Estate of Roy v. Commissioner
United States Tax Court
54 T.C. 1317 (1970)
- Written by Daniel Clark, JD
Facts
Dwight Roy and his brother transferred property to a trust. Roy and his brother granted their father a life estate in the income from the trust and each held a reversionary interest whereby the trust corpus would revert back to them if their father were to predecease them. If either Roy or his brother died before their father, the deceased son’s respective share in the trust corpus would be managed to benefit the deceased son’s family. Roy was 41 years old and in good health when he and his brother formed the trust. However, Roy was later discovered to have a severe kidney disease, to which he succumbed at the age of 47. The Internal Revenue Service (IRS) (defendant) used mortality tables that compared Roy’s age at his death with the ages of his brother and father to value Roy’s reversion interest at 70 percent of the value of assets transferred to the trust. Roy’s estate (plaintiff) considered Roy’s actual life expectancy, taking his kidney disease into account, to value his reversionary interest at 5 percent of the value of the transferred assets. Roy’s estate filed a petition in tax court to determine the correct valuation method.
Rule of Law
Issue
Holding and Reasoning (Sterrett, J.)
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