the position of the United States is well taken.
To be includable under Section 811, the decedent must have retained a reversionary interest by the express terms of the instrument of transfer, and the value of such reversionary interest, immediately prior to her death, must have been in excess of five per cent of the value of the transferred property. The term 'reversionary interest' includes a possibility that property transferred by a decedent may return to him or his estate, or may be subject to a power of disposition by him. 26 U.S.C.A. 811(c)(2), as amended by Section 7(a), of Internal Revenue Code 1949, 63 Stat. 894.
In the instant case decedent had the power during her lifetime to sell the property in question and retain or use the proceeds. That power constitutes a reversionary interest within the meaning of the Code, inasmuch as the decedent by exercising this power could divert the remainder to her own use by disposing of the property at any time during her lifetime. The value of such a reversionary interest would be 100% of the value of the transferred property, which was determined by the Commissioner of Internal Revenue to be in the amount of $ 40,000.
It is my further judgment that the summer residence is also includable as a revocable transfer under Section 811(d)(2) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 811(d)(2).
Decedent increased the value of the estate by construction of a dwelling thereon assessed at $ 40,000.
Under the agreement in question, neither the decedent nor her estate was to be paid the value of the dwelling. Her right to have payment made to her of the cost of any house built by her on the land was relinquished by the decedent under the terms of the agreement. The decedent did, however, acquire under the agreement a life estate with the power to sell the property and retain or use the proceeds.
The transaction covered by the agreement amounted in effect to an exchange by the decedent of her right to payment for any house she might build on the plot of ground for a life estate with the remainder to her two brothers, with power in the decedent to sell the property and retain the use of the proceeds.
It is my judgment that decedent's death has brought into being for the survivors property rights of such a character as to make appropriate the imposition of an estate tax. Tyler v. United States, 281 U.S. 497, 503, 50 S. Ct. 356, 74 L. Ed. 991.
Motion of plaintiff for judgment on the pleadings will be refused and motion of the United States of America for judgment will be granted.
An appropriate order is entered.
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