1976 U.S. Tax Ct. LEXIS 45">*45
Decedent gave her residence to her daughter, who lived in an apartment. The plan was that the residence would be sold, that the daughter would buy a new house, in which the decedent would reside, and that, pending the consummation of the foregoing, decedent would continue to live in the old residence. Contracts were made to sell the house. Decedent continued to live in the residence and died before the contracts were closed.
66 T.C. 1080">*1080 Respondent determined a deficiency1976 U.S. Tax Ct. LEXIS 45">*46 of $ 10,024.95 in the estate tax of Florence Honigman. The only issue before us is whether the value of a residence is to be included in the estate as a transfer subject to a retained interest under
FINDINGS OF FACT
Some of the facts are stipulated and are found accordingly. The stipulation of facts and attached exhibits are incorporated herein by this reference.
Abraham Shlefstein is the executor of the Estate of Florence Honigman, who died at the age of 56, a resident of Brooklyn, N.Y., on June 2, 1969. At the time the petition was filed, the executor also resided in Brooklyn. A Federal estate tax return was timely filed with the Internal Revenue Service in Brooklyn.
Decedent's husband died in June 1968. Thereafter decedent owned and lived alone in their three-bedroom residence, in which she also carried on her employment as a bookkeeper. During the same period, decedent's daughter 1976 U.S. Tax Ct. LEXIS 45">*47 lived with her own family in a small apartment. Decedent decided to give the residence to her daughter, who would have the option of selling 66 T.C. 1080">*1081 or occupying it. Decedent did transfer the property to her daughter on April 2, 1969. In connection with this transaction, a Federal gift tax return was filed by the executor in 1970.
Decedent's daughter and son-in-law decided to sell the residence, intending to reinvest the proceeds in a larger house which would contain a separate apartment for decedent. They persuaded decedent to live with them, despite her initial reluctance to do so. On April 10, 1969, decedent's daughter and son-in-law contracted to purchase such a new home. Title to this property was scheduled to pass on June 30, 1969, but the contract was canceled due to decedent's death.
On May 9, 1969, decedent's daughter contracted to sell the residence she received from decedent. Decedent participated actively in the negotiations leading up to the contract of sale. Closing on this contract was scheduled for August 15, 1969, at which time the premises were to be "vacant and broom clean." Closing actually occurred on July 22, 1969.
Decedent continued to live in the 1976 U.S. Tax Ct. LEXIS 45">*48 house given to her daughter until she entered the hospital during her last illness. She continued to do her bookkeeping work there. It was the intent of decedent, her daughter, and her son-in-law that she occupy the residence until she moved into the planned new house. Decedent's daughter wanted her to stay in the house until it was sold, partly to prevent vandalism and for the convenience of the broker in showing the property to prospective purchasers. There were no other living quarters available to decedent had she vacated the residence before the new house was available. She paid no rent to her daughter and her estate paid telephone and utility bills on the property covering periods after April 2, 1969. Decedent's daughter paid the final insurance premium on the premises in October 1969.
ULTIMATE FINDING OF FACT
Decedent retained the possession or enjoyment of the residence which she gave to her daughter for a period which did not in fact end before her death.
OPINION
The facts of this case as set forth above are simple and virtually undisputed. The issue is whether those facts require 66 T.C. 1080">*1082 the inclusion of the value of decedent's residence in her estate under
(a) General Rule. -- The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise, under which he has (1) the possession or enjoyment of, or the right to the income from, the property * * *
[Emphasis added.]
This section is phrased in the alternative and requires property to be included in the decedent's estate if she
It is undisputed that the house in question was decedent's actual residence up to the time of her death. This case therefore fits within the literal wording of the statute, requiring only that possession or enjoyment be retained by the decedent "for any period which does1976 U.S. Tax Ct. LEXIS 45">*52 not in fact end before [her] death." The result appears harsh -- had decedent lived a few months longer and had events transpired as planned, there would probably be no argument that the house was includable in her estate 31976 U.S. Tax Ct. LEXIS 45">*55 -- but, if dictated by the statute, it must be imposed. This Court has on several occasions noted, but not adopted, a possible interpretation of
1. All statutory references are to the Internal Revenue Code of 1954, as amended, unless otherwise indicated.↩
2. Cf.
3. Respondent does not argue that the gift was made in contemplation of death.↩
4. The court found on the facts before it that such an intention did exist. See
5. "[Inquiries] into subjective intention, especially in intrafamily transfers, are particularly perilous." See