In order to properly consider the relevant issues in question it is necessary to quickly summarize the facts. The petitioners sold an 57 T.C. 164">*168 apple orchard for $ 140,000, received a downpayment of $ 20,000, and elected to report the transaction on the installment method as permitted by section 453. However, petitioners were only to receive interest of 5 percent per year on the unpaid principal or $ 6,000; the remaining portion of the contract price being payable on their death. 1971 U.S. Tax Ct. LEXIS 32">*44 Contemporaneously therewith the petitioners executed an irrevocable trust, funded with the installment sales contract, in which they were to receive an annual payment of $ 6,000; the corpus payable upon their death to a charitable foundation.

The respondent asserts that the transfer of the installment sales contract to the trust was a disposition of an installment obligation within the meaning of section 453(d) and therefore gain must be recognized to the extent of the difference between the basis of the obligation and its fair market value. He relies heavily on the legislative history of the predecessor of section 453(d), section 44(d) initially enacted as part of the Revenue Act of 1928, which is nearly congruent to the language of section 453(d). In its enactment Congress noted the following:

Subsection (d) contains new provisions of law to prevent evasion of taxes in connection with the transmission of installment obligations * * * by way of gift, or in connection with similar transactions. * * * The installment basis accords the taxpayer the privilege of deferring the reporting at the time of sale of the gain realized, until such time as the deferred cash payments are made. 1971 U.S. Tax Ct. LEXIS 32">*45 To prevent the evasion the subsection terminates the privilege of longer deferring the profit if the seller at any time transmits, distributes, or disposes of the installment obligations and compels the seller at that time to report the deferred profits. [H. Rept. No. 2, 70th Cong., 1st Sess., p. 24 (1928), 1939-1 C. B. (Part 2) 394-395.]

It is evident from the above language that the congressional purpose for enacting section 453(d) was to prevent tax avoidance by requiring a taxpayer who disposes of his installment obligation in any manner, ⁵ to pay the remainder of the tax due. It seems apparent that the facts at hand fall squarely within the purview of the statute; the petitioners irrevocably conveyed the principal interest of an installment sales contract to a trust. Though the conveyance was the gift of a remainder interest, the legislative history indicates that a gift is a disposition within the meaning of section 453(d). ⁶ This is indeed appropriate for otherwise, and as the petitioners view the instant transaction, the transferor would receive an immediate charitable deduction while still 57 T.C. 164">*169 spreading his gain over a period of1971 U.S. Tax Ct. LEXIS 32">*46 time. Therefore, it would seem that in the instant case the yet unrealized gain must immediately be recognized.

In support of this conclusion we note that in Marshall v. United States, 26 F. Supp. 580">26 F. Supp. 580 (S.D. Cal. 1939), the taxpayer transferred an installment sales obligation to an irrevocable trust, income to benefit the taxpayer. The court found that since there was an irrevocable transfer, a disposition did in fact occur so as to render the taxpayer liable for the yet unreported profit. More1971 U.S. Tax Ct. LEXIS 32">*47 recently this Court in Harold W. Smith, 56 T.C. 263">56 T.C. 263 (1971), held that the petitioner's transfer of an installment obligation to his children, who thereupon placed the obligation in trust and paid petitioner an annuity, was in fact a disposition as conceded by the petitioner, and thereby subject to the provisions of section 453(d). However, petitioners raise several contentions which deserve consideration before our holding can be deemed final. They contend that since the sale and the creation of the trust transpired simultaneously, the transaction in substance was a sale consisting of a $ 20,000 downpayment and a lifetime remuneration of $ 6,000 per year. Secondly, that the language quoted above presenting the reasoning behind the enactment of section 453(d) has in this case not been violated since the terms of the installment sales contract postponed payment of the principal until after petitioners' death thereby preventing payment of any further tax on the gain. Finally, that the grantor trust provisions, particularly section 677, are controlling, thereby treating the petitioners as the owners of the trust and removing any possible section 4531971 U.S. Tax Ct. LEXIS 32">*48 application.

The petitioners' first contention has little or no justification in light of the fact that the form of the transaction was contemplated and carried out by the petitioners; it was their decision to report the sale on the installment basis. A taxpayer cannot elect a specific course of action and then when finding himself in an adverse situation extricate himself by applying the age-old theory of substance over form.

The second assertion also has little merit. Section 691(a)(4) holds that an installment obligation received by the decedent's estate is income in respect of a decedent. ⁷ Therefore, even though the petitioners in the present case would receive no additional principal while alive, thereby having to pay no additional tax, their estate or designated beneficiary would be obligated to report the gain on receipt of the 57 T.C. 164">*170 $ 120,000. If petitioners succeeded in transferring the installment obligation to the trust without reporting any gain, a substantial amount of tax would be avoided. As noted above, the prevention of such avoidance was the congressional motive behind section 453(d).

