Fairchild v. Commissioner

*416 This proceeding involves a deficiency of $262.63 in estate tax. It is alleged that the respondent committed the following errors in determining this deficiency:

(1) Overvaluing certain stock.

(2) Including within the gross estate shares of stock owned by decedent's wife.

(3) Overvaluing a parcel of real property.

(4) Including within the gross estate the alleged interest of decedent's wife in certain property to the extent of the portion of the purchase price paid by her.

FINDINGS OF FACT.

Nellie B. Fairchild was the wife of the decedent and is the executrix of his estate. She resides at 1403 Ditmas Avenue, Brooklyn, N.Y. She had some property of her own, and she and her husband kept their stocks and bonds commingled. The Bluebird Securities Corporation was a closely held corporation organized by the decedent for the purpose of handling their securities, and through which he traded on the market. Both decedent and his wife turned property *417 over to the corporation. The wife owned 100 shares*2594 of the capital stock of the corporation, and a certificate therefor in her name was issued to her in October, 1919.

The decedent died March 10, 1923, at the age of 45 years.

At one time Nellie B. Fairchild owned real estate at 281 Decatur Street. She sold this property and the cash payment was used in the purchase of the property at 1403 Ditmas Avenue, title to which was taken in the name of Marcus D. Fairchild and Nellie Fairchild. his wife. The sale of the Decatur Street property and the purchase of the Ditmas Avenue property were consummated on the same day, on or about March 28, 1921.

At the date of decedent's death the property at 1403 Ditmas Avenue had a value of $27,500. This property was included by the respondent in the gross estate at a value of $33,000.

OPINION.

STERNHAGEN: The petitioner says that respondent has overstated the decedent's gross estate by improperly including two items which were not part of the decendent's property at death and by overvaluing certain stock and real property owned.

The respondent held that petitioner owned 379 shares of the stock of Bluebird Securities, Inc. Petitioner has proven that 100 of these shares were owned*2595 by decedent's wife, who had owned separate property and had contributed to the corporation separately. The stock certificate for 100 shares had been issued to her in 1919, and she was thus presumed to be the owner. . The value of this stock was not within the gross estate and respondent is reversed as to this item.

The respondent held the value of Bluebird Securities, Inc., stock to be at the rate of $177 a share. Petitioner alleges that this is excessive and that the value was $138.15 a share. The proof is insufficient to sustain the lower value claimed. It consists of the testimony of an accountant who examined the books and prepared a balance sheet. He satisfactorily verified the ownership and value of certain listed stocks among the assets, but as to other items he had no personal or direct knowledge and was not qualified to give evidence. Even assuming that the value of the Bluebird stock was proven to be exactly equal to the value of the assets of the corporation minus the liabilities, such valuation would require proper evidence of each item of such assets and liabilities. Without proof, for example, *2596 of the alleged note payable of $25,000 or of officers' account current $13,853.59, other than their statement on the constructed balance sheet, the true value of the Bluebird stock as something less than found by respondent has not been established. Respondent is therefore sustained in his valuation of $177 a share.

*418 The respondent held that the value of the Ditmas Avenue property at death was $33,000. The evidence establishes a value of $27,500. The property was owned by decedent and his wife as tenants by the entirety and the wife contributed to the purchase price. This property should be excluded from the gross estate under authority of .

Judgment will be entered on 15 days' notice, under Rule 50.

Considered by GREEN and ARUNDELL.