OPINION.
Oppee, Judge:
The deficiency in gift tax determined against petitioner is resisted on two principal grounds: (1) that no taxable gift took place, and (2) that the respondent’s valuation was excessive. The disputed taxable event was the relinquishment by petitioner of a retained power to designate among specified beneficiaries who should be entitled to receive the remainder interest upon the death of the life tenant. The issue is the imposition of a gift tax upon the value of the remainder, no question as to the life estate being involved.
The principle of Sanford’s Estate v. Commissioner, 308 U. S. 39, seems to us to bring this relinquishment within the category of taxable gifts. True, a final and irrevocable release of all control by petitioner when he originally established the trust creating the gift in 1927 might have resulted in an act of such finality that the gift having been complete when made could not subsequently become subject to a gift tax. But here that control was retained through petitioner’s power to select the beneficiaries. In its own field it was complete, for if petitioner survived the life tenant he could manifest his choice by deed, and if he predeceased her he could do so by his will.
The contingency over which he had no control, namely, the chronological relation of the death of the life tenant to his own, was therefore not a condition to the existence of the power, but merely the determinant of the method of its exercise. There clearly was that "retention of control over the disposition-of the trust property whether for the benefit of the donor or others [which] renders the gift income píete until the power is relinquished whether in life or at death” of which the Sanford case speaks. This would sufficiently reconcile the dictum in Emily Trevor, 40 B. T. A. 1241, to which petitioner refers, if that case were still to be treated as authoritative. Cf. Burnet v. Guggenheim, 288 U. S. 280.
Petitioner concedes that it is not a sufficient distinction from the Sanford case that he here retained only a special power limiting his designation to a specified group of beneficiaries. Higgins v. Commissioner (C. C. A., 1st Cir.), 129 Fed. (2d) 237; certiorari denied, 317 U. S. 658. And if the test is whether a failure to exercise the retained power at death, in the absence of such an inter vivos renunciation as occurred here, would be taxable as part of petitioner’s estate, the authorities indicate an affirmative answer. Estate of Homer G. Day, 41 B. T. A. 580; Fidelity-Phhiladelphia Trust Co., 34 B. T. A. 614; H. T. Cook et al., Executors, 23 B. T. A. 335; affd. (C. C. A., 3d Cir.), 66 Fed. (2d) 995; certiorari denied, 291 U. S. 660. Thus, if upon the life tenant’s death or at any time thereafter prior to his own, petitioner exercised the power by deed and thus destroyed it, the gift tax would then accrue. See Sanford’s Estate v. Commissioner, supra; Regulations 79, art. 3, as amended by T. D. 5010; Higgins v. Commissioner, supra. If he exercised it'by will, the estate tax would clearly bring the property into his gross estate; and this would be equally true if the property passed at his death upon default of the designation by him. Porter v. Commissioner, 288 U. S. 436; Estate of Homer G. Day, supra; Fidelity-Phhiladelphia Trust Co., supra; H. T. Cook et al., Executors, supra. Hence, the only occasion by which the earlier uncompleted gift could become complete in the absence of these taxable contingencies was the surrender in petitioner’s lifetime of the right of selection. This then becomes the occasion for the gift tax to attach, and justifies the respondent’s action in this respect. Sanford's Estate v. Commissioner, supra; Burnet v. Guggenheim, supra.
Nor do the provisions of the Revenue Act of 1942, section 452,1 affect this conclusion. It is evident that the exceptions set forth in subdivisions (b) and (c) are designed only to limit the effect of the amendment which it was the basic purpose of the section to effect.2 No necessity existed for bringing within the scope of the gift tax the exercise or release of a power of appointment previously created by the donor himself. Sanford's Estate v. Commissioner, supra. The evident purpose was merely to add to the category of taxable gifts the exercise or release of a power of appointment received by the holder of the power from another. It follows that the provisions limiting the operation of these amendments to future releases could be no broader than the operation of the amendments themselves; and that they were not intended to and did not exempt relinquishment of powers of appointment over gifts created by the saipe donor, the existence of which had previously resulted in such lack of completeness of the prior gift as to exclude it from the operation of the gift tax.
