"(a) That said transfers were substitutes for testamentary dispositions of property, and therefore made in contemplation of death within the meaning of Section 302(c) of the Revenue Act of 1926, as amended."
Then this suit followed for the recovery of the amount paid on this special assessment.
The sole issue involved in this case is one of fact, i.e., Were the gifts of April 4, 1932, made in contemplation of death?
The assessment by the Commissioner established a prima facie case of liability, for the presumption is that taxes paid are rightly collected upon assessments correctly made by the Commissioner. Therefore, in a suit to recover them, the burden rests upon the taxpayer to prove all the facts necessary to establish the illegality of the collection. United States v. Rindskopf, 105 U.S. 418, 422, 26 L. Ed. 1131; United States v. Anderson, 269 U.S. 422, 443, 46 S. Ct. 131, 135, 70 L. Ed. 347; Wickwire v. Reinecke, 275 U.S. 101, 105, 48 S. Ct. 43, 44, 72 L. Ed. 184; Niles Bement Pond Company v. United States, 281 U.S. 357, 361, 50 S. Ct. 251, 252, 74 L. Ed. 901; McCaughn v. Real Estate Land Title & Trust Co., 297 U.S. 606, 56 S. Ct. 604, 80 L. Ed. 879.
We have fully considered the evidence in this case, having in mind the principles governing the determination of whether or not a gift inter vivos is made "in contemplation of death" as announced by the Supreme Court in United States v. Wells, 283 U.S. 102, 51 S. Ct. 446, 75 L. Ed. 867; and have come to the conclusion that not only have the plaintiffs failed to meet the burden of proof imposed upon them to show the gifts in question were not made "in contemplation of death," but, on the contrary, we are of the opinion that the evidence taken as a whole established the dominant motives for those gifts were death motives and not life motives.
The facts leading to this conclusion are these: David B. Oliver, a resident of Pittsburgh, died on October 21, 1934, at the age of ninety-nine years, eleven months, and eleven days. At the time he made the gifts in question, on April 4, 1932, he was over ninety-seven years old. He made the gifts to the natural objects of his bounty, i.e., to the persons who would succeed to his estate if he had died intestate. On April 6, 1932, he executed his last will and testament. The same persons witnessed this will who witnessed the instrument of gifts on April 4, 1932. The distributions under the will were made to the same persons who were the beneficiaries of the gifts of April 4, 1932, and were made to them in substnantially the same proportions.
It appears to us that the trust instruments and other gifts of April 4, 1932, and the will of April 6, 1932, were parts of a single transaction, and that, when the gifts were arranged for, David B. Oliver had in contemplation his own death, and that the evident purpose of the gifts was to save his estate from the payment of large estate taxes.
In the month of March, 1932, considerable publicity was given to the fact that Congress was proposing to enact a law to double the estate-tax rate.
At the time the gifts were made, none of the recipients of David B. Oliver's bounty was in financially distressed circumstances. By gifts made to them between 1914 and 1917, he had placed them on a financially secure basis.
Oliver had not been actively engaged in business for many years preceding the transfers.At that time, and for some years before, he had a nurse in constant attendance, and was examined by doctors two or three times a week. Under such circumstances, it would appear that a man over ninety-seven years of age must have fully realized, while death might not be imminent, it certainly might occur at any time in the ordinary course of nature, and could not long be delayed.
After the gifts made to all the sons and daughters in 1917, no other gifts from capital assets were made to his children, except Charles, till the gifts of 1932. It is true that he paid during that period the expenses of the college eduction of grandchildren; but there were, during that period, no gifts which would reduce his capital holdings and increase those of his children. From this fact the inference could be properly made that it was not the intention of Oliver to surrender any remaining part of his capital assets before death. However, the imminent increase of estate-tax rates in March, 1932, evidently led to an attempt on his part to save his heirs from the payment of those large taxes.
On the whole record, we are convinced the thought of death was the impelling cause of these gifts, and therefore they were made "in contemplation of death" and taxable under the statute.
Plaintiffs' motion for judgment in their favor will be denied, and defendant's motion for judgment in his favor will be granted.
Findings of fact and conclusions of law in accord with this opinion are filed herewith.
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