author: JOSÉ A. CABRANES, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. James M. COPPOLA, Jr., individually and as executor of the Estate of James M. Coppola, Sr., and Barbara Coppola, Defendants-Appellants, Ida Coppola and George Coppola, as executors of the Estate of James M. Coppola, Sr., Defendants.
    No. 393, Docket 95-6012.
    United States Court of Appeals, Second Circuit.
    Argued Dec. 7, 1995.
    Decided June 10, 1996.

      Michael I. Saltzman, New York City (Robert P. Lewis, Baker & McKenzie, New York City, of counsel), for defendants-appellants.
    Randolph L. Hutter, Washington, DC (Loretta C. Argrett, Assistant Attorney General, Gary R. Allen, Charles E. Brookhart, Tax Division, Department of Justice, Washington, DC, Zachary W. Carter, United States Attorney for the Eastern District of New York, of counsel), for plaintiff-appellee.
    Before NEWMAN, Chief Judge, and OAKES and CABRANES, Circuit Judges.
   JOSÉ A. CABRANES, Circuit Judge:

This action by the United States against the executors of the estate of James M. Coppola, Sr. seeks to recover unpaid estate taxes. On November 22, 1994, after a two-day bench trial, the United States District Court for the Eastern District of New York (Jack B. Weinstein, Judge) entered judgment for the United States, holding defendant-appellant James M. Coppola, Jr., one of the executors, personally liable for taxes due, on several different theories: (1) James Jr. entered into an agreement distributing the estate’s assets to himself, his mother, and his brother without first satisfying the estate’s obligations to the United States, in violation of 31 U.S.C. § 3713(b); (2) he breached his fiduciary duty to the estate under New York law; (3) he was a distributee of the estate under § 12-1.1 of the New York Estates, Powers and Trusts Law; and (4) he transferred assets out of the estate and into his own corporations, thereby engaging in a series of fraudulent conveyances under the New York Debtor and Creditor Law. In addition, the court ordered that all assets distributed from the estate be restored to it.

On appeal, James Jr. contends that many of the district court’s factual findings were clearly erroneous and challenges all of the district court’s legal conclusions. We affirm.

I. Background

The following facts are drawn primarily from the district court’s opinion. See United States v. Coppola, No. CV-88-3456 (JBW), 1994 WL 665751 (E.D.N.Y. Nov. 17, 1994).

Before the death of James Sr., on June 28, 1975, the Coppola family owned and operated several construction-related businesses. These family businesses included three New York corporations (“the New York Corporations”) — G.I.J. Realty, Cobra Pile Driving, and G.I.J. Equipment — and a Florida partnership, The Coppola Company. James Sr. owned 80 percent of G.I.J. Realty, 25 percent of Cobra Pile Driving, and 25 percent of G.I.J. Equipment, and he was a 25-percent partner in The Coppola Company. Before James Sr.’s death, G.I.J. Realty and Cobra Pile Driving borrowed money from Franklin National Bank, secured respectively by real estate owned by G.I.J. Realty on Strickland Avenue in Brooklyn, New York (“the Strickland Property”), and construction equipment owned by G.I.J. Equipment. The loans were guaranteed by the Coppola companies and by various members of the Coppola family, including James Sr., his wife, Ida, and his sons, James Jr. and George.

James Sr.’s last will and testament provided that most of his property, including his interests in the various family businesses, be placed in a trust, paying income for life to Ida, and upon her death, to James Jr. and George for life, and thereafter to each of his grandchildren. Under the terms of the will, James Jr., George, and Ida were to serve as co-executors of the estate and as co-trustees of the projected trust. Ida had sole discretion to appoint all or part of the principal of the trust fund to James Sr.’s living issue. The will was probated without contest in the Surrogate’s Court of Kings County, New York in July 1975. It is not disputed that the executors never established the trust contemplated by the will and that Ida never exercised her power of appointment.

After James Sr.’s death, the executors retained a law firm selected by James Jr. to prepare a federal estate tax return; James Sr.’s combined interests in the New York Corporations was reported to exceed $500,-000. Shortly after the filing of the tax return in September 1976, the Internal Revenue Service claimed there was a deficiency in the estate tax paid, resulting in part from an undervaluation of James Sr.’s interest in the New York Corporations. According to George Coppola, discussions between the IRS and members of the Coppola family, including James Jr., regarding the alleged tax deficiency continued for several years before the issuance of a statutory notice of deficiency on August 1, 1979. The district court determined that, as a result of these discussions, James Jr. received notice of the IRS’s claim against the estate for unpaid taxes on or before May 13,1977.

A. The 1977 Agreement

On May 13, 1977, James Jr., George, and Ida entered into an Agreement and Plan of Reorganization (“the Agreement” or “1977 Agreement”) to divide the various family businesses among themselves in derogation of the terms of James Sr.’s will. Under the Agreement, James Jr. was to obtain sole ownership and control of the New York Corporations and, in turn, to transfer his interest in the Florida Company to Ida and George. Each party was required to pay any estate taxes due in proportion to the value of the assets each received.

Shortly after the Agreement was signed, the family members began to dispute their compliance with their respective obligations. Ida and George contested James Jr.’s control over the New York Corporations and, according to James Jr., “removed” him as an officer — although James Jr. nevertheless apparently maintained control and represented himself as the sole shareholder to various third parties.

B. Foreclosures on the Equipment and the Real Estate and Transfers of Assets to James Jr.

In the meantime, G.I.J. Realty and Cobra Pile Driving defaulted on their loans from Franklin National Bank, and its successor, the European American Bank (“EAB”), sought to recover the outstanding debt. In February 1977, EAB commenced action against G.I.J. Equipment as the guarantor of the $350,000 loan to Cobra Pile Driving. It obtained a judgment and later foreclosed on construction equipment owned by G.I.J. Equipment, valued at over $800,000. EAB obtained title to the equipment on December 12, 1977, but agreed to let G.I.J. Equipment, managed by James Jr., retain actual possession. In January 1978, EAB resold the equipment to James Jr. for approximately $400,000. He promptly placed the title to the equipment in James Coppola Trucking, Inc. — a new corporation wholly owned and controlled by him — in order to avoid claims to the property by Ida, George, or the estate.

Similarly, in May 1977 (soon after the Coppolas signed the 1977 Agreement), G.I.J. Realty defaulted on its mortgage on the Strickland Property, now also held by EAB. On October 17, 1977, EAB brought foreclosure proceedings for $660,914.74 owed on the mortgage, and on July 21,1978, it obtained a default judgment on the property, previously valued at $1.7 million. Athough the property was auctioned at a foreclosure sale on March 7, 1979, no bids were offered and EAB ultimately took title. G.I.J. Realty, still operated by James Jr., never relinquished possession of the Strickland Property. On May 15, 1979, the Coppola Realty Corp. — a new corporation wholly owned by James Jr. — purchased the property for $908,739.43.

On August 1, 1979, the IRS issued its statutory notice of deficiency to the estate, and on August 12, 1982, the United States Tax Court filed a decision, stipulated to by the parties, finding that the estate had a tax deficiency of $166,633. Including interest, the estate’s total tax liability to the United States stood at $910,405.99 as of September 30,1994.

C. The District Court Proceedings

In 1988, the United States brought this action in the district court against the defendants to reduce to judgment the unpaid federal tax liabilities of the estate, as well as the individual tax liabilities of James Jr. and his wife, Barbara Coppola. In its Amended Complaint, filed March 21, 1989, the United States sought, among other things, a declaration that James Jr. fraudulently conveyed the estate’s assets to himself and others and a judgment against James Jr., individually, in an amount equal to the assets received by him from the estate.

James Jr. was the only witness to testify at trial; the parties submitted the deposition testimony of Ida and George. James Jr. testified that in November 1975, EAB asked for new cross-corporate and personal guarantees on its loans to the family-owned corporations, but that George and Ida had refused to provide them. According to James Jr., after EAB demanded full payment of the outstanding loans, he tried to negotiate to restructure the debt, but because Ida and George would not cooperate with him, he was unable to demonstrate the requisite authority to enter an agreement to pay off the debts. James Jr. testified that he had entered into the 1977 Agreement in order to obtain sole authority to negotiate with. EAB on behalf of the New York Corporations and thus salvage them.

In addition to the facts outlined above, the district court found that James Jr. allowed Cobra Pile Driving and G.I.J. Realty to go into default on their loans, thereby permitting EAB to foreclose on the property, whose value far exceeded the estate’s obligation to the bank. The district court further noted that, rather than sell the property and satisfy the estate’s tax obligation to the United States and its obligation on the loans to EAB, James Jr. engaged in a series of transactions that permitted him to repurchase the property through his corporations, “creatfing] the illusion that he ... obtained title to property, free from claims of the United States.”

