan Willem Nienhuys, died on April 8, 1946, at the age of 68 years 1952 U.S. Tax Ct. LEXIS 295">*297 in Southern Pines, North Carolina. He died testate, leaving two wills. One was executed in The Netherlands in 1935 and was established in The Netherlands as his last will and testament. The other was executed in the State of New York in 1942 and related only to property located in the United States. It was admitted to probate in a surrogate's court in New York in May 1946, and letters testamentary thereunder were issued to the decedent's widow, Alida M. Nienhuys.

The executrix under the United States will of the decedent filed a nonresident alien estate tax return with the collector for the second district of New York on June 3, 1947. She elected in that return to 17 T.C. 1149">*1151 have the gross estate valued under the optional valuation date or dates in accordance with the provisions of Internal Revenue Code section 811 (j).

The decedent was survived, in addition to his widow, by four sons, all of whom had attained majority prior to the time of the decedent's death.

The decedent was born in Amsterdam, The Netherlands, in 1878, and throughout his life and at the time of his death he was a citizen of The Netherlands. His widow is a Dutch citizen. She and the decedent were married in The Netherlands 1952 U.S. Tax Ct. LEXIS 295">*298 in 1905.

In January 1940, and for some years prior thereto, the decedent owned, and he and his family occupied, a spacious residence on a large tract of well landscaped ground in Bloemendaal, which was a good residential community within commuting distance of Amsterdam. The house was well furnished and contained paintings of considerable value. The decedent and his wife entertained extensively and had frequent house guests. The decedent owned two other houses in Bloemendaal, and a farm.

In 1907 the decedent became president of the Amsterdam Tobacco Trading Company, which had been founded by his father in 1894. That company dealt in leaf tobacco, and specialized in the sale of tobacco grown in Sumatra and Java, which tobacco was used in the manufacture of cigars. Prior to 1940, the Sumatra and Java tobaccos had been sold at auctions held in Amsterdam. In that year the tobacco growers did not ship their product to The Netherlands because of the war then being waged in parts of Europe. In order to obtain a supply of tobacco for his company, and for an American company, the decedent decided to go to Sumatra where the tobacco was to be sold. He and his wife flew to Sumatra in January 1952 U.S. Tax Ct. LEXIS 295">*299 1940, and at that time they intended to return to Holland in March or April. They had round-trip tickets. After attending to business matters, they did some visiting, and started the return journey on a Dutch plane on May 7, 1940. Because of the invasion of Holland by Germany on May 10, 1940, the plane, acting on orders, terminated the flight at Alexandria, Egypt. After considerable difficulty, due to shortage of funds and delay in obtaining passport endorsements, the decedent and his wife obtained passage on an Egyptian boat to Marseilles, France. They landed in Marseilles without funds. Although the decedent had a letter of credit, he could not raise funds on it because at that time no one knew the value, if any, of the Dutch guilder. At that time, the decedent planned to return to Holland by way of Paris and England. The decedent cabled a business acquaintance, Henry M. Duys, in New York, for funds. Mr. Duys cabled funds, and suggested that the decedent and his wife come to the United States. They 17 T.C. 1149">*1152 decided to act on the suggestion, obtained visitors' visas, sailed from Genoa, and landed in the United States on June 20, 1940.

On arrival in the United States, the decedent 1952 U.S. Tax Ct. LEXIS 295">*300 and his wife first stayed as guests with Mr. and Mrs. Duys. They subsequently rented furnished apartments in New York City. Beginning in the latter part of 1941, they leased an unfurnished apartment on Long Island, which they furnished with light, inexpensive furniture that they intended to send to their son and daughter-in-law in the Dutch East Indies when the war ended. While living on Long Island, the decedent collected literature put out by American firms on modern kitchens. He intended to install such a kitchen in a house that he planned to build for occupancy by himself and his wife on their return to Holland.

When the decedent arrived in the United States in 1940, he had a credit balance of some $ 21,000 with H. Duys & Co., Inc., a New York corporation, which had been associated with the decedent's company in Holland in the purchase and sale of leaf tobacco, and in which the decedent owned some stock and was vice president thereof. Due to wartime restrictions on the funds of nationals of enemy and enemy-occupied countries, the decedent was permitted to draw only limited amounts of money from his credit balance. Under his visitor's visa, he was limited in his acceptance 1952 U.S. Tax Ct. LEXIS 295">*301 of gainful employment. In order to overcome these restrictions, the decedent went to Canada in the early part of 1941, and reentered the United States as a Netherlands quota immigrant. After his reentry to the United States under the immigration visa, the decedent was employed on a salary basis by H. Duys & Co., Inc.

