Before BIGGS, Chief Judge, and STALEY and HASTIE, Circuit Judges.
This is a petition for review of an estate tax decision of the Tax Court upholding the Commissioner's determination that certain gifts made by decedent without qualification and without restriction on immediate full enjoyment by the donees were transfers in contemplation of death and, therefore, that their value was includible in decedent's taxable estate.
Under Section 811 of the Internal Revenue Code the taxable estate of a decedent includes property so transferred that it comes within the following category:
"(c) Transfers in contemplation of, or taking effect at, death
"(1) General rule. 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 -
"(A) in contemplation of his death * * *." 26 U.S.C. § 811, 1946 ed. Supp. III.
Our concern is the application of this language to the circumstances of this case.
Decedent, Truman S. Belyea, was born in 1873. By 1920 he had become owner of all of the capital stock of two small corporations, Belyea Company, engaged in the manufacture and installation of gas-firing pressing machinery, and a separate corporation which held title to the real property occupied by Belyea Company. In 1922, he gave 50% of the capital stock in each of the corporations to his son and only child, Leon, who had been working for his father's company for about three years and was engaged to be married. In 1937, following a decision to expand the business and engage in a wider range of activities, the corporations were reorganized, but with father and son each still holding 50% of the capital stock.
Thereafter, starting in 1938, Truman Belyea made annual gifts, mostly to Leon but some to Leon's wife. Some of the gifts were in stock of the family-controlled corporations and some were cash gifts effectuated by transfers on the books of the Belyea Company. The gifts were as follows:
Date Age of Donor Net Worth of Donee Donee Amount Form
1/1/38 65 $58,699.08 Son $5000 ...