The district court specifically found that James Jr. was aware that the estate faced undetermined federal tax liability (1) when he signed the 1977 Agreement with Ida and George, attempting to transfer ownership of the New York Corporations to himself; (2) when he “permitted” the foreclosures by EAB to proceed; and (3) when the newly formed corporations that he controlled reacquired the assets of G.I.J. Equipment and G.I.J. Realty. The court held, inter alia, that James Jr., as an executor of the estate, was personally liable for taxes owed to the United States by the estate because he distributed its assets to himself, his mother, and his brother, without first satisfying the estate’s federal tax debt, in violation of the federal insolvency statute, 31 U.S.C. § 3713(b). In the alternative, it held that James Jr. was personally liable for the estate taxes because (1) he breached his fiduciary duty to the estate through self-dealing, by permitting foreclosure upon the equipment and the Strickland Property — rather than selling it to satisfy the estate’s obligations to EAB and the United States — and later repurchasing it for his exclusive benefit without satisfying the estate’s federal tax liabilities; (2) he was a distributee of the assets of the estate under § 12-1.1 of the New York Estates, Powers and Trusts Law; and (3) he engaged in a series of fraudulent conveyances by which he transferred assets out of the estate for his exclusive benefit and defeated the claims of creditors of the estate, in violation of the New York Debtor and Creditor Law. The court ordered that the equipment and the Strickland Property be returned to G.I.J. Equipment and G.I.J. Realty, respectively, and that the interests of James Sr.’s estate in those two corporations be returned to the estate.

On November 22, 1994, the district court entered judgment against the executors of the estate and James Jr., personally, in the amount of $910,405.99 plus interest, and against James Jr. for attorneys’ fees expended by the United States in bringing this action.

On appeal, James Jr. contends that the district court erred by holding him liable (1) under 31 U.S.C § 37130b) because, inter alia, the district court’s finding that he had actual notice of the IRS’s claim for additional estate taxes was clearly erroneous; (2) as a transferee of property fraudulently conveyed from the estate in violation of the New York Debt- or and Creditor Law, because (a) the transfer of assets by virtue of EAB’s foreclosures was not the result of James Jr.’s voluntary actions, Ob) the record showed no evidence of fraudulent intent and the district court’s finding of actual fraud was clearly erroneous, and (c) the conveyance of assets to corporations wholly owned by James Jr. was made for fair consideration; (3) under New York Estates, Powers and Trusts Law § 12-1.1, because he did not receive property from the estate as a distributee or a testamentary beneficiary; and (4) for breach of fiduciary duties, because its holding was based on clearly erroneous findings of fact and conclusions of law. The United States urges affirmance of the district court’s judgment on all four theories of liability.

II. Discussion

After a bench trial, we will set aside a district court’s findings of fact only if they are clearly erroneous. Fed. R. Civ. P. 52(a); Travellers Int’l, A.G. v. Trans World Airlines, Inc., 41 F.3d 1570, 1574 (2d Cir.1994). However, we review all conclusions of law, including those derived from the application of a court’s findings of fact, de novo. Banker v. Nighswander, Martin & Mitchell, 37 F.3d 866, 870 (2d Cir.1994).

A. James Jr.’s Personal Liability: The Federal Insolvency Statute, 31 U.S.C. § 3713

The federal insolvency statute, 31 U.S.C. § 3713, enacted in 1982 as the successor to 31 U.S.C. § 191 and a line of federal insolvency statutes dating from 1789, see United States v. Moore, 423 U.S. 77, 81, 96 S.Ct. 310, 313, 46 L.Ed.2d 219 (1975), provides that when a person is insolvent or an estate has insufficient assets to pay all of its debts, priority must be given to debts due the United States. 31 U.S.C. § 3713 states in relevant part:

(a)(1) A claim of the United States Government shall be paid first when—
(A) a person indebted to the Government is insolvent and—
(i) the debtor without enough property to pay all debts makes a voluntary assignment of property;
(ii) property of the debtor, if absent, is attached; or
(iii) an act of bankruptcy is committed; or
(B) the estate of a deceased debtor, in the custody of the executor or administrator, is not enough to pay all debts of the debtor.
(b) A representative of ... an estate ... paying any part of a debt of the person or estate before paying a claim of the Government is liable to the extent of the payment for unpaid claims of the Government.

(Emphasis added.)

Accordingly, by the statute’s express terms, liability is imposed on a representative of a debtor, including an executor of an estate, who pays a debt of the estate to another in derogation of the priority of debts owed to the United States, thereby rendering the estate insolvent. In order for liability to attach, the executor must have knowledge of the debt owed by the estate to the United States or notice of facts that would lead a reasonably prudent person to inquire as to the existence of the debt owed before making the challenged distribution or payment. In re Gottheiner, 703 F.2d 1136, 1140 (9th Cir.1983); Want v. Commissioner, 280 F.2d 777, 783 (2d Cir.1960); Huddleston v. Commissioner, 67 Tax Ct. Mem. Dec. (CCH) 2521, 2524, 1994 WL 100520 (1994). Of course, the executor’s liability is limited to the extent of the payment or value of the assets he distributes from the estate prior to the payment of the taxes. 31 U.S.C. § 3713(b).

In recognition of the federal insolvency statute’s broad purpose of securing adequate revenue for the United States Treasury, courts have interpreted it liberally. See Moore, 423 U.S. at 81-82, 96 S.Ct. at 313-14; United States v. Key, 397 U.S. 322, 324, 90 S.Ct. 1049, 1051, 25 L.Ed.2d 340 (1970). There is no question that taxes owed to the United States fall within the scope of a “claim of the Government” under the statute’s broad terms. See Massachusetts v. United States, 333 U.S. 611, 625-26, 68 S.Ct. 747, 755-56, 92 L.Ed. 968 (1948). Courts have also taken an expansive view of the type of payments or “distributions” from the estate for which an executor may be held liable. Indeed, in Want, 280 F.2d at 783, we specifically held that a fiduciary, e.g., an executor, may be held liable under the federal insolvency statute “for a distribution of funds [from the estate] that is not, strictly speaking, the payment of a debt.”

In the instant case, the district court found that James Jr. was personally liable for the unpaid estate taxes as executor under § 3713 because he stripped the estate of all of its assets and rendered it insolvent by entering the 1977 Agreement: “James Jr’s status as a fiduciary with sufficient knowledge of the United States’ claim for federal estate taxes, who as an executor of the estate, provided for the distribution of all of the estate assets to himself, his brother, and his mother, subjects him to liability under 31 U.S.C. § 3713(b).” While we acknowledge that the division of the estate’s assets under the 1977 Agreement does not constitute an actual payment of a “debt” of the estate, we find—consistent with other courts’ broad interpretation of § 3713—that James Jr.’s participation in the Agreement without payment of debts owed to the United States renders him liable under the insolvency statute. While James Jr. did not defeat the Government’s tax claim against the estate by paying a debt of the estate, he depleted the assets of his father’s estate by distributing them to himself and his family, thereby preventing payment of the tax debt. Such conduct certainly falls within the broad prohibitions of the federal insolvency statute. See Want, 280 F.2d at 783; see also In re Gottheiner, 703 F.2d at 1138-40 (finding insolvent corporation’s sole shareholder liable under federal insolvency statute for loans and payments made to himself at a time when the corporation was insolvent and had not satisfied its debt to the United States); United States v. Coyne, 540 F.Supp. 175, 180 (D.D.C.1981) (corporate officer liable under federal insolvency statute where his “assignment” of corporation’s assets to himself to avoid payment of corporate debt to the United States rendered the corporation insolvent).

We reject James Jr.’s contention that the district court erroneously found that he had notice of the IRS’s claim when the relevant transfers were made. While it is true that the IRS did not issue its notice of deficiency on the estate taxes until August 1, 1979—over two years after the Agreement was signed and James Jr. had acquired sole ownership and control of the New York Corporations—there is substantial evidence on the record to support the court’s finding that James Jr. had the requisite notice at the time he signed the Agreement on May 13, 1977. As noted above, the law permits a finding of notice where the executor lacks actual notice of the liability but possesses notice of such facts as would lead a reasonable person to inquire as to the existence of unpaid claims. We affirm the district court’s finding that discussions and negotiations between the executors and the IRS about an alleged tax deficiency prior to the signing of the 1977 Agreement, and the Agreement’s explicit reference to the “estate tax obligations” of the estate, were sufficient to put James Jr. on notice of the tax liability for purposes of § 3713. At the very least, he was obligated to inquire further before the assets were distributed pursuant to the 1977 Agreement.

