Estate of Don Murillo Brockway, Deceased v. Commissioner of Internal Revenue

In 1922 there was incorporated Crown Body & Coach Corporation with 200 shares of common stock, of which Don Murillo Brockway owned 100. Murillo M. Brockway, his son,* became an employee of Crown. In 1936 decedent acquired for Murillo the outstanding 100 shares of stock, for the purchase price of which his son subsequently reimbursed him. In the same year, decedent and Murillo entered into a written agreement to place this stock in “themselves as joint tenants.” Subsequently, 550 shares of common and 950 shares of preferred stock were issued by Crown, in accordance with the contract, in the joint names.

The Tax Court, 18 T.C. 488 , construed this document to create a joint tenancy, and upheld a deficiency assessment against the estate based upon the transfer of his father’s shares of stock to Murillo by the death.

There are three questions raised on the appeal: (a) Where the agreement contained the words:

was the stock held in “joint tenancy” within the meaning of the Internal Revenue Code, § 811(e)? (b) If the stock were so held but there was an arm’s length business agreement free from donative intent, was the stock includable in the gross estate? (c) Did certain obligations…