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MILLER v. UNITED STATES

April 8, 1971

George Laurence MILLER, Surviving Trustee under Deed of Trust of George Laurence Miller and Mary Campbell Miller dated March 15, 1935, George Laurence Miller and George Laurence Miller, Jr., Executors of the Estate of Mary Campbell Miller, deceased, Plaintiffs,
v.
UNITED STATES of America, Defendant


Higginbotham, District Judge.


The opinion of the court was delivered by: HIGGINBOTHAM

HIGGINBOTHAM, District Judge.

 Plaintiffs sue for the refund of the estate tax and interest paid in a total amount in excess of one million dollars (plus interest on both sums).

 Mary Campbell Miller (hereinafter referred to as Decedent) died on or about March 30, 1961. The plaintiffs are the executors of her estate and the surviving trustee under a trust dated March 15, 1935.

 On December 15, 1930, George Laurence Miller (hereinafter referred to as Miller), Decedent's husband, was the owner of four hundred (400) shares of common stock of George Miller, Inc. (hereinafter referred to as Corporation). On that date, Miller transferred those shares to himself and Decedent as tenants by the entirety. Decedent, as Miller before her, did not pay for the property. *fn1"

 On March 15, 1935, the Millers created an inter vivos trust in which Miller and Francis Chapman were named as Trustees. On the same date, Miller and Decedent transferred the 400 shares of stock and the $80,000 of bonds of the Corporation to the Trustees of this trust.

 Plaintiffs contend that the Government erroneously included in Decedent's gross estate one-half the value of property which the Millers, as tenants by the entirety, transferred to the above-mentioned trust. However, it is my conclusion that one-half the value of the property transferred by the Millers to the Trust created March 15, 1935 was properly included in Decedent's gross estate.

 II. SECTIONS 2036 AND 2040 OF THE INTERNAL REVENUE CODE.

 A. Introduction

 The critical statutory provision in this case is Section 2036 of the Internal Revenue Code of 1954 (26 U.S.C.), which, in relevant part, reads as follows:

 
"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 retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death --
 
(1) the possession or enjoyment of, or the right to the income from, the property * * *."

 The Trust created by the Millers on March 15, 1935 provided (Complaint, ...


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