1971 U.S. Tax Ct. LEXIS 32">*49 With their last contention petitioners seek to carry water on both shoulders. By claiming charitable deductions on their tax returns for the years in issue for a gift of an installment obligation in the face amount of $ 120,000, they represented that they had no further interest in said obligation. Yet they seek to avoid the income tax consequences of such a transfer as required by section 453(d) by claiming that the grantor trust provisions contained in sections 671-677 make them the technical owner of the installment obligation, and hence they never made a section 453(d) disposition. This, of course, cannot be -- having claimed the tax benefit of a charitable contribution, petitioners are hoisted by their own petard and must accept the consequences.

Further this last contention begs the question to be decided. The fundamental issue relates to whether in fact the petitioners conveyed away their entire interest in the contract, taking back a life interest or, on the other hand, whether they merely conveyed the remainder or principal interest. We note that though the trust instrument required the payment of $ 6,000 per year to the petitioners this amount was identical to the remuneration1971 U.S. Tax Ct. LEXIS 32">*50 the petitioners were to receive in the initial sales contract.⁸ It is therefore manifest to this Court that though the form of the transaction may superficially bear a resemblance to a grantor trust, in substance the petitioners conveyed away their interest in the principal of the contract; which in fact was a complete disposition of that interest. The annual payment was nothing more than the pass-through by the trust of $ 6,000 per year in interest from the original purchasers, Wells & Wade Fruit Co., to the petitioners; the trust serving as a mere conduit. As the Supreme Court noted in Minnesota Tea Co. v. Helvering, 302 U.S. 609">302 U.S. 609, 302 U.S. 609">613 (1938), "A given result at the end of a straight path is not made a different result because reached by following a devious path." Therefore, the transaction is controlled by the disposition provisions of section 453.

1971 U.S. Tax Ct. LEXIS 32">*51 In the alternative if we conclude that the petitioners conveyed their entire interest taking back the right to an annual payment, this Court still must hold the grantor trust provisions inapplicable to the principal interest conveyed to the trust. The reasoning is twofold. First, it is clear that the principal interest conveyed by petitioners to the 57 T.C. 164">*171 trust was irrevocable. Section 673 treats a taxpayer as the owner of a trust corpus where at its inception the corpus may reasonably be expected to revert within 10 years. It is therefore evident that this provision can have no application to the present set of facts. Secondly, though the trust instrument stated that the petitioners were to receive $ 6,000 per year from income and if necessary from principal, thereby implying the application of section 677(a)(1) to both components of the contract, principal and income, such treatment is not called for. Recalling the language of the initial contract we note that the unpaid principal of $ 120,000 was not payable until the death of the petitioners. Therefore, it is obvious that the annual payment could only come from income and thus the term "principal" was superfluous.

1971 U.S. Tax Ct. LEXIS 32">*52 Admittedly, there was a forfeiture provision in the sales contract in the event the purchaser failed to meet the provisions of sale. However, such a provision has no effect on an early principal payment and in addition the possibility of such a happening, due to the purchaser's strong financial position, was extremely remote. Thus, it was most appropriate in this case to hold that the grantor trust provisions are applicable, if at all, to the income interest alone, and therefore we necessarily conclude that the remainder interest was disposed of within the purview of section 453(d). ⁹ Such treatment is not novel in light of the language of sections 671-678 which hold in effect that a taxpayer may be treated as an owner of only a portion of a trust. To reach any other result would clearly frustrate the intent of Congress in enacting section 453(d).

1971 U.S. Tax Ct. LEXIS 32">*53 Having determined the existence of a disposition it is necessary to ascertain the fair market value of the property disposed of. The respondent through his appraiser, Albert H. Keppler, valued the obligation at $ 80,000. This figure was based primarily on the life expectancy of the petitioners.

It is manifest from the peculiar nature of the underlying product and the terms of the contract itself that a valuation must be based on several other considerations, including the hazardous nature of the business; the extended period of time between planting the orchard and its bearing fruit; the underlying product being difficult if not impossible to insure; the fact that the type of security involved is not attractive to most investors and therefore the traditional purchaser must be eliminated; the private investor does not usually have the amount of financing required; and finally as noted above, the entire amount of principal is not payable until maturity of the contract which 57 T.C. 164">*172 is dependent on the life expectancy of the petitioners. In light of the respondent's failure to consider these additional factors it is apparent that his valuation exceeds the reasonable fair market 1971 U.S. Tax Ct. LEXIS 32">*54 value of the installment obligation.