If there were any doubt of the correctness of this construction, the legislative history of the section puts it entirely beyond dispute. The limitations upon the operation of the section provided by subdivisions (b) and (c) were first added by a floor amendment in the Senate. To these the conference managers for the House agreed in substance. The report of the Conference Committee contains the following language:
* * * The House recedes with certain technical amendments. These amendments, in accordance with the entire tenor of sections 403 and 462 of the House bill, apply only to powers received by the individual from another, person, and do not affect the present status of powers reserved to an individual by himself. See Estate of Sanford v. Comm. (308 U. S. 39 (1939) ).
That report was acted upon favorably by both Houses. We are satisfied that the authority of the Sanford case and its application to the situation in controversy are undiminished by the subsequent legislation.
We have fixed the value of the corpus of the trust fund at a price per share of $135. This is some 18 points below the per share price at which the stock was selling on the New York Stock Exchange on the date of the gift. In the light of the evidence, however, we are satisfied that the actual sales figures are not to be taken as an accurate reflection of value by reason of the size of the block involved in the gift which consisted of upwards of 50,000 shares of the same stock. This is not the result of any automatic assumption that a large number of shares is necessarily of a different value as to each share than a smaller number. But it is now as well settled as may be, considering that the Supreme Court has never passed upon the question, that whether the size of the block involved affects the value of a given number of shares is a matter which may be shown by the evidence. Safe Deposit & Trust Co. of Baltimore, 35 B. T. A. 259; affd. (C. C. A., 4th Cir.), 95 Fed. (2d) 806; Helvering v. Maytag (C. C. A., 8th Cir.), 125 Fed. (2d) 55; certiorari denied, 316 U. S. 689.
There was uncontradicted testimony from petitioner’s witnesses that in their opinion the sale of a block of that size on or about the date in question at stock market prices would have been impossible.
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OPINION.
Oppee, Judge:
The deficiency in gift tax determined against petitioner is resisted on two principal grounds: (1) that no taxable gift took place, and (2) that the respondent’s valuation was excessive. The disputed taxable event was the relinquishment by petitioner of a retained power to designate among specified beneficiaries who should be entitled to receive the remainder interest upon the death of the life tenant. The issue is the imposition of a gift tax upon the value of the remainder, no question as to the life estate being involved.
The principle of Sanford’s Estate v. Commissioner, 308 U. S. 39, seems to us to bring this relinquishment within the category of taxable gifts. True, a final and irrevocable release of all control by petitioner when he originally established the trust creating the gift in 1927 might have resulted in an act of such finality that the gift having been complete when made could not subsequently become subject to a gift tax. But here that control was retained through petitioner’s power to select the beneficiaries. In its own field it was complete, for if petitioner survived the life tenant he could manifest his choice by deed, and if he predeceased her he could do so by his will.
The contingency over which he had no control, namely, the chronological relation of the death of the life tenant to his own, was therefore not a condition to the existence of the power, but merely the determinant of the method of its exercise. There clearly was that "retention of control over the disposition-of the trust property whether for the benefit of the donor or others [which] renders the gift income píete until the power is relinquished whether in life or at death” of which the Sanford case speaks. This would sufficiently reconcile the dictum in Emily Trevor, 40 B. T. A. 1241, to which petitioner refers, if that case were still to be treated as authoritative. Cf. Burnet v. Guggenheim, 288 U. S. 280.
Petitioner concedes that it is not a sufficient distinction from the Sanford case that he here retained only a special power limiting his designation to a specified group of beneficiaries. Higgins v. Commissioner (C. C. A., 1st Cir.), 129 Fed. (2d) 237; certiorari denied, 317 U. S. 658. And if the test is whether a failure to exercise the retained power at death, in the absence of such an inter vivos renunciation as occurred here, would be taxable as part of petitioner’s estate, the authorities indicate an affirmative answer. Estate of Homer G. Day, 41 B. T. A. 580; Fidelity-Phhiladelphia Trust Co., 34 B. T. A. 614; H. T. Cook et al., Executors, 23 B. T. A. 335; affd. (C. C. A., 3d Cir.), 66 Fed. (2d) 995; certiorari denied, 291 U. S. 660. Thus, if upon the life tenant’s death or at any time thereafter prior to his own, petitioner exercised the power by deed and thus destroyed it, the gift tax would then accrue. See Sanford’s Estate v. Commissioner, supra; Regulations 79, art. 3, as amended by T. D. 5010; Higgins v. Commissioner, supra. If he exercised it'by will, the estate tax would clearly bring the property into his gross estate; and this would be equally true if the property passed at his death upon default of the designation by him. Porter v. Commissioner, 288 U. S. 436; Estate of Homer G. Day, supra; Fidelity-Phhiladelphia Trust Co., supra; H. T. Cook et al., Executors, supra. Hence, the only occasion by which the earlier uncompleted gift could become complete in the absence of these taxable contingencies was the surrender in petitioner’s lifetime of the right of selection. This then becomes the occasion for the gift tax to attach, and justifies the respondent’s action in this respect. Sanford's Estate v. Commissioner, supra; Burnet v. Guggenheim, supra.