The decedent filed annual resident Federal income and New York State income tax returns for the period from April 20, 1941, to the date of his death. The decedent's net income from sources within the United States for each of the years 1941 to 1945, inclusive, was:

When the decedent left Holland in 1940, he gave a limited power of attorney to one of his sons. When he was unable to return to Holland, a court in that country issued to the son a full power of attorney to manage the decedent's 1952 U.S. Tax Ct. LEXIS 295">*302 affairs. The son made no changes in the decedent's investments, but he destroyed the certificates representing the decedent's stock in H. Duys & Co., Inc., in order to keep them from 17 T.C. 1149">*1153 falling into enemy hands. New certificates were issued in 1945 and were kept in this country. The son sent to a New York investment house some stock certificates covering investments of the decedent in other companies. Such certificates were in the United States at the time of the decedent's death. The son paid all Dutch taxes that were owing by the decedent; and he paid the household servants. The son also paid his father's dues in clubs and societies in Holland, and in 1945 the decedent requested the son to continue to make such payments.

The decedent's home in Bloemendaal was requisitioned by the Germans in 1943 for use as an officers' club. Both the house and the surrounding grounds suffered damages while the property was occupied by the Germans. The son above mentioned arranged for his parents to stay with relatives on their return to Holland pending their decision as to the restoration of their home or the construction of a new one.

The decedent's wife organized the Netherlands Aid Society, 1952 U.S. Tax Ct. LEXIS 295">*303 both were active in that organization, and the decedent was its treasurer. They did not join any church in this country. The decedent joined the golf club at Forest Hills. The decedent and his wife did very little entertaining in this country. Most of their guests were Dutch sailors.

Upon liberation of The Netherlands from the hands of the enemy in 1945, the decedent made inquiry as to the possibility of returning to his home. He did not return at that time because of the policy of the Dutch government not to permit the return of its nationals who were abroad due to the shortage of food and fuel in Holland.

During the summer of 1945, the decedent was not feeling well. He wanted to return to Holland but, upon being advised of the fuel shortage, he was afraid of spending a cold winter in Holland and planned to return there the following spring. He was hospitalized in New York in the fall of 1945 where his illness was diagnosed as being due to a cancerous condition. In the winter of 1945 the decedent and his wife went to Pinehurst and then to Southern Pines, North Carolina, where the decedent died. His body was cremated and his ashes were taken to Holland.

At all times after the 1952 U.S. Tax Ct. LEXIS 295">*304 decedent arrived in the United States in 1940 he desired to and intended to return to Holland and to resume his business and social activities in that country. He never applied for naturalization as a citizen of the United States.

The decedent's domicile at the time of his death was in The Netherlands, and he was a nonresident of the United States within the meaning of the Federal estate tax statutes.

At the time of his death, the decedent owned 1,096 shares of the common stock of H. Duys & Co., Inc. (herein called Duys & Co.). 17 T.C. 1149">*1154 His estate owned those shares on the optional valuation date, April 8, 1947.

Duys & Co. was incorporated under the laws of the State of New York on December 19, 1916. On April 8, 1947, it had outstanding 7,917 shares of 7 per cent preferred stock, 6,000 shares of common stock, and 2,853 shares of common A stock. Each class of stock had a par value of $ 100 per share. The preferred stock was redeemable at $ 110 per share. The common stock was held as follows:

The 1952 U.S. Tax Ct. LEXIS 295">*305 holders of the common stock were all members of the Nienhuys and Duys families. The common stock has never been listed on any exchange or sold on any public market.

The 1,096 shares of Duys & Co. common stock owned by the decedent amounted to 18.266 per cent of the number of shares of such stock that were outstanding. The value of those shares was reported in the estate tax return as $ 115 each, a total of $ 126,040 at April 8, 1947.

Duys & Co. is a grower of and dealer in leaf tobacco. The business was founded in 1900 by the father of the present president of the company and the father of the decedent under an arrangement by which a joint account was created for dealing in this country in Sumatra and Java tobacco. The financing of the venture was supplied by the Nienhuys family which was to receive one-half of the profits. The joint venture was succeeded by a partnership. The present corporation took over the business upon organization. The Nienhuys family acquired one-half of the common stock of the corporation.