James Jr. contends that the relevant transfers for purposes of § 3713 liability are not those associated with the transfer of the estate’s stock under the 1977 Agreement, but rather, the EAB foreclosures on the equipment and the Strickland Property. Because we find that the effective total depletion of the estate’s assets by the 1977 Agreement is sufficient to render James Jr. personally liable for the estate taxes under the federal insolvency statute, we need not reach the question of whether the foreclosures on the property of the New York Corporations and the subsequent transfers also subjected him to liability.

The district court also found James Jr. personally liable for the unpaid estate taxes on the alternative grounds that (1) he breached his fiduciary duty to the estate in violation of New York law, and (2) he was a distributee of the estate under New York Estates, Powers and Trusts Law § 12-1.1. Inasmuch as we find § 3713 sufficient to render him liable for the full amount of the unpaid taxes, plus interest assessed, we do not find it necessary to address these other theories of liability.

B. Returning the Assets to the Estate: James Jr.’s Fraudulent Conveyances

In the proceedings below, the IRS sought an order requiring the return of all the assets to the estate, so that those assets might be used to pay the taxes owed. The district court’s conclusion that transfers of the estate’s assets into corporations wholly owned by James Jr. constituted actual fraudulent conveyances under § 276 of the New York Debtor and Creditor Law provides a sound basis for voiding the transactions and returning the assets to the estate. We affirm the finding that the conveyances were fraudulent and conclude that the district court’s order was proper.

The district court found that both the 1977 Agreement and the transfers of the assets of the New York Corporations into corporations solely owned by James Jr. constituted actual fraudulent conveyances under New York Debtor and Creditor Law § 276. While direct proof of fraudulent intent is often difficult to establish, courts frequently infer it from the debtor’s course of conduct. See In re Grand Jury Subpoena Duces Tecum Dated Sept. 15, 1983, 731 F.2d 1032, 1041 (2d Cir.1984) (“The fraudulent nature of a conveyance may be inferred from the relationship among the parties to the transactions and the secrecy of the sale, ... or from inadequacy of consideration and hasty, unusual transactions.” (citations omitted)). We find that, for purposes of § 276, the district court properly viewed the various conveyances at issue as part of an integrated scheme, rather than as individual transfers and transactions. See, e.g., United States v. Cohn, 682 F.Supp. 209, 217 (S.D.N.Y.1988). In keeping with that approach, we examine the alleged scheme in its entirety to determine whether the district court properly found actual fraudulent intent.

The record clearly supports the district court’s finding that each of the relevant transfers was part of a deliberately fraudulent scheme to put the assets of the estate beyond the reach of its creditors. First, the 1977 Agreement, which distributed the estate’s interests in the various family-owned corporations to the surviving family members, is a strong indicator of fraudulent intent insofar as it was executed in clear violation of James Sr.’s will and at a time when the executors had actual notice of additional tax liability. The transfers of the equipment and the Strickland Property, through the EAB foreclosure proceedings, provide further evidence that James Jr. deliberately sought to acquire the corporations and assets of the estate free from the claims of both its creditors and other members of his family. As the district court found, (1) James Jr. permitted EAB to foreclose on over $800,000 worth of equipment owned by G.I.J. Equipment by deliberately allowing Cobra Pile Driving to go into default on its $350,000 loan when there were assets available to pay the amount due; (2) James Jr. retained possession and use of the equipment after the foreclosure and, shortly thereafter, raised over $400,000 to repurchase the equipment free of all claims; and (3) he created a new corporation, of which he was the sole shareholder, to take ownership of the equipment. Similarly, James Jr. obtained sole possession of the Strickland Property by allowing G.I.J. Realty to go into default on its unpaid loan balance for approximately $650,000 in May 1977, thereby precipitating the foreclosure on the Strickland Property, previously valued at $1.7 million; subsequently repurchasing the property for approximately $900,000; and ultimately obtaining title in the name of a new corporation of which he was the sole owner. It is clear from the record that the companies were not so financially burdened that they were forced to go into default on the loans and that the market value of the assets foreclosed upon was such that James Jr. could have sold them on his own and satisfied all creditors. Moreover, despite the foreclosure sales, James Jr. never relinquished possession of either the equipment or the property. Perhaps the most persuasive evidence supporting the conclusions of the district court is that James Jr. managed to raise over $400,000 for the repurchase of the equipment only a few months after its foreclosure and that he sought financing for the “repurchase” of the Strickland Property even before the execution sale of that property occurred.

In short, the record supports the district court’s findings and conclusions that the various transfers and conveyances, viewed as a single scheme, served to hinder, delay, and defraud the United States in its efforts to collect the estate’s unpaid taxes. We have considered James Jr.’s arguments to the contrary and we find them to be without merit.

Because the conveyances at issue were properly found to be fraudulent under § 276 of the New York Debtor and Creditor Law, we affirm the district court’s order declaring void the distribution of the estate’s assets under the 1977 Agreement and the transfers from the estate, through foreclosure proceedings, to corporations wholly owned and controlled by James Jr. Accordingly, we also affirm the court’s order that the equipment and the Strickland Property be returned to G.I.J. Equipment and G.I.J. Realty, respectively, and that the interests of the estate in those corporations be returned to the estate. See New York Debtor and Creditor Law § 278(l)(a) (“Where a conveyance ... is fraudulent as to a creditor, such creditor, when his claim has matured, may ... [h]ave the conveyance set aside or obligation annulled to the extent necessary to satisfy his claim.”).

Conclusion

To summarize:

1. We affirm the district court’s order that James Jr. be held personally liable for unpaid estate taxes under 31 U.S.C. § 3713 on the ground that he distributed the estate’s assets under the 1977 Agreement, rendering the estate insolvent, before satisfying its tax debt to the United States. We also affirm the district court’s determination that James Jr. was aware of sufficient facts to place him on notice of the estate’s tax liability at the time he signed the 1977 Agreement.

2. We affirm the district court’s order that the assets of G.I.J. Equipment and G.I.J. Realty be returned to those corporations and that the estate’s interests in those corporations be returned to the estate. We do so on the ground that the distribution of the assets of the estate by virtue of the 1977 Agreement and the transfers of assets, through the foreclosure proceedings, into corporations wholly owned by James Jr. were fraudulent conveyances under New York Debtor and Creditor Law § 276.

The judgment of the district court is affirmed.

      . James Jr. purchased the equipment with $225,-000 of his own money and $175,000 of his mother's money.

      . In view of the 1977 Agreement, by which James Jr. purportedly relinquished his interest in The Coppola Company, the IRS disallowed his claim for fifty percent of the company’s losses on his 1978 personal income tax return attributed to his asserted interest in the company. This disallowance resulted in a deficiency in the joint personal income tax payments of James Jr. and Barbara Coppola.
      Barbara Coppola, a co-defendant below based on her individual tax liability, also filed a notice of appeal, but the issues raised on appeal only concern James Jr.'s liability for the unpaid estate taxes. Accordingly, we do not discuss the facts relevant to the question of Barbara Coppola's individual tax liability in any detail.

      . In 1982, Congress amended the federal insolvency statute, formerly codified at 31 U.S.C. § 191 (1976). Insofar as no substantive changes were adopted, see H.R. Rep. No. 651, 97th Cong., 2d Sess. 1-3 (1982), reprinted in 1982 U.S.C.C.A.N. 1895, 1895-97, we rely on case law preceding the 1982 amendment in interpreting the current version of the insolvency statute. See also United States v. Cole, 733 F.2d 651, 653-54 & n. 1 (9th Cir.1984).

      . We are unpersuaded by James Jr.’s argument that the 1977 Agreement is irrelevant because the transfer of the estate’s stock in the New York Corporations to James Jr. never occurred due to disputes with his mother and brother. The record adequately supports the district court's finding that James Jr. (1) acquired sole ownership and control of the New York Corporations; (2) represented to third parties that he controlled the Corporations; and (3) used the Agreement as a shield from litigation in Florida.

      . In examining whether the transfers from the estate to James Jr.’s corporations were fraudulent under New York law, the district court analyzed both whether the transfers could be deemed "constructively” fraudulent — i.e., made without fair consideration and rendering the debtor insolvent — under § 273 of the New York Debtor and Creditor Law, and whether the transfers were "actually” fraudulent — i.e., made with actual intent to defraud creditors — under § 276 of the New York Debtor and Creditor Law. Because we find that the district court properly concluded that the transfers constituted actual fraudulent conveyances, we need not examine its conclusion as to constructive fraud.

      .Section 276 provides:
      Every conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors.
      N.Y. Debt. & Cked. Law § 276 (McKinney 1990) (emphasis added).


source: Caselaw Access Project

author: MAHONEY, Circuit Judge:

license: Public Domain

text:
    UNITED STATES of America, Appellee, v. Jose Antonio HERNANDEZ, also known as “Tony”; Mayra Aponte, Defendants, Steven Camacho, also known as “Spank,” also known as “Spanko”; Jaime Rodriguez, also known as “Jay”; Antonio Feliciano, also known as “Tony,” also known as “Guess,” Defendants-Appellants.
    Nos. 521, 522 and 1079, Dockets 94-1685, 94-1686 and 94-1710.
    United States Court of Appeals, Second Circuit.
    Argued March 18, 1996.
    Decided June 11, 1996.

