
    Appeal of MARY E. McDONALD, Executrix, Estate of PATRICK J. McDONALD.
    Docket No. 3042.
    Submitted September 29, 1925.
    Decided November 11, 1925.
    
      Michael M. Doyle, Esq., for the taxpayer.
    
      R. E. Coyes, Esq., for the Commissioner.
    Before Smith, James, Littleton, and Teussell.
   The taxpaybr appeals from the determination of a deficiency in estate tax upon the estate of Patrick J. McDonald, deceased, in the amount of $255.99. The appeal is based upon alleged errors on the part of the Commissioner in increasing the valuation returned for 18 garages near Porter Street, N. W., Washington, D. C., from $4,500 to. $10,000; in increasing the value of property at 643 Pennsylvania Avenue, S. E., Washington, D. C., from $15,000 to $20,000; and in holding that the sale of certain property was a transfer in contemplation of death to the extent that the sale price was less than the fair market value.

FINDINGS OF FACT.

Patrick J. McDonald, a resident of Washington, D. C., died on February 11, 1923, at the age of 55 years. About one year prior to his death he suffered an attack of influenza which took his strength and left him subject to attacks of asthma. In the summer of 1922 he took a trip to Europe with his wife. This trip was taken at the solicitation of his wife, who was anxious that he get away from his business for a time. He was greatly benefited by the trip and gained about 16 pounds in weight. He died suddenly of heart disease. He was not aware that he had any affection of the heart until a very few days before his deaih.

In March, 1922, he began the erection of three houses on Porter Street, N. W., Washington, D. O. A little prior to beginning the erection of these houses his son, a clerk in the Post Office Department, desired to purchase a home for himself and family. The decedent’s wife suggested to the decedent that he build a house for his son on Porter Street and sell it to him at a price which he could afford to pay for it. The decedent demurred for a time, but finally consented to build one of the three houses contemplated smaller than the others and to sell it to the son at a price of $6,500, which was admittedly' less than the price at which it could have been sold to others. The house was completed in the fall of 1923 and was deeded to the decedent’s son and his wife, at the request of the son. In December, 1922, the son paid $1,000 cash and assumed a mortgage of $5,500 for the balance.

The decedent at the date of his death owned the premises at 643 Pennsylvania Avenue, S. E. He also owned 18 garages in the rear of the three houses which he had erected on Porter Street. These garages fronted on an alley and were built at a cost of between $5,000 and $6,000. The property at 643 Pennsylvania Avenue, S. E., was returned by the executrix at a value of $15,000 and the garages on Porter Street at a value of $4,500.

The Commissioner increased the value of the Pennsylvania Avenue, S. E., property from $15,000 to $20,000 and of the garages from $4,500 to $10,000. He also held that the fair market value of the property sold by the decedent to his son two months before his death for $6,500 was $12,000, and that the excess value over the sale price was a transfer of property in contemplation of death.

The fair market value of the property at 643 Pennsylvania Avenue, S. E., at the date of the death of the decedent was $15,000, and the fair market value of the 18 garages in the rear of the lots fronting on Porter Street, 'N. W., was $10,000. The sale of the property on Porter Street to the son of the decedent was not made by the decedent in contemplation of death.

DECISION.

The deficiency should be computed in accordance with the foregoing findings of fact. Final determination will be settled on 10 days’ notice, in accordance with Rule 50.  