Of the 7,917 outstanding shares of preferred stock of Duys & Co., the decedent owned 741. He owned none of the common A shares. The preferred stock had no voting rights 1952 U.S. Tax Ct. LEXIS 295">*306 except upon default of dividends amounting to 21 per cent. No dividends thereon were in default at April 8, 1947. The common A shares had no voting rights. The common shares had all voting rights at April 8, 1947. The common and common A shares were entitled to share equally in dividends and on liquidation.

17 T.C. 1149">*1155 The principal business of Duys & Co., aside from its growing operations, was that of middleman. It bought and sold tobacco on its own account and on commission. It did not do any manufacturing. Prior to 1940, Duys & Co. acquired the tobacco to meet its requirements at the auction sales in Holland. It was the practice for a member of the Duys family to go to Holland in the period that auction sales were held there, and he, in conjunction with the decedent, purchased Sumatra and Java tobacco, both herein called Sumatra tobacco, for Duys & Co. The 1939 crop of Sumatra tobacco was sold in Sumatra in 1940 at auction sales attended by the decedent on behalf of his Holland company and Duys & Co. The 1940 crop was sold at auction on Staten Island, New York, in 1941. The 1941 crop was allocated in 1942 by the Imperial Tobacco Company among users of Sumatra tobacco. Duys & Co. 1952 U.S. Tax Ct. LEXIS 295">*307 acquired some of each of the 1939, 1940, and 1941 crops. No Sumatra crops were grown during the war after the crop of 1941 due to the occupation of the South Pacific islands by enemy forces. The first crop marketed after the war was that of 1948 which was a small crop. The Imperial Tobacco Company conserved its inventories of prewar Sumatra tobacco and allocated such tobacco among dealers during the war.

At April 8, 1947, the prospects for Duys & Co. to reenter the Sumatra tobacco business appeared to be hopeless. During the war period, the Imperial Tobacco Company, which represented the Sumatra growers had been formed. It entered the selling field in the United States and sold directly to some of the customers of Duys & Co.

When the supply of Sumatra tobacco was cut off, Duys & Co. turned to other means of procuring its needs. It leased lands in the Connecticut River Valley and acquired a farm of about 40 acres in that valley. It raised tobacco there, known as Connecticut shade tobacco, which is grown under cheesecloth. Due to adverse weather conditions, including hail storms, some crops were failures. It also raised some tobacco in that valley in the open which was a filler 1952 U.S. Tax Ct. LEXIS 295">*308 tobacco as distinguished from the wrapper tobacco grown under shade. In the Connecticut operations it was necessary for Duys & Co. to finance the farmers who planted and tended the crops.

On April 8, 1947, Duys & Co. had a wholly owned Cuban subsidiary, which dealt in Cuban tobacco and financed farmers in Cuba in the growing of tobacco. The bulk of the Cuban tobacco handled by the Cuban company is filler tobacco, which is less costly than wrapper tobacco, and is sold in volume at a small profit. The Cuban company sold tobacco in Havana direct to Cuban cigar manufacturers. Any surplus was sold by Duys & Co. in New York. Some low-grade Cuban tobacco was sold for use in making Cuban cigarettes. Duys 17 T.C. 1149">*1156 & Co. financed one Cuban farmer who raised wrapper tobacco which was sent to New York for sale. Cuban operations were subject to the hazard of hurricanes.

Duys & Co. was also a jobber in Florida and Puerto Rican tobaccos, and it dealt in other miscellaneous tobaccos.

During the decade from 1938 to 1947, the selling prices of all kinds of tobacco handled by Duys & Co. increased very substantially. Unit prices of representative tobaccos handled by Duys & Co. on March 31, 1938 and 1947, 1952 U.S. Tax Ct. LEXIS 295">*309 were as follows:

The average retail price of inexpensive cigars in that period increased from 4.6 cents to 8.8 cents. The per capita consumption of tobacco used in cigars in that period was relatively stable and in each of the years 1938 and 1947 was .97 pounds. The number of factories manufacturing cigars in the United States has declined from 1915 when the number was 15,732, to 1938 when there were 3,834, and again to 1927 when there were 2,228. In the years 1915 to 1947, the year of peak production was 1920 when 8,097,000,000 cigars were produced. In 1938, production amounted to 5,015,000,000, and in 1947 the number was 5,488,000,000.