      Michael H. Sporn, New York City, for Defendant-Appellant Steven Camacho.

      Joyce C. London, New York City, for Defendant-Appellant Jaime Rodriguez.
    Carol E. Hofstein, New York City (Lee Ginsberg, New York City, of counsel), for Defendant-Appellant Antonio Feliciano.
    Jonathan D. Schwartz, Assistant United States Attorney for the Southern District of New York, New York City (Mary Jo White, United States Attorney, Nancy J. Northrup, Assistant United States Attorney, New York City, of counsel), for Appellee.
    Before: FEINBERG, CARDAMONE, and MAHONEY, Circuit Judges.

      . We have received a letter dated May 20, 1996 from Camacho, long after the oral argument of this appeal, complaining that Spom provided him with ineffective assistance at trial, and advising the Court that Camacho has “been attempting to have new appellate counsel appointed.” Under our rules, "[w]hen a defendant convicted following trial wishes to appeal, trial counsel, whether retained or appointed, is responsible for representing the defendant until relieved by the Court of Appeals.” 2d Cir. R. § 4(b)(a). Further, Camacho’s only specific complaint is that Spom is disqualified to pursue the argument concerning ineffectiveness of trial counsel, an issue that ordinarily may not be pursued on direct appeal because the trial record will be inadequate for the resolution of the issue. See United States v. Matos, 905 F.2d 30, 32 (2d Cir.1990); United States v. Cruz, 785 F.2d 399, 404 (2d Cir.1986). In addition, a failure to raise the issue on this appeal will not bar a future application for relief on that ground. See Billy-Eko v. United States, 8 F.3d 111, 113-15 (2d Cir.1993). Accordingly, we have proceeded to decide this appeal on the record, briefing, and oral argument as it presently stands.

   MAHONEY, Circuit Judge:

Defendants-appellants Steven Camacho, Jaime Rodriguez, and Antonio Feliciano (“Defendants”) appeal from judgments entered November 25, 1994 (Camacho and Rodriguez) and December 20, 1994 (Feliciano) in the United States District Court for the Southern District of New York, John F. Keenan, Judge, that (1) convicted all three Defendants of conspiring to distribute and possess with intent to distribute heroin in violation of 21 U.S.C. §§ 846 and 841(a)(1), distributing and possessing with intent to distribute heroin in violation of 21 U.S.C. § 841(a)(1), using and carrying a firearm during and in relation to a drug trafficking crime in violation of 18 U.S.C. § 924(c)(1), and possessing a firearm with an obliterated serial number that had been shipped in interstate commerce, in violation of 18 U.S.C. §§ 922(k) and 924(a)(1)(B); (2) convicted Camacho and Rodriguez of conspiring to suborn perjury in violation of 18 U.S.C. §§ 371 and 1622, and conspiring to obstruct justice by preventing testimony through threats and intimidation in violation of 18 U.S.C. §§ 371 and 1512(b); and (3) convicted Camacho of possessing in and affecting commerce a firearm after having been convicted of a felony, in violation of 18 U.S.C. § 922(g).

Defendants raise various challenges to their convictions and sentences. Specifically, they argue that the district court erred by (1) denying Camacho’s pretrial motion to suppress evidence seized by the government during its searches of two apartments used in connection with Defendants’ narcotics-related activities; (2) ruling that Rodriguez and Feliciano lacked standing to challenge one of those searches; (3) denying Feliciano’s pretrial severance motion; (4) denying Rodriguez’s pretrial motion to strike from the superseding indictment as surplusage overt acts of cocaine distribution; and (5) fining Rodriguez in the amount of $10,000. Defendants also contend that (6) the evidence adduced at trial was insufficient to support Rodriguez’s convictions for conspiring to suborn perjury and obstruct justice; (7) Congress exceeded its authority under the Commerce Clause when it enacted 18 U.S.C. §§ 922(g)(1) and 922(k); and (8) the Supreme Court’s recent decision in Bailey v. United States, — U.S. -, 116 S.Ct. 501, 133 L.Ed.2d 472 (1995), requires the reversal of their convictions for violation of 18 U.S.C. § 924(e)(1).

The government concedes, and we agree, that Bailey requires reversal of Defendants’ convictions under § 924(c)(1), but we reject the remainder of Defendants’ claims. Accordingly, we affirm in part, vacate in part, and remand for resentencing.

Background

Camacho, Rodriguez, and Feliciano, along with several other coconspirators, were members of the Raja Crew, a heroin-selling organization that operated principally in the Bronx, New York from late 1989 until Defendants were arrested in 1993. Defendants conducted their narcotics-related activities in part out of Apartment 2B at 537 East 139th Street in the Bronx (“Apartment 2B”).

On July 29, 1991, Judge John Cataldo of the Criminal Court of the City of New York, Bronx County, issued a warrant to search Apartment 2B for, inter alia, heroin, heroin paraphernalia, and guns. Judge Cataldo issued the warrant after making a probable cause determination based upon his (1) review of an affidavit sworn to by New York City Police Department (“NYPD”) Detective Donald Sanchez, and (2) examination under oath of a confidential informant (the “Cl”). Sanchez’s affidavit, which set forth information that had been provided to Sanchez by the Cl, stated that the Cl had twice been inside Apartment 2B, described the apartment in detail, and described a person named “Joey” engaging in heroin transactions there. When questioned under oath by Judge Cataldo, the Cl confirmed the information in the affidavit.

Sanchez and other NYPD officers executed the warrant and seized from Apartment 2B drugs, guns, and photographic and documentary evidence linking Defendants to narcotics-related activity. They also arrested co-conspirators Jose Crespo and Marie Rosado. With the cooperation of Rosado, agents of the Bureau of Alcohol, Tobacco, and Firearms (the “BATF”) were able to identify Defendants. On July 9, 1993, agents of the Federal Bureau of Investigation (the “FBI”) arrested Rodriguez and Feliciano.

On July 21, 1993, federal agents went to 3312 Hull Avenue, Apartment 4DN, in the Bronx (“Apartment 4DN”) to execute an arrest warrant for Camacho. Upon their arrival at 3312 Hull Avenue, the agents located Camacho on the roof of the building and arrested him there. Camacho and the agents returned to Apartment 4DN, where the agents found and seized drug paraphernalia and other evidence.

Camacho and the agents gave contradictory accounts of the circumstances of the agents’ search of Apartment 4DN. FBI Special Agent David S. Higgins testified at the district court’s suppression hearing that Camacho had requested to return to the apartment in order to retrieve his hat. Higgins contended that he had granted Camacho’s request because he believed that doing so would increase the likelihood that Camacho would cooperate with the officers. According to Higgins, he and another agent took Camacho into the apartment’s master bedroom, where they found a baseball cap and a box of ammunition. Higgins claimed that he had then asked Camacho for permission to search the apartment, and that Camacho had granted such permission. After the officers discovered drug paraphernalia and photographs and documents implicating Defendants, Camacho was asked to sign a consent-to-seareh form. When he refused, the officers terminated the search.

Camacho denied that he had consented to the search and maintained that he had never asked to return to the apartment either to retrieve his hat or for any other reason. In support of his version of the events, Camacho introduced a property invoice from the Metropolitan Correctional Center (the “MCC”), where he was detained following his arrest, which indicated that Camacho did not have a hat with him when he arrived at the MCC.

BATF Special Agent Leslie Gee attempted to account for the absence of the hat from the MCC property invoice. Gee testified that he had not been present when Camacho was arrested on the roof, but had entered Apartment 4DN while Camacho and Higgins were in the master bedroom. According to Gee, he guarded the entrance to the apartment until Higgins and Camacho emerged from the bedroom, at which time Gee noticed that Camacho was wearing a baseball cap. Further according to Gee, he mistakenly believed that prisoners were not allowed to wear hats at the MCC, and when he informed the other agents about this belief, one of them removed Camacho’s baseball cap and left it in the apartment when they departed with Camacho for the MCC.

Following their arrests, and while they were detained and awaiting trial, Camacho and Rodriguez learned that Crespo was cooperating with the government. Crespo testified at trial that Camacho and Rodriguez had sent him a letter requesting that Crespo not testify against Defendants. The letter stated that if Crespo did testify, then he did not care about his family and that he might be found dead some day. Crespo claimed that the letter asked him to sign four accompanying documents, each of which stated falsely that Crespo had been coerced by the government into making false statements against the Defendants. Crespo did not sign the documents.