Nor do the provisions of the Revenue Act of 1942, section 452,1 affect this conclusion. It is evident that the exceptions set forth in subdivisions (b) and (c) are designed only to limit the effect of the amendment which it was the basic purpose of the section to effect.2 No necessity existed for bringing within the scope of the gift tax the exercise or release of a power of appointment previously created by the donor himself. Sanford's Estate v. Commissioner, supra. The evident purpose was merely to add to the category of taxable gifts the exercise or release of a power of appointment received by the holder of the power from another. It follows that the provisions limiting the operation of these amendments to future releases could be no broader than the operation of the amendments themselves; and that they were not intended to and did not exempt relinquishment of powers of appointment over gifts created by the saipe donor, the existence of which had previously resulted in such lack of completeness of the prior gift as to exclude it from the operation of the gift tax.
If there were any doubt of the correctness of this construction, the legislative history of the section puts it entirely beyond dispute. The limitations upon the operation of the section provided by subdivisions (b) and (c) were first added by a floor amendment in the Senate. To these the conference managers for the House agreed in substance. The report of the Conference Committee contains the following language:
* * * The House recedes with certain technical amendments. These amendments, in accordance with the entire tenor of sections 403 and 462 of the House bill, apply only to powers received by the individual from another, person, and do not affect the present status of powers reserved to an individual by himself. See Estate of Sanford v. Comm. (308 U. S. 39 (1939) ).
That report was acted upon favorably by both Houses. We are satisfied that the authority of the Sanford case and its application to the situation in controversy are undiminished by the subsequent legislation.
We have fixed the value of the corpus of the trust fund at a price per share of $135. This is some 18 points below the per share price at which the stock was selling on the New York Stock Exchange on the date of the gift. In the light of the evidence, however, we are satisfied that the actual sales figures are not to be taken as an accurate reflection of value by reason of the size of the block involved in the gift which consisted of upwards of 50,000 shares of the same stock. This is not the result of any automatic assumption that a large number of shares is necessarily of a different value as to each share than a smaller number. But it is now as well settled as may be, considering that the Supreme Court has never passed upon the question, that whether the size of the block involved affects the value of a given number of shares is a matter which may be shown by the evidence. Safe Deposit & Trust Co. of Baltimore, 35 B. T. A. 259; affd. (C. C. A., 4th Cir.), 95 Fed. (2d) 806; Helvering v. Maytag (C. C. A., 8th Cir.), 125 Fed. (2d) 55; certiorari denied, 316 U. S. 689.
There was uncontradicted testimony from petitioner’s witnesses that in their opinion the sale of a block of that size on or about the date in question at stock market prices would have been impossible. If such a view was excessively pessimistic, the respondent had ample opportunity to produce contrary evidence, but this was not done. He contended strenuously at the hearing, and continued to do so in his brief, that petitioner’s testimony was inadmissible and should be disregarded. But the respondent’s regulations on the subject take notice of the present situation and permit “some reasonable modification” where “it is established that the value per bond or share of any security determined on the basis of a selling or bid and asked prices as herein provided does not reflect the fair market value thereof.” Regulations 79 art. 19 (3), as amended by T. D. 4901. It would be in the highest degree anomalous, and this portion of the regulation would be deprived of all meaning, if a taxpayer were prevented from establishing by testimony the very fact which the regulation requires as the premise for the “reasonable modification” of market prices which the same provision permits. There may be better ways to submit such proof, although they are not readily apparent, but we cannot for that reason refuse to consider the opinions of qualified witnesses in the absence of better evidence and in fact of any at all.