Gross sales of Duys & Co. of various tobaccos, and net profits after taxes, were as follows:

Net 1952 U.S. Tax Ct. LEXIS 295">*310 earnings per share of Duys & Co. after all taxes, and dividends per share on the common and common A stock for each of the fiscal years ended March 31, 1938 to 1947, inclusive, were: 17 T.C. 1149">*1157

Duys & Co. largely financed its operations through bank loans. During the years 1938 to 1947, its annual borrowings from banks ran as high as $ 1,600,000.

Henry M. Duys has been an officer of Duys & Co. since its organization. He became president in 1940 and held that office on April 8, 1947. At that time he made all major policy decisions affecting the business of the corporation, including the borrowing of funds, quantities of tobacco to be purchased, and the payment of dividends. He had able assistants in various departments of the business, but no one with over-all responsibility. He was 62 years of age on April 8, 1947. The corporation did not carry insurance on his life.

The value on April 8, 1947, of the common stock of H. Duys & Co., Inc., that was owned by the decedent at the date of death was $ 172.68 per share.

At the date of death, the decedent owned a number of corporate stocks and bonds, and also securities issued by various governments. Some of the corporate stocks and bonds were those of corporations organized in the United States and some were issues of foreign corporations.

In the estate tax return filed by the executrix, the several stocks owned by the decedent, the certificates for which were in The Netherlands, were listed as having no value because of foreign exchange control restrictions. In determining the deficiency in estate tax, the respondent included in the gross estate the several items summarized below as being assets located in The Netherlands:

17 T.C. 1149">*1158 The above total was translated by the respondent into United States dollars by applying thereto the official rate of exchange of $ 0.37695 per guilder, which resulted in an addition to the gross estate of the amount of 1952 U.S. Tax Ct. LEXIS 295">*312 $ 784,116.56. The corporate stocks which were included in United States assets were valued at market quotations in the United States on the optional valuation date, except as to certain stocks which had been redeemed prior to that date and those were valued at the redemption price in United States dollars. The value of accrued dividends on stocks which were included by the respondent in United States assets was determined by converting the guilder value thereof into United States dollars by application of the official rate of exchange of $ 0.37695 per guilder. As to some of the United States stocks, the certificates were held by the Dutch Administration Offices which had issued its certificates therefor to the decedent.

Among the properties included in gross estate by the respondent were stocks of three foreign corporations, the certificates for which were in England and Switzerland which had a value of 16,784.22 Dutch guilders. Also included by the respondent were deposits in banks in England, Switzerland and France which had a total value at the optional valuation date of 1,077.44 Dutch guilders. The mortgages that were owned by the decedent were mortgages on property located in 1952 U.S. Tax Ct. LEXIS 295">*313 Holland. The item of miscellaneous property consisted of claims against Dutch nationals and the Dutch government in the amount of 114,714.48 guilders, and tangible personal property consisting of furniture, furnishings, and paintings of the value of 223,740.50 guilders.

The stocks of American corporations which were represented by certificates issued by the Dutch Administration Offices had a value at April 8, 1947, of 88,805 guilders, and accrued dividends on those stocks had a value of 12,841.90 guilders.

Life insurance proceeds under a group life insurance policy issued by a United States insurance company were included in the gross estate by the respondent at a value of $ 5,000. The proceeds of the policy were payable to the decedent's widow.

By Royal Decree of October 10, 1945, known as the "Foreign Exchange Decree, 1945," and regulations promulgated thereunder, the Dutch government imposed comprehensive restrictions on the sale or disposition of personal property by Dutch nationals and residents of Holland. Under the Foreign Exchange Decree, the personal property in the estate of the decedent which was outside of the United States could not have been sold at the optional valuation 1952 U.S. Tax Ct. LEXIS 295">*314 date for an amount in United States dollars equal to its value in guilders converted into such dollars at the official rate of exchange.

On April 8, 1947, the value of a Dutch guilder was 10 cents in currency of the United States.

