Virginia Hansen Vincent v. Commissioner of Internal Revenue

Petitioner was bom in 1916, the daughter of Oscar and Fay Hansen. The parents separated in 1920, and petitioner left California, where all had previously lived, and went with her mother to Michigan. The parents were finally divorced in 1923, and her mother subsequently remarried. Her father, who resided after the separation with his mother, Josephine Hansen, was president, manager and member of the Board of Directors of Bear Film Company, a California corporation. As owner of all the outstanding shares of stock of Bear, he transferred these to Josephine in trust for himself as beneficiary. At his death, petitioner became his sole heir. Josephine, who was appointed a co-ad-ministratrix of Oscar’s estate, filed an inventory of assets which included no mention of the stock of Bear. In 1930, the other assets of Oscar’s estate, of a value of about $10,000.00, were distributed to petitioner.

In order to obtain the services of Albert Hansen, another son, as manager of Bear, Josephine transferred to him all the stock which she had received in trust from Oscar. Josephine died in 1932. Albert operated the business of Bear successfully until his death in 1940. While he was in control, Bear…