Once we are satisfied that the Stock Exchange prices do not accurately reflect the fair market value of the large block of stock with which we are here concerned, it becomes necessary to fix some other figure which appears to us to be the price at which the stock could have changed hands. One of petitioner’s witnesses testified that although in his opinion the block could not have been sold at the quoted price of 153% within 90 days or at prices averaging 10 points less, he admitted that he thought it could have been sold at an average of 20 points under that figure. Another witness for the petitioner was of the opinion that during a 90-day period prices 15 to 20 points below the average market prices during that time could have been realized for the entire amount. The record shows that for the two months following January 5, the date of the gift, market prices were in the neighborhood of $150 and although the remaining 26 days of March are not shown, the mean of the high and low for that month was approximately the same as that for the two months preceding.
Taking the testimony of these two witnesses in its aspect most unfavorable to petitioner, which seems to us reasonable in view of their production and sponsorship by him, it thus follows that within a 90-day period the stock could have been sold at prices averaging $135 per share. For a block of this size 90 days would not be an unreasonable time to expect marketing operations to continue. We do not by this mean to imply that this period would be the limit of reasonableness, but the evidence shows that prices declined during April and May, with the result that even though a longer period should be considered, there might yet be no appreciable improvement in the prices realized. From the entire record we have accordingly reached the conclusion that the fair market value per share on the date bf the gift of the property constituting the corpus of the trust was $135.
The value of the gift itself, consisting of the remainder after the death of the life tenant, aged 61 at the time of the gift, remains to be discussed. In fixing this we have accepted the commutation determined by respondent, in accordance with his regulations, which in our opinion has not been shown to be unreasonable. The figure in question, sometimes referred to as the remainder factor, consists of the present value of one dollar due at the end of the year of death of a person 61 years of age, computed from the Actuaries’ or Combined Experience Table of Mortality with interest at 4 percent.
The case of Anna L. Raymond, 40 B. T. A. 244, upon which petitioner relies, is inapposite in at least two fundamental respects. The taxpayer there had paid to certain institutions, in exchange for their agreements in the nature of annuity contracts, sums which the Board considered to be in excess of reasonable cost of the agreements. The balance was treated as a gift. Since the parties had made no such division, it became necessary to discover a proper figure to attribute to the purchase of the annuities on the one hand, and to the gift on the other. What could be more natural than that the Board should resort to an inspection of the charges which would be made for similar contracts by those in the business of issuing them,3 namely, insurance companies? This conclusion was in effect a forecast of the decision in Guggenheim v. Rasquin, 312 U. S. 254, holding that the fair market value of a donated single premium life insurance policy is what it would cost to purchase such a policy from an insurance company.
That this was the effect of the Board’s decision appears from both the majority and the minority statements. The respondent had calculated a commuted value by reference to his estate tax regulations and to the Actuaries’ or Combined Experience Table of Mortality therein adopted; The Board’s opinion comments:
* * * The evidence shows that a later table called the "lAmerican Annuitants’ Mortality Table” is a more approved table and is now commonly in use among insurance companies in the United States.
The opinion then refers to the “American Annuitants’ Mortality Table” as being the means by which “the petitioner’s expectancy at the dates of the several agreements can readily be computed to arrive at the reasonable cost which petitioner would have paid to the five leading insurance companies for the annuities which she bought * * [Italics added.] And the dissenting opinion construes the prevailing view as being that: “The amount that was paid as consideration for the annuity is found by the majority opinion to be that which would have been paid to the five leading insurance companies under the American Annuitants’ Mortality Table.”
In the present case it requires no fine discrimination to recognize that the life tenant did not buy an annuity from anyone nor pay any amount to anyone to act as consideration for such an agreement of annuity; and there is no issue in this case which requires us to find what the life tenant would have had to pay for such an agreement in order to discover how much it is reasonable to assume that she did in fact pay, as was the case in the Raymond proceeding. The life estate in question here was given; it was not bought. It bears no true resemblance to an insurance company annuity. There is no insurance company or institution involved in the contract. There is no agreement to pay a stipulated amount; and there is no assurance of an annual income irrespective of the annual earnings. This is the essence of the distinction between an annuity and a life estate. Burnet v. Whitehouse, 283 U. S. 148; Helvering v. Butterworth (Pardee), 290 U. S. 365.