Following a two-week trial, Defendants were convicted of the aforementioned ofr fenses. On November 10, 1994, the district court sentenced Camacho and Rodriguez to twenty-five years imprisonment, to be followed by five years supervised release, and imposed a $10,000 fine and a $350 special assessment upon each of them. On December 14, 1994, the district court sentenced Feliciano to ten years and three months imprisonment, to be followed by five years supervised release, and imposed a $200 special assessment. Defendants are currently serving their sentences.

This appeal followed.

Discussion

A. The Search of Apartment 2B.

Camacho contends that the district court should have granted his pretrial motion to suppress the evidence seized during the NYPD officers’ search of Apartment 2B. Camacho argues that Judge Cataldo’s warrant was not supported by probable cause because the information provided by the confidential informant — the sole evidence on which the probable cause determination was based— was not corroborated by an independent police investigation.

On an appeal from the denial of a motion to suppress, we review de novo the legal determination of whether there existed probable cause for a search warrant. See United States v. Smith, 9 F.3d 1007, 1011 (2d Cir.1993). In the case of a warrant supported by information obtained from a confidential informant, we examine the “totality of the circumstances” bearing upon the reliability of that information. See Illinois v. Gates, 462 U.S. 213, 230-31, 103 S.Ct. 2317, 2328-29, 76 L.Ed.2d 527 (1983); Smith, 9 F.3d at 1012.

In the present case, Judge Cataldo’s probable cause determination was based upon the detailed, specific, and sworn testimony of the confidential informant. The Cl testified as to events that he claimed to have witnessed first-hand. Here, as in Smith, the CI “corroborated his allegations that the Apartment was used as a retail location for narcotics sales by describing in detail the Apartment, its occupants, and the purchase transactions.” 9 F.3d at 1013. In fact, the Cl’s allegations are significantly more reliable in this case than in Smith because the CI testified under threat of the criminal sanction for perjury. We think that such “[a] detailed eye-witness report of a crime is self-corroborating; it supplies its own indicia of reliability.” United States v. Elliott, 893 F.2d 220, 223 (9th Cir.) (internal quotation omitted), modified, 904 F.2d 25 (9th Cir.), cert. denied, 498 U.S. 904, 111 S.Ct. 268, 112 L.Ed.2d 224 (1990); see also Smith, 9 F.3d at 1013 (citing Elliott). Accordingly, we conclude that the warrant to search Apartment 2B was supported by probable cause.

Even if we were to accept Camacho’s contention that the Cl’s testimony was insufficient to establish probable cause, however, the subsequent reliance on the warrant by NYPD officers was objectively reasonable. Thus, the evidence found in the apartment would in any event have been admissible under the “good-faith” exception to the exclusionary rule. See United States v. Leon, 468 U.S. 897, 922-23, 104 S.Ct. 3405, 3420-21, 82 L.Ed.2d 677 (1984); Smith 9 F.3d at 1015-16.

B. The Search of Apartment 4.DN.

We also reject Camacho’s argument that the search of Apartment 4DN was illegal. It is well settled that a warrantless search does not violate the Fourth Amendment if “the authorities have obtained the voluntary consent of a person authorized to grant such consent,” United States v. Elliott, 50 F.3d 180, 185 (2d Cir.1995), cert. denied, — U.S. -, 116 S.Ct. 715, 133 L.Ed.2d 669 (1996), and that “[s]o long as the police do not coerce consent, a search conducted on the basis of consent is not an unreasonable search,” United States v. Gar cia, 56 F.3d 418, 422 (2d Cir.1995). In the present case, it is clear that if we accept the version of the events described at the suppression hearing by Special Agents Higgins and Gee, then the search of Apartment 4DN was reasonable and consistent with the requirements of the Fourth Amendment. The question on appeal, therefore, is whether the district court erred in crediting Higgins and Gee’s version of the events.

In reviewing the denial of a motion to suppress following an evidentiary hearing, we will uphold the district court’s factual findings unless they are clearly erroneous. See United States v. Hernandez, 5 F.3d 628, 632 (2d Cir.1993). We view the evidence presented at the hearing in the light most favorable to the government. See id. at 633. We review de novo the district court’s ultimate legal determinations. Ornelas v. United States, — U.S -,- - -, 116 S.Ct. 1657, 1662-63, 134 L.Ed.2d 911 (1996).

We are satisfied that there was no clear error here, as we have no basis for second-guessing the district court’s assessment of the witnesses’ credibility. See United States v. Trzaska, 859 F.2d 1118, 1121 (2d Cir.1988), cert. denied, 493 U.S. 839, 110 S.Ct. 123, 107 L.Ed.2d 84 (1989). The district court was confronted with two differing accounts regarding whether Camacho consented to the search, “was free to reject [the defendant’s] testimony and accept the agent[s’], and did so.” United States v. Villegas, 928 F.2d 512, 518 (2d Cir.), cert. denied, 502 U.S. 843, 112 S.Ct. 137, 116 L.Ed.2d 104 (1991).

Our conclusion that the search was consensual moots Rodriguez and Feliciano’s Fourth Amendment challenge to it. Thus, we need not review the district court’s conclusion that Rodriguez and Feliciano had no objectively reasonable expectation of privacy in Apartment 4DN and therefore lacked standing to challenge the lawfulness of the search at that location.

C. Feliciano’s Severance Motion.

Feliciano contends that the district court should have granted his pretrial motion for severance of his trial from that of Camacho and Rodriguez. Feliciano argues that the introduction of evidence concerning his codefendants’ attempt to intimidate Crespo had a prejudicial spillover effect on him, thereby depriving him of a fair trial.

Rule 14 of the Federal Rules of Criminal Procedure allows a district court to order the severance of defendants charged with jointly undertaken criminal activity “[i]f it appears that a defendant or the government is prejudiced by a joinder of offenses or of defendants ... for trial together.” We have noted that “there is a preference, in the federal system, for the joint trial of defendants indicted together,” United States v. Rosa, 11 F.3d 315, 341 (2d Cir.1993), cert. denied, — U.S. -, -, 114 S.Ct. 1565, 1864, 128 L.Ed.2d 211, 485 (1994), and accordingly have held that we will reverse a district court’s denial of a severance motion only if a defendant can “show prejudice so severe that his conviction constituted a miscarriage of justice, and that the denial of his motion constituted an abuse of discretion,” id. (citations omitted).

We conclude that the introduction of evidence of the attempt to intimidate Crespo did not prejudice Feliciano’s trial. The fact that one of several codefendants is tried for a crime not committed by another codefendant does not, without more, create the sort of miscarriage of justice that would require a new trial. See United States v. DeVillio, 983 F.2d 1185, 1192-93 (2d Cir.1993); United States v. Chang An-Lo, 851 F.2d 547, 556-57 (2d Cir.), cert. denied, 488 U.S. 966, 109 S.Ct. 493, 102 L.Ed.2d 530 (1988). Rather, to prevail in this case, Feliciano must demonstrate that the evidence introduced against Camacho and Rodriguez in some way affected the jury’s ability fairly and rationally to evaluate the evidence of Feliciano’s guilt.

Feliciano has not made that showing. The crimes for which Camacho and Rodriguez were alone charged were adequately distinct from the crimes of which Feliciano was accused so that the evidence relating to each could be presented without any confusion or spillover effect. See Chang An-Lo, 851 F.2d at 556. Additionally, the district court instructed the jury that it was required to consider the evidence against each defendant individually for each count. See id. at 556-57; United States v. Losada, 674 F.2d 167, 171 (2d Cir.), cert. denied, 457 U.S. 1125, 102 S.Ct. 2945, 73 L.Ed.2d 1341 (1982). Under these circumstances, Feliciano’s claim of prejudicial spillover must be rejected.

D. Rodriguez’s Motion to Strike Overt Acts.

Rodriguez challenges the district court’s denial of his pretrial motion to strike as surplusage two overt acts of cocaine distribution from Count One of the superseding indictment, which charged Defendants with conspiring to distribute and possess with intent to distribute heroin.

