Horst

By written instrument dated April 11, 1925, E. Clemens Horst transferred to Daisy B. Horst, his wife, 2026 shares of capital stock in the E. Clemens Horst Company, community property of the parties, in exchange for a transfer by her of her interest in an equal number of shares of said stock to E. Clemens Horst, such transfer to each to be held as her and his separate property.

*2 E. Clemens Horst died May 24, 1940, and Daisy B. Horst is the executrix of his last will.

Daisy B. Horst as executrix petitioned the Tax Court for a redetermination of a tax deficiency in ,the amount of $32,348.80. 1 The Commissioner of Internal Revenue had ruled that the transaction of April 11, 1925 was not a sale or exchange of stock for a fair consideration in money or money’s worth as required by law.' The Tax Court upheld the Commissioner, stating “we hold that the release of the wife’s interest * * * did not constitute a ‘fair consideration in money or money’s worth’ * * * and that such transfer [to her] was a gift”, taxable under Sections 319, as amended by Section 324 of the Revenue Act of 1926, and 320 of the Revenue Act of 1924, 2 26 U.S.C.A. Int.Rev.Acts, pages 80, 81.

This case is before…