TAXATION - FEDERAL ESTATE TAX - INTER VIVOS TRUST AS GIFT TO TAKE EFFECT IN POSSESSION OR ENJOYMENT AT DEATH

On May 14, 1919, decedent set up six trusts, appointing life estates with remainders over. Each trust deed provided: "This Trust may, during the lifetime of the Grantor, be amended or revoked on the joint consent of the Grantor and the Trustees." The remainderman, who was the same person in each trust, was also one of the three trustees. Decedent died on September 4, 1928. The Board of Tax Appeals sustained the contention of the Commissioner of Internal Revenue that the value of the life estates should be included in the decedent's gross estate by virtue of section 302 (c) of the Revenue Act of 1926, as gifts "intended to take effect in possession or enjoyment at or after his death." On appeal it was held, by a two to one decision, that the Board of Tax Appeals erred, since the remainderman's interests were adverse to amendment or revocation of those parts of the trusts granting life estates, and since section 302 (d) should not be applied retroactively.

Mackay v. Commissioner, (C. C. A. 2d, 1938) 94 F. (2d) 558.