Lumbard, Chief Judge, Moore and Feinberg, Circuit Judges.
Petitioner is the Estate of Jack F. Chrysler, Deceased. Decedent died on November 7, 1958, a resident of New York, survived by his wife Edith (now Edith B. Carr) and two children, Helen and Jack, Jr.
During his lifetime, decedent deposited funds belonging to him in a checking account designated "Account No. 1 -- Jack F. Chrysler or Edith B. Chrysler as joint tenants with right of survivorship and not as tenants in common." Decedent also transferred certain securities to his name and that of his wife, or to his name and that of his daughter Helen, as joint tenants with right of survivorship. All these transactions were recorded by the decedent in a ledger which he kept at his office, inscribed "Helen F. Chrysler -- Personal." Decedent never used any of the funds recorded in these transactions, nor their proceeds, for his own benefit. The transfers recorded in this ledger after 1955 were solely transfers of cash, not of securities.
From time to time decedent used the checking account described above to purchase securities, which were registered in the name of decedent and his wife as joint tenants with right of survivorship until 1956. After the enactment in 1956 of the New York statute with respect to gifts of securities to minors, certain of the securities were registered in the name of Jack F. Chrysler, as custodian for Helen F. Chrysler, a minor, under Article 8-A of the Personal Property Law of New York, McKinney's Consol. Laws, c. 41. The securities so registered were kept in a separate safe deposit box, held in the name of decedent and his wife as joint tenants. No other securities were kept in the box. From time to time, some of the securities were sold, the proceeds deposited in the checking account described above, and new securities purchased.
Income tax returns with respect to the income from all of the property described above were filed for the daughter, Helen F. Chrysler, each year, and the taxes, if any, were paid out of the property.
What decedent did for Helen, he also did for his son, Jack, though using a different checking account, a different ledger (inscribed "Jack F. Chrysler, Jr. -- Personal"), a different safety deposit box, and so forth.
Decedent included each of the original transfers set forth in his ledgers in annual gift tax returns.
The Commissioner determined an estate tax deficiency on the grounds that the property described above was includable in decedent's gross estate. The Tax Court upheld the position of the Commissioner. The amount of the estate tax deficiency under the decision of the Tax Court was computed to be $74,770.09. From this decision, the estate petitions for review.
1. The Property Registered in the Names of Decedent and Another.
Section 2040 of the Internal Revenue Code of 1954 provides that:
"The value of the gross estate shall include the value of all property * * to the extent of the interest therein held as joint tenants by the decedent and any other person, or as tenants by the entirety by the decedent and spouse, or deposited, with any person carrying on the banking business, in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than an adequate and full consideration in money or money's worth * * *."
There is no dispute but that all of the property in question initially came from funds of the decedent. The Commissioner maintains that § 2040 applies by its terms to the property held by "Jack F. Chrysler or Helen F. Chrysler," "Jack F. Chrysler or Jack F. Chrysler, Jr.," and "Jack F. Chrysler and Edith B. Chrysler, as joint tenants with right of survivorship and not as tenants in common."
However, § 2040 is concerned only with beneficial interests possessed by a decedent as a joint tenant. It is apparent from the facts of this case that decedent's interest as a joint tenant was purely nominal. The joint tenancies were simply devices for making completed gifts to minors without going through the cumbersome machinery of guardianship or formal trusts which otherwise would have been necessary prior to the enactment of the New York custodianship statute. See Rogers, Some Practical Considerations in Gifts to Minors, 20 Fordham L. Rev. 233 (1951); Note, Recent Legislation to Facilitate Gifts of Securities to Minors, 69 Harv. L. Rev. 1476 (1956). Contrast Estate of Oliver B. Avery, 40 T.C. 392 (1963), in which the children were not minors at the time of transfer, so that there was no reason to suppose that the joint tenancy interest retained by the father was nominal rather than beneficial. We find convincing evidence of decedent's intention to relinquish all beneficial interest in the property transferred, including the right of survivorship, in favor of his minor children: in decedent's careful records in separate ledgers of the transfers for each child; in the reporting of each transfer as a completed gift; in the reporting of income from the property transferred as income of the children; and in the fact that decedent never used any of the funds transferred for his own benefit. With such extrinsic proofs, it seems likely that if the children had died first, the property would have been part of their estates. See ...