Richard A. Myers, appraiser on behalf of the petitioners, considering most of the factors enunciated above, valued the obligation at an absolute maximum figure of $ 75,000. This Court concludes that the installment obligation does in fact have an ascertainable value and, due to the many diverse factors noted above, that such fair market value is $ 75,000.

Upon an examination of the entire record we conclude that the petitioners have disposed of their installment obligation within the purview of section 453(d) and therefore must recognize gain to the extent of the difference between said fair market value and their basis in the obligation.

The second issue relates to the petitioners' right to (1) deduct the charitable contribution made to the A. Z. Wells Foundation to the extent of 30 percent of their adjusted gross income and (2) their right to carry over the additional contribution to succeeding years. The facts indicate that the determination rests solely on whether the foundation is considered publicly supported within the meaning of section 170(b)(1)(A).

In the Revenue Act of 1964 Congress expanded the charitable classification which entitles1971 U.S. Tax Ct. LEXIS 32">*55 the contributor to deduct contributions to the extent of 30 percent of their adjusted gross income. In essence by adding subsection 170(b)(1)(A)(vi) Congress included an organization which receives a substantial part of its support from governmental units or from direct or indirect contributions from the general public. ¹⁰ It also added a provision permitting a taxpayer to carry over a contribution made to a "30 percent charity" if in fact the amount contributed exceeded 30 percent of the taxpayer's adjusted gross income. ¹¹

1971 U.S. Tax Ct. LEXIS 32">*56 The respondent contends that since there were only four or five contributors and the interests contributed were remainder interests 57 T.C. 164">*173 in trust the foundation was not publicly supported within the meaning of section 170(b)(1)(A). In support of this assertion respondent points to the language of the regulations which states:

However, under no circumstances will an organization which normally receives substantially all of its contributions (directly or indirectly) from the members of a single family or from a few individuals qualify as a "publicly supported" organization. [Sec. 1.170-2(b) (5) (iii) (c) (2).]

The petitioners on the other hand contend that in light of the fact that the total assets of the foundation equaled only $ 2 million and the interests conveyed had a present fair market value of approximately $ 600,000 this should qualify the foundation as publicly supported.

Though there are no cases on point the legislative history is most enlightening. It makes clear that the purpose behind the passage of the applicable provisions was the equalization of benefits available to charitable organizations supported by the public and the encouragement of immediate contributions1971 U.S. Tax Ct. LEXIS 32">*57 by the populace to these organizations. Congress noted the following:

The additional 10-percent deduction is limited to organizations which are publicly or governmentally supported, however, and this additional deduction is not made available in the case of private foundations. * * * The extra 10-percent deduction is intended to encourage immediately spendable receipts of contributions for charitable organizations. [Emphasis supplied.]

* * * *

The reference to direct or indirect contributions from the general public prevents what are generally termed private foundations from qualifying for this additional 10-percent deduction. To qualify, the organization must receive support from at least a representative number of persons within the community concerned. [Emphasis supplied. S. Rept. No. 830, 88th Cong., 2d Sess. (1964), 1964-1 C.B. (Part 2) 562-563.]

In light of the above discussion it seems apparent that the case at bar does not fit within the expanded provisions enacted by Congress. The purpose for enacting the statute was to encourage "immediately spendable receipts" by contributors; here, however, the contributions were future interests1971 U.S. Tax Ct. LEXIS 32">*58 which for the most part would not be realized for several years. Equally important, the facts indicate, as noted above, that the only contributions made consisted of four or five remainder interests conveyed in trust to the foundation. Clearly, this is not a representative number of persons within the community. It is therefore evident that Congress was not so much concerned with the amount of contribution as it was with the number of contributors.

In light of all the facts and circumstances we hold that the A. Z. Wells Foundation is not publicly supported and therefore the petitioners are only entitled to deduct the charitable contributions to the 57 T.C. 164">*174 extent of 20 percent of adjusted gross income and are not therefore entitled to carry over the additional contribution.

The third issue relates to the existence of an annuity. Though this was conceded by respondent, the petitioners' reply to the amended answer seems once again to raise the question.

We concluded above that the $ 6,000 payment from the trust was in fact an interest payment from the purchaser, Wells & Wade Fruit Co., to the petitioners. Therefore, it could not be an annuity and must be included in income as1971 U.S. Tax Ct. LEXIS 32">*59 an interest payment.

Finally, we must point out that though the notice of deficiency recomputed the tax for the fiscal year ended June 30, 1967, it did not assess additional tax. Therefore, since there was no deficiency the year is not within this Court's jurisdiction. Milby & Dow Coal & Mining Co., 24 B.T.A. 40">24 B.T.A. 40 (1931); New York Trust Co., et al., 3 B.T.A. 583">3 B.T.A. 583 (1926).

Decision will be entered under Rule 50.