TAXATION - FEDERAL GIFT TAX - CANCELLATION OF A POWER TODESIGNATE NEW BENEFICIARIES OTHER THAN THE SETTLOR - INTERRELATIONSHIP OF GIFT AND ESTATE TAX

Before the enactment of the 1924 gift tax statute, decedent created a trust for the benefit of named beneficiaries, reserving to himself power both to revoke and to modify the trust. In 1919 the decedent made a surrender of the power to revoke the trust by a writing which reserved the power to designate new beneficiaries other than himself. This latter power was renounced in 1924 after the effective date of the gift tax statute. The Board of Tax Appeals and the Circuit Court of Appeals for the Third Circuit affirmed the commissioner's ruling that the gift became complete and taxable only upon decedent's final renunciation of his power to designate new beneficiaries.

Held, the decisions below are affirmed. Sanford's Estate v. Commissioner of Internal Revenue, 308 U.S. 39, 60 S. Ct. 51 (1939).