We have cautioned that “[m]otions to strike surplusage from an indictment will be granted only where the challenged allegations are ‘not relevant to the crime charged and are inflammatory and prejudicial.’ ” United States v. Scarpa, 913 F.2d 993, 1013 (2d Cir.1990) (quoting United States v. Napolitano, 552 F.Supp. 465, 480 (S.D.N.Y.1982)). Defendants’ cocaine-related activity was clearly relevant evidence of the organizational structure and method of operation of their heroin conspiracy, and it also tended to establish the nature of the relationship between Defendants and their supplier of heroin, defendant Jose Antonio Hernandez. See Fed.R.Evid. 404(b) (“Evidence of other crimes, wrongs, or acts” is admissible “as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident....”); United States v. Towne, 870 F.2d 880, 886 (2d Cir.) (“[E]vidence of uncharged criminal activity is [admissible] ... if it arose out of the same transaction or series of transactions as the charged offense, if it [is] inextricably intertwined with the evidence regarding the charged offense, or if it is necessary to complete the story of the crime [on] trial.”) (internal quotation omitted) (some alterations in original), cert. denied, 490 U.S. 1101, 109 S.Ct. 2456, 104 L.Ed.2d 1010 (1989); United States v. Percy, 765 F.2d 1199, 1204 (4th Cir.1985) (prior drug transactions admissible to show that defendant’s acts were “not inadvertent, accidental, unintentional or without guilty knowledge”) (internal quotation omitted). Accordingly, the district court correctly denied Rodriguez’s motion to strike. See United States v. Montour, 944 F.2d 1019, 1026-27 (2d Cir.1991).

E. Sufficiency of the Evidence.

Rodriguez challenges the sufficiency of the evidence supporting his convictions for both conspiracy to suborn perjury and conspiracy to obstruct justice. A defendant challenging a conviction on sufficiency grounds bears a heavy burden. See United States v. Jespersen, 65 F.3d 993, 998 (2d Cir.1995), cert. denied, — U.S. -, 116 S.Ct. 1571, 134 L.Ed.2d 669 (1996). The reviewing court must consider the evidence in the light most favorable to the government, crediting every inference that the jury might have drawn in favor of the government, and may overturn the conviction only if no rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Id.

As outlined earlier, Crespo testified at trial that Camacho and Rodriguez had sent Crespo a letter asking Crespo to testify falsely and requesting that Crespo retract his earlier statements against Defendants. Crespo testified that he interpreted the letter as containing veiled threats against him and his family. Because we are required to resolve any issue regarding Crespo’s credibility in favor of the government, see id., and because a rational jury could have concluded that Camacho and Rodriguez communicated threats to Crespo, we hold that Crespo’s testimony was sufficient to support the jury’s finding that Rodriguez and Camacho conspired to suborn perjury and to obstruct justice by means of threat and intimidation.

F. Congressional Authority to Enact 18 U.S.C. §§ 922(g)(1) and (k).

Relying upon United States v. Lopez, — U.S. -, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995), in which the Supreme Court struck down as exceeding Congress’ Commerce Clause authority a statute that banned the possession of guns within 1,000 feet of a public, parochial, or private school, Camacho argues that Congress exceeded its authority under the Commerce Clause when it enacted §§ 922(g)(1) and 922(k). We have already rejected such a challenge to § 922(g), which requires the prosecution to prove, inter alia, that the offending firearm was “shipped or transported in interstate or foreign commerce” or was “possess[ed] in or affecting commerce.” 18 U.S.C. § 922(g). In United States v. Sorrentino, 72 F.3d 294, 296 (2d Cir.1995), we noted that § 922(g) “avoids the constitutional deficiency identified in Lopez because it requires a legitimate nexus with interstate commerce.” Compare United States v. Carter, 981 F.2d 645, 647 (2d Cir.1992) (“In the context of firearm control, it is well established that for a firearm to fall within the Commerce Clause, it need only have travelled previously in interstate commerce.”), cert. denied, 507 U.S. 1023, 113 S.Ct. 1827, 123 L.Ed.2d 456 (1993), with Lopez, — U.S. at -, 115 S.Ct. at 1631 (“[Section] 922(g) contains no jurisdictional element which would ensure, through case-by-case inquiry, that the firearm possession in question affects interstate commerce.”). This reasoning applies to § 922(k) as well, for that provision requires the prosecution to prove that the firearm in question “has, at any time, been shipped or transported in interstate or foreign commerce.” Given the statutorily required nexus between interstate commerce and the firearms possessions prohibited by §§ 922(g)(1) and 922(k), we conclude that Congress acted within its constitutional authority when it enacted these provisions.

G. The $10,000 Fine Imposed upon Rodriguez.

Rodriguez challenges the district court’s imposition of a $10,000 fine to be paid out of the money Rodriguez earns while in prison. Rodriguez relies upon United States Sentencing Guideline § 5E1.2, which provides in pertinent part:

(a) The court shall impose a fine in all cases, except where the defendant establishes that he is unable to pay and is not likely to become able to pay any fine.
(f) If the defendant establishes that (1) he is not able and, even with the use of a reasonable installment schedule, is not likely to become able to pay all or part of the fine required ... or (2) imposition of a fine would unduly burden the defendant’s dependents, the court may impose a lesser fine or waive the fine. In these circumstances, the court shall consider alternative sanctions in lieu of all or a portion of the fine, and must still impose a total combined sanction that is punitive. Although any additional sanction not proscribed by the guidelines is permissible, community service is the generally preferable alternative in such instances.

Because Rodriguez failed to object to the fine below, we review his claim for plain error. See United States v. Keppler, 2 F.3d 21, 23-24 (2d Cir.1993).

We have authorized the assessment against an indigent defendant of a limited fine to be paid out of his likely prison earnings. See United States v. Fermin, 32 F.3d 674, 682 n. 4 (2d Cir.1994) (collecting cases), cert. denied, — U.S. -, 115 S.Ct. 1145, 130 L.Ed.2d 1104 (1995). Despite his present inability to pay the fine, we have no reason to believe that Rodriguez will be unable to work while incarcerated. Nor do -we think that a fine of $10,000 to be paid over the course of twenty-five years of incarceration is unreasonably high. See United States v. Williams, 996 F.2d 231, 234 (10th Cir.1993) (‘“On average, Federal inmates that work can earn $1,000 a year....’ ” (quoting Administrative Office of the U.S. Courts, Bringing Criminal Debt into Balance: Improving Fine & Restitution Collection 17 (1992))); cf. United States v. Wong, 40 F.3d 1347, 1382-83 (2d Cir.1994) (vacating fines of $250,000 imposed upon indigent defendants), cert. denied, — U.S. -, -, — U.S. -, 115 S.Ct. 1968, 2568, 116 S.Ct. 190, 131 L.Ed.2d 858, 820, 133 L.Ed.2d 127 (1995). Accordingly, the district court’s imposition of the $10,000 fine upon Rodriguez did not constitute plain error.

H. The Convictions under 18 U.S.C. § 924.

Finally, Defendants argue, and the government concedes, that Bailey v. United States, — U.S. -, 116 S.Ct. 501, 133 L.Ed.2d 472 (1995), requires the reversal of Defendants’ convictions and sentences under 18 U.S.C. § 924(c)(1), which penalizes anyone who, “during and in relation to any ... drug trafficking crime ..., uses or carries a firearm.” Bailey held that to sustain a conviction for “use” of a firearm under that provision, there must be “evidence sufficient to show an active employment of the firearm by the defendant.” — U.S. at -, 116 S.Ct. at 505. The government concedes that the § 924(c)(1) convictions in this case must be vacated because there was no evidence in this case of “use” as defined in Bailey, and Griffin v. United States, 502 U.S. 46, 112 S.Ct. 466, 116 L.Ed.2d 371 (1991), precludes affirmance of these convictions on a theory that the firearms were “carrie[d].”

In sentencing Defendants for their violations of § 924(e)(1), the district court imposed the mandatory five-year consecutive sentences required by that provision. See 18 U.S.C. § 924(c)(1). However, limitations on double-counting prevented the district court from enhancing Defendants’ narcotics-related sentences for the possession of firearms while simultaneously imposing consecutive sentences for violations of § 924(c)(1). See USSG § 2K2.4 comment, (n.2) (“Where a sentence [for a violation of § 924(c)(1) ] is imposed in conjunction with a sentence for an underlying offense, any specific offense characteristic for the possession, use, or discharge of a[ ] ... firearm ... is not to be applied in respect to the guideline for the underlying offense.”); United States v. Howard, 998 F.2d 42, 48 (2d Cir.1993).

Accordingly, the government asks that we remand for resentencing on Defendants’ convictions for conspiring to distribute and possess with intent to distribute heroin in violation of 21 U.S.C. §§ 846 and 841(a)(1) and distributing and possessing with intent to distribute heroin in violation of 21 U.S.C. § 841(a)(1), in order to afford the district court the opportunity to consider the applicability to those offenses of USSG § 2Dl.l(b)(l) (requiring increase of two offense levels “[i]f a dangerous weapon (including a firearm) was possessed” in connection with specified narcotics offenses). It is clear that such a remand for resentencing is appropriate when a § 924 conviction is reversed in light of Bailey. See, e.g., United States v. Vasquez, 85 F.3d 59, 61 (2d Cir. May 22, 1996); United States v. Bermudez, 82 F.3d 548, 550 (2d Cir.1996); United States v. Giraldo, 80 F.3d 667, 677 (2d Cir.1996).

