Daisy J. Nance, as of the Will of Louis E. Nance, Deceased v. United States

The Government appeals from a judgment for the taxpayer, the executrix of the estate of Louis E. Nance, deceased, in her suit to recover $16,287.55, paid by the estate following a deficiency assessment. The estate tax had been assessed upon one half of the proceeds of two insurance policies on the life of Louis in a face amount totaling $250,000.

The decedent-insured, Louis, and his beneficiary, Daisy, were husband and wife, who were Arizona domiciliaries. For the purpose of this appeal it is conceded that one half of the proceeds of the policies belonged to the wife and that such proceeds are not includible within the decedent’s estate under applicable Arizona community property law.

A single issue is dispositive of the appeal: Did Louis retain an “incident of ownership” of the policies within the meaning of section 2042(2) of the Internal Revenue Code of 1954 ( 26 U.S.C. § 2042 (2)) ? Section 2042(2) requires inclusion in a decedent’s gross estate of amounts “receivable by all other beneficiaries as insurance under policies on the life of the decedent with respect to which the decedent possessed at his death any of the incidents of ownership, exercisable either alone or in…