17 T.C. 1149">*1159 OPINION.

The parties are in agreement on the basic premise that the amount of the estate tax on the estate of the decedent is dependent, in part, upon whether or not the decedent was domiciled in the United States at the date of his death. ^{11952 U.S. Tax Ct. LEXIS 295">*315} This agreement of the parties is in accordance with the respondent's regulations which provide that "A resident is one who, at the time of his death, had his domicile in the United States * * *. All persons not residents of the United States as above defined * * * are nonresidents." Section 81.5, Regulations 105.

The parties are also in agreement on the fact that the decedent was born in The Netherlands and throughout his life, and at the time of his death, was a citizen of The Netherlands. In view of the agreement of the parties on these points, our immediate question is whether the decedent's domicile at the time of death was in the United States as determined by the respondent.

We start with the fundamental principle that "a domicile once acquired is presumed to continue until it is shown to have been changed." Mitchell v. United States, 88 Wall. 350. There is no question about the decedent having been domiciled in The Netherlands prior to the year 1940 when he left there on a business trip and his return thereto was prevented by the invasion of his country by enemy forces. In the light of the presumption of continued Dutch domicile, the facts must be examined to determine whether in or after 1940 any events occurred which result in overcoming that presumption. The opinion in the case of Mitchell v. United States, supra, 1952 U.S. Tax Ct. LEXIS 295">*316 gives as guides these principles:

To constitute the new domicile two things are indispensable: First, residence in the new locality; and, second, the intention to remain there. The change cannot be made except facto et animo. Both are alike necessary. Either without the other is insufficient. Mere absence from a fixed home, however long continued, cannot work the change. There must be the animus to change the prior domicile for another. Until the new one is acquired, the old one remains. These principles are axiomatic in the law upon the subject.

The quoted principles are the basis of the respondent's approach to the problem. He states in his brief that "The two components, factum and animus, must concur in order to effect a change of domicile." 17 T.C. 1149">*1160 Although the decedent's failure to return to Holland in 1940 was forced upon him by circumstances beyond his control, the fact is that he did reside in the United States for nearly six years. Thus, the first of the two components that are relied on by the respondent -- the factum -- must be recognized as having existed.

As to the second factor -- "the animus to change the prior domicile" -- there is not only no sufficient evidence to 1952 U.S. Tax Ct. LEXIS 295">*317 overcome the presumption that Holland continued to be the country of his domicile, but there is abundant evidence to establish that no new domicile was acquired in the United States.

We have set out some of the facts upon which is based our ultimate finding that the decedent's domicile was in The Netherlands. An examination of all of the evidence, particularly the testimony of persons who were well acquainted with the decedent, leaves upon our minds a clear picture of a man who was unhappy about his enforced absence from his domicile and who intended to return to that domicile when circumstances made it possible and practicable to do so. He had an established business in Holland, which had been founded by his father, and which he wanted to carry on. His association with Duys & Co. was that of an employee, which was a far cry from the executive position of directing the business of his own corporation. He had in Holland a large home on extensive grounds, in which he and his wife had entertained on a large scale. In this country he lived in small apartments which were not at all suited to his customary way of living. The respondent points out that the decedent had sufficient income 1952 U.S. Tax Ct. LEXIS 295">*318 to have warranted the decedent's occupancy of more sumptuous quarters. His failure to do so is in keeping with his expressed view that his stay in the United States was only temporary. Other members of his family were in Holland and the decedent was concerned about their welfare. There is no evidence that he had any relatives in this country.

The respondent calls attention to certain statements made by the decedent in forms pertaining to his quota immigration visa. In reply to a question as to his "present permanent residence address" the decedent gave the address of the New York apartment that he was occupying at that time. One of the forms that the decedent signed contained the printed statement that "I intend to remain    ." Under the blank space were the words: "(Permanently or length of time)." The decedent inserted the word "permanently" in the blank space. The statements in the forms were made in the early part of the year 1941, at which time no one could prophesy with any assurance the length of the decedent's enforced absence from his homeland which was then in enemy hands and his Government was in exile. The forms did not provide space for any extended 17 T.C. 1149">*1161 explanation. 1952 U.S. Tax Ct. LEXIS 295">*319 Even so, if we consider the statements as indicating actual residence in the United States, they do not establish domicile upon which "the incidence of estate and succession taxes has historically been determined." Bowring v. Bowers, 24 F.2d 918, certiorari denied 277 U.S. 608">277 U.S. 608; Frederick Rodiek, supra."Residence without the requisite intention to remain indefinitely will not suffice to constitute domicile * * *." Section 81.5, Regulations 105.