Conclusion

The convictions on count three (§ 924(c) violation) are vacated, the convictions on the remaining counts are affirmed, and the case is remanded to permit the district court to consider resentencing.

      . The government stipulates that it will not seek a total sentence for Camacho or Rodriguez greater than that originally imposed, a possible outcome under the Sentencing Guidelines in this case.


author: CALABRESI, Circuit Judge:

text:
    ESTATE OF Herbert R. HERRMANN, Deceased, Edward I. Herrmann and Lawrence A. Herrmann, Co-Executors, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
    No. 1090, Docket 95-4113.
    United States Court of Appeals, Second Circuit.
    Argued Feb. 12, 1996.
    Decided June 11, 1996.

      Frank H. Connelly, Jr. (Margaret M. Fitzpatrick, McGovern, Connelly & Davidson, New Rochelle, NY), for Petitioners.
    Tamara Schottenstein, United States Department of Justice, Washington, DC (Loretta C. Argrett, Assistant Attorney General, Gary R. Allen, Richard Farber, on the brief), for Respondent.
    Before: MAHONEY, WALKER, and CALABRESI, Circuit Judges.
   CALABRESI, Circuit Judge:

In a prenuptial agreement, Herbert Herrmann agreed to give his fiancée a life interest in his apartment upon his death, provided that they were still married when he died. In return, the fiancée gave up her rights to any of her future husband’s property upon his death or their divorce. They married, and several years later the husband died. The question is whether the widow’s life interest in his apartment is a claim supported by “adequate and full consideration in money or money’s worth.” I.R.C. § 2053(e)(1)(A). If so, then it is deductible from the husband’s taxable estate. If not, it is subject to taxation.

We could quickly dispose of this case by citing several of our opinions dating from 1940, all of which hold that a transfer of property to a spouse in return for a relinquishment of any marital right (for example, support rights, or an elective share in the deceased spouse’s estate) is not supported by adequate consideration, and, as such, cannot be deducted. The taxpayer in this case suggests, however, that our decisions have been undercut by several developments since 1940. It contends that post-1940 IRS Revenue Rulings and opinions of the Tax Court and other circuits (which expressly reject our earlier holdings) require us to abandon those precedents.

We do not, however, need to consider the current validity of those precedents to decide this case. For, without relying on them, we still conclude that the property before us should be taxed.

I. Background

In 1984, Herbert Herrmann (then in his 60’s) married Harriet Boris (then in her 50’s) in New York. Before the marriage, they signed a prenuptial agreement that provided:

• Separate property of each spouse would remain separate.
• Both waived any claims for alimony, support, and maintenance.
• Both agreed to pool their incomes after marriage, to be held jointly with right of survivorship.
• In case of divorce, Herbert agreed to pay Harriet $5,000 per year for ten years.
• Both waived any claim for any property distribution of any kind (e.g., equitable distribution of their property upon divorce), except that, if they were still married when Herbert died, Herbert would give Harriet a life interest in his apartment.
• Both waived any right against the “property or estate of the other” including any statutory allowance, personal right of election against a will, or other rights in case of intestacy.

At the time of the agreement, Herbert had about $1,600,000 in assets and $100,000 in annual income; Harriet had $250,000 in assets and an annual income of $25,000.

Herbert died in 1988, and, as the prenuptial agreement had provided, Harriet received the life use of his New York apartment. When Herbert’s executors filed the estate tax return, they subtracted the value of Harriet’s interest ($264,965) from the assessed value of the apartment ($340,000) as a “claim against the estate,” and listed only the estate’s reversionary right to the property ($75,035) in his gross estate. The Commissioner of Internal Revenue disallowed the deduction and included the entire value of the apartment in Herbert’s gross estate.

The estate filed a petition in the Tax Court challenging the Commissioner’s determination. That court, after trying the case on a stipulated set of facts, concluded that Harriet’s life interest was not deductible as a claim against the estate because, in the prenuptial agreement, she had not given Herbert “adequate and full consideration in money or money’s worth” for the life interest as required by I.R.C. § 2053(c). The court reasoned that Harriet had principally given up her right of statutory election against Herbert’s will; that this was a waiver “of dower or curtesy, or of a statutory estate created in lieu of dower or curtesy, or of other marital rights in the decedent’s property or estate”; and that foregoing such an interest can never serve as adequate consideration -under I.R.C. § 2043(b). The court further found that even if Harriet had given up other rights that were unlike dower— rights that might provide acceptable consideration — the estate had failed to prove the value of such rights. Since the taxpayer had not met its burden of showing how much of Harriet’s life estate was deductible, all of it had to be included. The Tax Court therefore sustained the Commissioner’s determination and required the estate to pay about $70,000 in extra taxes.

The taxpayer now asks us to review the Tax Court’s decision.

II. Discussion

We have jurisdiction to re-examine a final decision of the Tax Court pursuant to 1.R.C. § 7482. As always, we exercise plenary review over the Tax Court’s legal conclusions but disturb its factual findings only for clear error. Bliss v. Commissioner, 59 F.3d 374, 378 (2d Cir.1995).

Our inquiry begins with I.R.C. § 2053(a), which provides that, generally, “claims against the estate” are deductible from the gross estate. Section 2053(c)(1)(A), in turn, permits “claims against the estate” only “when founded on a promise or agreement, ... to the extent that they were contracted bona fide and for an adequate and full consideration in money or money’s worth.”

In good tax code fashion, there is a further provision, § 2043(b)(1), which tells us that some things do not constitute “consideration in money or money’s worth.” It states:

(b) Marital Rights Not Treated as Consideration—
(1) In General — For purposes of this chapter, a relinquishment or promised relinquishment of dower or curtesy, or of a statutory estate created in lieu of dower or curtesy, or of other marital rights in the decedent’s property or estate, shall not be considered to any extent a consideration “in money or money’s worth”.

(Emphasis added.)

Section 2043(b)(1) was designed to prevent a husband and wife from entering into agreements that use consideration that is valid under state contract law to transform nondeductible marital rights — such as dower — into deductible contractual claims against the estate, thereby depleting the taxable estate. See Natchez v. United States, 705 F.2d 671, 674 (2d Cir.1983); see also I.R.C. § 2034 (including dower rights in the gross estate).

Normally, of course, a married couple will have no reason to structure bequests to each other as contractual debts. Most transfers between husband and wife qualify for a marital deduction that exempts interspousal transfers from estate and gift taxes. As a result, the decedent’s taxable estate does not usually include property transferred to the surviving spouse. I.R.C. § 2056(a). The theory of 'the marital deduction is that the estate and gift taxes should strike marital property once, on the death of either the decedent or the survivor, but not on both events. See Estate of Pipe v. Commissioner, 241 F.2d 210, 214 (2d Cir.), cert. denied, 355 U.S. 814, 78 S.Ct. 15, 2 L.Ed.2d 31 (1957).

. Consistent with this theory, life estates (and other terminable interests), are not eligible for the marital deduction. I.R.C. § 2056(b). Since life interests end upon the death of the life tenant (the surviving spouse), they typically do not appear in the survivor’s estate. If they were eligible for the marital deduction in the estate of the original decedent, the value they represent would escape transfer tax both when the first and when the the surviving spouse die. For example, unless it is included in Herbert’s taxable estate, the value of Harriet’s life interest in the apartment could well avoid estate tax altogether. It follows that couples have a significant interest in converting nondeductible life interests into deductible “claims against the estate.” The government has a commensurate interest in seeing that this does not happen.

The Tax Court held that the estate failed to prove the value of any consideration valid for purposes of transfer tax that Harriet gave Herbert in exchange for an interest in his apartment. In reaching this conclusion, however, the court did not decide whether Harriet’s waiver of her right to an equitable distribution of marital property upon divorce constituted valid or invalid consideration— whether, in other words, it was an “other marital right[ ] in the decedent’s property or estate” within the meaning of § 2043(b)(1). Since the estate had, in any event, failed to establish the dollar value of what Harriet had given up, the court declined to reach the § 2043(b)(1) question.

We agree with the Tax Court that Harriet’s claim against the estate is not deductible for estate tax purposes. In reaching that conclusion, we reject the IRS’s invitation that we simply rely on three of our precedents, decided over fifty years ago, for the categorical assertion that a waiver of equitable distribution rights in a prenuptial agreement can never serve as consideration under § 2043(b)(1). Instead, we affirm based on our determination that — whatever the scope of § 2043(b)(1) — the right that Harriet traded away in return for a life interest in her husband’s apartment, was not “adequate and full consideration in money or money’s worth” under § 2053(c)(1)(A). She waived only a potential right to an equitable distribution in her husband’s property, which never, in fact, ripened into an enforceable right. Accordingly, to allow a deduction in this case would be to invite tax avoidance.

