Estate of Frothingham v. Commissioner
United States Tax Court
60 T.C. 211 (1973)
- Written by Joe Cox, JD
Facts
Charles Frothingham was involved in a will contest regarding his cousin, George Mifflin. At the settlement of that matter, Frothingham received a general power of appointment for a property interest that was valued at $856,330.01 at the time of Frothingham’s own death. He exercised his power to dispose of that property by his will and received no consideration for doing so. Accordingly, that value was included in his gross estate by the Commissioner of Internal Revenue (the commissioner) (defendant). The exclusion at issue was in Internal Revenue Code § 2043(a), which allows that transfer or powers relinquished for consideration in a bona fide sale for adequate and full consideration in money or other value are not included in a gross estate. Frothingham’s estate (plaintiff) did not agree with the commissioner’s ruling, arguing that while Frothingham had paid nothing for his appointment, Frothingham’s bargain for surrender of his claim as Mifflin’s intestate heir constituted consideration as part of a bona fide sale and thus that the power of appointment should be excluded from Frothingham’s gross estate. The commissioner disagreed, arguing that Frothingham had received no consideration for the property passing under the power at his death and that the entire value should be included in his estate.
Rule of Law
Issue
Holding and Reasoning (Raum, J.)
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