Neither do we regard with any significance the decedent's filing of resident income tax returns. Residence has a different meaning in the income tax provisions of the Code than it has in those relating to estate tax. For income tax purposes, an alien in the United States "who is not a mere transient or sojourner is a resident" and must file returns. Section 29.211-2, Regulations 111, quoted with approval in Commissioner v. Nubar, 185 F.2d 584.

The evidence supports the presumption of continuance of original domicile and overcomes the presumption of the correctness of the respondent's determination. It is accordingly held that the respondent erred in his determination that the decedent was a resident of the United States at the time of his 1952 U.S. Tax Ct. LEXIS 295">*320 death.

Value of Stock of H. Duys & Co., Inc.

The decedent owned 1,096 shares of the common stock of Duys & Co. at the time of his death. The shares were reported in the estate tax return at a value of $ 126,040, which is at the rate of $ 115 per share at the optional valuation date. The respondent determined a value of $ 189,257.28, or $ 172.68 per share, and by amendment to his answer he alleges that the shares had a value of $ 312,360, i.e., $ 285 per share, and claims a consequent increase in the deficiency.

Duys & Co. was a closely held corporation. All of its common stock was held by the Duys and Nienhuys families. In 1947 all voting rights were in the common stock.

As is usual in cases of valuation of stock of closely held corporations, each party has introduced evidence of the existence of factors which, standing alone, supports his position. The petitioner places stress on factors which would tend to make the stock unattractive to prospective investors and to depress the value. Examples of these are that the stock owned by the decedent was a minority interest -- some 18 per cent of the common -- and could not control corporate policy. Its operations were confined to growing, 1952 U.S. Tax Ct. LEXIS 295">*321 purchasing and selling leaf tobacco for use in cigars. It did not do any manufacturing in which respect it differed from some of the better known tobacco companies, nor did it deal in cigarette tobacco except as to a minor part of its Cuban tobacco. The operating and financial policies of the corporation were dictated by one man, Henry M. Duys, who was 62 years of age at 17 T.C. 1149">*1162 the optional valuation date. The corporation did not carry insurance on the life of Mr. Duys.

The major basis of the business since its inception in 1900 had been the importation and sale of Sumatra and Java tobacco, and that part of the business was sharply curtailed if not entirely lost when enemy forces overran the Pacific islands in World War II. Its enforced change to the growing of domestic tobaccos was a costly and precarious venture.

On the other hand, the respondent points to the financially successful operations of the business over a long period of years, with emphasis on operations in the 10-year period covered by the fiscal years ended March 31, 1938 to 1947, inclusive. Although no far-eastern crops of tobacco were grown in the war period after the crop of 1941, Duys & Co. was able to procure some Sumatra 1952 U.S. Tax Ct. LEXIS 295">*322 and Java tobacco from the inventory of another company throughout the war period. During the period of scarcity of far-eastern tobacco, domestic cigar manufacturers became accustomed to using Connecticut shade tobacco for wrappers and were satisfied to use that tobacco. Dealings in Connecticut tobacco resulted in a loss of some $ 1,600 in 1941, but thereafter such dealings were profitable, with a profit of over $ 364,000 in 1946 and $ 276,000 in 1947. Operations in other tobaccos, including those of Puerto Rico, Cuba, and Florida, throughout the 10-year period resulted in an over-all profit in each of those years. Income per common share, with the exception of 1938, was substantial, ranging from a low of $ 7.18 to a high of $ 45.63. In the valuation year, 1947, earnings per common share amounted to $ 17.02. While the number of cigar factories had decreased considerably over a period of years prior to 1947, the per capita consumption of cigar tobacco had remained steady in the 10 years ending in 1947 and the number of cigars produced in 1947 was 470,000,000 greater than in 1938.

We have examined and weighed all of the evidence bearing on the value of the common stock of Duys & Co. 1952 U.S. Tax Ct. LEXIS 295">*323 Based upon our consideration of that evidence, and a weighing of the factors established by it, we have reached the conclusion and have found as an ultimate fact that the value of the common stock at April 8, 1947, was $ 172.68 per share. The evidence does not establish a lower value contended for by the petitioner or a higher value asserted by the respondent by amendment to his answer. The respondent's inclusion of the stock in gross estate at a value of $ 172.68 per share is sustained.

