Rev. Rul. 61-129

The Internal Revenue Service will follow the recent decision of the United States Court of Appeals for the Eighth Circuit in United States v. Winifred H. Turner, Executrix , filed March 8, 1961.

The Court of Appeals held that the decedent's husband had created for her a general power of appointment when he entered into an agreement with an insurance company in 1935, even though he retained the privilege of altering or revoking the agreement.

The Service had argued that, since the husband had such a privilege of revocation, the power in the wife was not created until the husband died in 1948 without exercising it.

Under the court's ruling, the insurance proceeds were not taxable as part of the decedent's gross estate, for the decedent died in 1955 without having exercised the power, and section 2041(a)(1) of the Internal Revenue Code of 1954 provides for inclusion of a general power of appointment created on or before October 21, 1942, only if such power was exercised under certain conditions.

The decision in the Turner case follows the holdings in ( United States v. Merchants National Bank of Mobile , 261 Fed.(2d) 570 (1958); United States v. Walter A. Hubner , et al., 285 Fed.(2d) 29 (1960); Arthur B. Hyman, et al. v. United States , 187 Fed.Supp. 661 (1960); and Estate of Ernestina Rosenthal, et al. v. Commissioner , 34 T.C. 144 (1960).

Revenue Ruling 278, C.B. 1953-2, 267, will be revoked and consideration will be given to conforming section 20.2041-1(e) of the regulations to accord with the decision in the Turner case. the Turner case.

¹ Based on Technical Information Release 320, dated June 1, 1961.