In the second place, even if we assume that a method of valuation comparable to that in the Raymond case would be relevant here, it is the opposite or converse type of valuation which must be engaged in. In the Raymond case the necessity arose to inquire into the reasonable cost of an annuity. In the present case the property to be valued is not the annuity or life estate but the remainder. True, life estate and remainder are theoretically two parts of a whole, which should be subject to mutual calculation by means of subtraction from the value of the whole. But so are life insurance policies and annuities two parts of a whole. Helvering v. Le Gierse, 312 U. S. 531. Yet we know that insurance companies adopt different mortality tables for computing the premium on life insurance from those used to establish the cost of annuities. In the words of one of the petitioner’s witnesses, “We would select the best tables to accomplish what was to the best interests of the company, taking all of the factors into account.”
In other words, if we were seeking to discover here what an insurance company would regard as the value of the remainder estate or what perhaps we might say a hypothetical insurance company would be willing to sell such a remainder estate for if it were in the business of selling such contracts, as well as annuities, it would be to the tables which an insurance company employs for computing such values, and not to the tables which it employs for computing annuity costs, that we should resort. No such tables are availavle because insurance companies do not deal in these commodities, but since remainders, like life insurance, are the reciprocal of annuities, perhaps the nearest to this that actually exist are the tables which deal with life expectancies for the purpose of computing life insurance premiums.4 These tables are comparable to those used by respondent.5
It follows that no more than in the case of Estate of Charles H. Hart, 1 T. C. 989, is there any evidence in this record sufficient to demonstrate that there are more accurate figures to which we can turn than those employed for the purpose by the respondent. As that case points out:
* * '* Valuation for estate or inheritance tax purposes is computed in some 17 states by the use of the Actuaries’ or Combined Experience Mortality Table, with 4, 5, or 6 percent interest, and approximately 20 other states use. the American Experience Table of Mortality, with interest at 5 or 6 percent * * *. In New York State the use of the Actuaries’ or Combined Experience Table of Mortality, with 4 percent interest, is prescribed by statute * * *.
We can not say under those circumstances that the provisions of the Commissioner’s regulations are unreasonable or arbitrary. See Robinette v. Helvering, 318 U. S. 184. And as there is no evidence here that the tables adopted by insurance companies in their own financial interest for pricing annuities furnish a more accurate basis for evaluating this remainder than the Commissioner’s method, it is true here, as it was in the Hart case that “There may be better and more accurate methods, but we can not for that reason disapprove of a method long in use without evidence establishing a better one.” See F. J. Sensenbrenner, 46 B. T. A. 713; affd. (C. C. A., 7th Cir.), 134 Fed. (2d) 883.
In determining the remainder factor we have assumed an interest rate of 4 percent. This finds support in material produced by both parties. It is the interest figure adopted for tables in the Commissioner’s regulations. Regulations 79, 1936 Edition, article 19 (9), table A. It is also the rate accepted as correct under the circumstances of the present case by one of the witnesses produced and vouched for by petitioner. Four percent is perhaps an overly high rate to be assumed for safe investment under current economic conditions.6 Cf. Simpson v. United States, 252 U. S. 547. But it may be said that the trend of lower interest rates tends to offset any increase in the expectancy of life from the standpoint of computing remainder value. The assumption of an interest rate higher than contemporary conditions would justify thus tends to equalize any slight error caused by the use of mortality tables which have not been corrected to reflect current life expectancy,7 and presumably for that reason, respondent accepts the 4 percent rate to accompany his mortality figures.
In approving the use of 4 percent interest under the circumstances of the present case, petitioner’s witness emphasized that the trustees were empowered to convert the corpus of the trust if it appeared that the safety of the investment was endangered. We think it reasonable to conclude that the 4 percent rate is at least not too low in view of this testimony, of the character of the investment, and of the terms of the trust.
We have accordingly concluded that the relinquishment by petitioner in the tax year before us of his power to designate the beneficiary entitled to take thé remainder constituted a taxable gift; that the value of that gift is to be computed by measuring the corpus of the estate at the rate of $135 a share; and by commuting the result by use of the remainder factor employed by respondent, the evidence failing to show that the Commissioner’s method was erroneous or that there are more accurate methods available than the one he used. Eeviewed by the Court.
Decision wül be entered under Rule 50,
Disney, concurs only in the result.