The respondent has included in the gross estate the value of personal property that he determined was located in The Netherlands, 17 T.C. 1149">*1163 including stocks in American corporations. It developed at the hearing that certificates for some stocks in foreign corporations, and some bank accounts of the decedent, were located in foreign countries other than The Netherlands. Based upon our conclusion that the decedent was not a resident of the United States, the greater portion of the personal property located outside the United States is not to be included in the gross estate. For estate tax purposes, stock of domestic corporations owned by a nonresident 1952 U.S. Tax Ct. LEXIS 295">*324 not a citizen of the United States is deemed to be property within the United States. Internal Revenue Code section 862 (a). Code section 861 (a) (1) requires an apportionment of deductions in such a case as this. For these reasons it is necessary to determine the value of such of the decedent's shares of stock in American corporations as were not included in the estate tax return and also the value of other of the decedent's properties, other than real estate.

There is no dispute between the parties as to the value in Dutch guilders of the decedent's property in The Netherlands and other foreign countries, and the shares in American corporations and accrued dividends thereon represented by certificates issued by the Dutch Administration Offices. The parties present the question to be decided as to such properties as one to be determined by the effect on such value of the blocking restrictions imposed by the government of The Netherlands under the 1945 decree on transactions involving foreign exchange. This presentation of the question stems from the fact that the estate tax, like its companion gift tax, is based on the value of property measured in terms of United States dollars. 1952 U.S. Tax Ct. LEXIS 295">*325 Estate of Anthony H. G. Fokker, 10 T.C. 1225, Morris Marks Landau, 7 T.C. 12.

Both parties take extreme views as to the effect of the decree of The Netherlands government. The petitioner contends that under the decree the property could not have been sold for United States dollars and therefore it had no value for estate tax purposes. The respondent's position is that the official exchange rate of $ 0.37695 per guilder should be used, as the valuation date is subsequent to the date of the liberation of The Netherlands and foreign trade had revived at the valuation date.

The evidence, as we analyze it, does not support the position of either party to the extent that each, respectively, claims. While Holland had been liberated from the hands of the enemy, and we assume that there had been a revival of foreign trade, at least to some extent, nevertheless there was in effect the governmental decree imposing restrictions on the sale of property of Dutch nationals in foreign exchange. The effect of such restrictions must be taken into account in determining value. Morris Marks Landau, supra.The evidence 17 T.C. 1149">*1164 establishes that at the optional valuation date the decedent's estate could not 1952 U.S. Tax Ct. LEXIS 295">*326 have realized in dollars the full guilder value of the blocked properties converted at the official rate of exchange. There is evidence that as to stocks in American corporations owned by Dutch nationals, the certificates for which were in this country, the market price was only about one-half of the guilder value at the official exchange rate.

The petitioner's evidence establishes to our satisfaction that the respondent erred in converting guilder values into dollar values at the official exchange rate. However, it is not convincing that the properties involved in this issue had no value at all. The foreign exchange decree does not purport to be an absolute prohibition on transactions involving foreign exchange. The decree made it illegal to dispose of property in foreign trade "otherwise than by virtue of a license." There is no evidence that the decedent's estate made any effort to procure a license. There is evidence that property of Dutch nationals could not have been sold for free United States dollars, but there is also evidence that some foreign transactions were permitted if the proceeds were offered to The Netherlands Bank in exchange for guilders. While this no doubt involved 1952 U.S. Tax Ct. LEXIS 295">*327 some financial sacrifice on the part of the Dutch national, we cannot find as a fact that the property in the decedent's estate could not have been converted into United States dollars at some figure. The existence of the foreign exchange controls imposed by The Netherlands makes it difficult to fix an exact value for the property outside the United States, but some value must be determined under the estate tax provisions of the taxing statute. Ithaca Trust Co. v. United States, 279 U.S. 151">279 U.S. 151. Our best judgment, based upon all the evidence, is that the decedent's property in The Netherlands should be valued at the optional valuation date by converting the guilder value into United States dollars at the rate of $ 0.10 per guilder.

As the decedent was not a resident of the United States, the proceeds of the policy of insurance on his life are not includible in the estate. Code section 863 (a).

The parties have stipulated as to the deduction allowable to the estate for attorneys' fees and related expenses and disbursements incurred in the administration of the estate and in this proceeding or on a review,

Decision will be entered under Rule 50.