Lester v. Commissioner

Alice H. Lester, an Incompetent Person. A. Crawford Greene, Guardian of the Estate of Alice H. Lester, an Incometent Person v. Commissioner.

Lester v. Commissioner

Docket Nos. 110620, 111447.

United States Tax Court

1943 Tax Ct. Memo LEXIS 411; 1 T.C.M. (CCH) 758; T.C.M. (RIA) 43121;

March 10, 1943

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Morris M. Doyle, Esq., 15th Floor, Balfour Bldg., San Francisco, Calif., for the petitioner. Arthur L. Murray, Esq., for the respondent.

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SMITH

Memorandum Opinion

SMITH, Judge: The petitioner in these proceedings assails gift tax deficiencies determined by the respondent as follows:

Docket No.	Year	Deficiency
110620	1938	$5,376.25
	1939	5,386.87
111447	1940	8,016.53

The case involving gift tax deficiencies for the years 1938 and 1939 (Docket No. 110620) was called for hearing in San Francisco, California, February 1, 1943. The case was submitted to the Court by counsel for the petitioner and the respondent "upon the pleadings with the stipulation that the facts are the same as in the cases previously decided by the Board, the docket numbers of which appear here as 93404 and 96315, respectively; the stipulation to be that the facts fundamentally in this proceeding are the same as the facts in those proceedings, subject, of course, only to the different amounts for the later years."

At the same time counsel for the petitioner stated:

* * * it will be agreeable for petitioner to submit not only the case appearing on your Honor's docket this morning but a further case which, for some reason, has not yet reached the docket but would in due course appear there. That bears the number, Mr. Murry tells me, of 111447. So that all of the pending petitions, whether appearing upon your Honor's docket this morning or not, may be submitted upon that same stipulation and understanding.

Counsel for the respondent acquiesced in such request.

The question presented by these proceedings is whether certain payments made by the guardian of the estate of Alice H. Lester during the years 1938, 1939 and 1940 to two adult daughters of Alice H. Lester, pursuant to an order of the court having jurisdiction of the estate, are liable to gift tax. Alice H. Lester, a woman of large wealth, has been an insane person for a period of more than 25 years. The respondent has determined that the payments out of the estate of Alice H. Lester to her two adult daughters are liable to gift tax.

The same issue was before the Board of Tax Appeals in a similar proceeding brought by the same petitioner at 41 B.T.A. 515">41 B.T.A. 515. That proceeding involved payments made out of the estate of Alice H. Lester during the calendar year 1937. The Board decided that those payments made out of the estate for the support and maintenance of the adult daughters of Alice H. Lester were not subject to gift tax. The Board's decision in that case was reversed by the United States Circuit Court of Appeals for the Ninth Circuit in Commissioner v. Greene, 119 Fed. (2d) 383, and certiorari was denied by the United States Supreme Court, 314 U.S. 641">314 U.S. 641. The essence of the court's opinion was that there was no adequate consideration in money or money's worth for the payments made and that under the gift tax law they constituted taxable gifts. The opinion rendered by the Ninth Circuit in that litigation is the law of this case.

In accordance with the above-cited opinion of the Ninth Circuit, and pursuant to the stipulation of the parties in these proceedings, it is held that the deficiencies in gift tax determined by the respondent for the years 1938, 1939, and 1940 are legally due.

Decisions will be entered for the respondent.