A. Our 1940 Decisions

Although we have not had many occasions to interpret § 2043(b)(1), that statute is no stranger to our court. In a trio of cases, all decided in 1940, we interpreted the phrase “other marital rights in the decedent’s property or estate” broadly to include all rights that arise from the marital relationship.

In our first encounter with § 2043(b)(1) (then denominated § 804), we were asked to decide whether an ex-wife’s waiver, in a separation agreement, of her right to support payments constituted adequate consideration for her ex-husband’s promise to make regular payments to her for her life. Meyer’s Estate v. Commissioner, 110 F.2d 367, 368-69 (2d Cir.), cert. denied, 310 U.S. 651, 60 S.Ct. 1103, 84 L.Ed. 1416 (1940). According to I.R.C. § 2034 (then § 811(b)), the decedent’s gross estate expressly included two categories of a surviving spouse’s marital property interests: (1) dower or curtesy and (2) those interests existing “by virtue of a statute creating an estate in lieu of dower or curtesy.” Section 2043(b)(1), by contrast, listed three categories of rights, the waiver of which could not serve as adequate consideration for a transfer of property away from an estate: (1) dower or curtesy; (2) statutory substitutes for dower and curtesy; and (3) other marital rights in the decedent’s property or estate. Apparently finding it significant that § 2043(b)(1) — unlike § 2034 — had added the third category of “other marital rights,” we held that this third category should be read to encompass not only substitutes for dower and curtesy — that is, marital rights that accrue upon one spouse’s death— but all rights that arise out of the marital relationship, including those that accrue upon marriage or, later, upon divorce. Because a wife’s right to support payments under New York law arose out of her marriage, we held that it was an “other marital right[ ] in the decedent’s property or estate” that could not serve as adequate consideration for a claim against the estate. Id. at 368-69.

Judge Learned Hand dissented, on the theory that the wife’s right to support was not a right to the decedent’s “property or estate.” As Judge Hand reasoned, the wife relinquished an in personam claim against her husband, whereas the tax code spoke only about in rem claims against his property. More important, Hand argued that, since the payment of support was not a taxable event, the conversion of support rights into contractual claims against the estate would not (unlike the analogous conversion of dower, curtesy and similar rights) give rise to any potential for tax avoidance. Id. at 369 (L. Hand, J., dissenting).

We reaffirmed our broad interpretation of “other marital rights” a month later in Helvering v. United States Trust Co., 111 F.2d 576, 577 (2d Cir.), cert. denied, 311 U.S. 678, 61 S.Ct. 45, 85 L.Ed 437 (1940). In that ease, a husband and wife had entered into a divorce settlement. Id. By its terms, the husband promised to pay his wife $2500 per month for the rest of her life to support her and their daughter. In return, the wife agreed not to seek any other support payments. Later, the parties replaced these periodic payments with a trust fund, the income from which was to be paid to the wife during her lifetime. When the husband died, we had to decide whether the corpus of the trust should be included in his estate. Id.

We found that insofar as the trust fund was intended to replace support payments to the wife, it had been traded for the wife’s “marital right” to support. To that extent, the trust was not based on adequate consideration and therefore had to be included in the husband’s estate. Id. The daughter’s right to support, by contrast, arose from the parent-child relationship and was therefore not a marital right. To the extent that the $2500 monthly payments (or, more precisely, the portion of the trust fund intended to replace that stream of payments) were intended to cover child support, the creation of the trust fund was supported by adequate consideration and therefore its corpus was not includible in the taxable estate. Id. at 578.

In the third case of the trio, Adriance v. Higgins, 113 F.2d 1013 (2d Cir.1940), a husband and wife signed a separation contract

in which they agreed that each should live separate from the other during the remainder of their lives and that neither should have any rights in the property of the other and neither should contest the will of the other or, upon the death of the other, should claim anything from his or her estate.

Id. at 1015-16 (emphasis added). The husband promised to pay the wife $15,000 up front, plus $4500 per year for the rest of her life out of a special trust. Id. at 1016. We held that, upon the husband’s death, the entire trust was includible in his taxable estate. In consideration for the $4500 annuity (and the commensurate life interest in the trust fund), the wife had given “her release of dower and of other rights in her husband’s property and of her claim for support.” Id. (emphasis added). The release of such rights, we found, were not “adequate considerations ‘in money or money’s worth’ within the meaning of [§ 2043(b) ].” Id.; see also Commissioner v. Maresi, 156 F.2d 929, 930 (2d Cir.1946) (following Meyer’s Estate, United States Trust, and Adriance).

B. The Commissioner’s Changed Position and Ensuing Judicial Decisions

Under these three cases, there can be no doubt that the interest before us today would be taxable. But shortly after our decisions, the Commissioner of Internal Revenue abandoned his view that a waiver of support rights cannot serve as consideration under § 2043(b)(1). Rev. Rul. 12367, 1946-2 C.B. 166, 166-69. Instead, the Commissioner concluded that a payment made in lieu of support rights “merely amounts to the liquidation of a presently existing obligation, the satisfaction of which does not have the effect of diminishing or depleting the husband’s estate to any greater extent than the payment of other existing legal obligations.” Id. at 168. The Commissioner therefore announced that he would no longer follow Meyer’s Estate or United States Trust “to the extent that they hold that the right of a divorced wife to support from a former husband during the joint lives of the parties is a marital right in his property or estate.” Id.; see also Rev. Rul. 71-67, 1971-1 C.B. 271 (ruling that payments due to a decedent’s wife, under a separation agreement in which she waived her support rights, are deductible by the estate to the extent of the commuted value of the support rights).

The same position was eventually adopted by the Tax Court. In Estate of Glen v. Commissioner, 45 T.C. 323, 338-42, 1966 WL 1216 (1966), that court rejected the broad reading of § 2043(b)(1) that we had taken in Meyer’s Estate and its progeny. Section 2043(b)(1), the court suggested, should be limited in its application to the release of rights that accrue to the surviving spouse upon the decedent’s death. The court further opined that “the principal target” of § 2043(b)(1)

is dower and curtesy or substitutes therefor under local law. Rather than read as intending to cover interests which may come into possession prior to decedent’s death (such as rights arising upon divorce), the third phrase “other marital rights in the decedent’s property or estate,” should be read as no more than a backstop, or a catchall, designed to cover any interest in a surviving spouse which by reason of some technical definitional peculiarity in local law might not fit the mold of the first two phrases. See the dissenting opinion in Meyer’s Estate v. Commissioner, 110 F.2d 367, 369 ..., in which Judge Learned Hand took this approach to interpreting the phrase “marital rights in the decedent’s property or estate.”
For example, since dower and curtesy are commonly associated only with real property, if under State law a surviving spouse is entitled to some interest in decedent’s personalty, this interest is of a type which the third phrase was designed to cover — since it would not be covered by the first two phrases. Statutory interpretation of section 2043(b) is an almost classic case for application of the doctrine ejusdem generis.

45 T.C. at 339-40 (footnote omitted).

Subsequently, in Estate of Carli v. Commissioner, 84 T.C. 649, 1985 WL 15335 (1985), the Tax Court held that, in a prenuptial agreement, a wife’s relinquishment of her community property rights in her future husband’s earnings during marriage constituted adequate and full consideration for the husband’s promise to give her a life estate in their residence upon his death if they remained married. Citing Glen, the Tax Court explained that it had consistently taken the position that

the phrase “other marital rights”, for the purposes of determining whether a transfer or a claim was made for “consideration in money or money’s worth”, embraces those rights conferred upon a surviving spouse by local law upon the death of his or her spouse. This definition does not, however, include any rights a spouse may have by virtue of the marriage in the other spouse’s property during their joint lives.

84 T.C. at 657 (citations omitted).

Significantly, moreover, no other circuit to consider the issue has adopted the broad rule we set forth in Meyer’s Estate. Those circuits have instead followed the Commissioner and held that certain other rights connected to the marital relationship — such as spousal support rights — can sometimes constitute suitable consideration for a transfer of property under the estate and gift tax laws. See Estate of Kosow, 45 F.3d 1524, 1531 (11th Cir.1995) (citing Glen and Carli with approval); Estate of Iversen v. Commissioner, 552 F.2d 977, 985 (3d Cir.1977); Leopold v. United States, 510 F.2d 617, 624 (9th Cir.1975); Sherman v. United States, 462 F.2d 577, 578 (5th Cir.1972); District of Columbia v. Lewis, 288 F.2d 137, 140 (D.C.Cir.) (expressly declining to follow Meyer’s Estate), cert. denied, 368 U.S. 818, 82 S.Ct. 33, 7 L.Ed.2d 24 (1961).

More importantly, while we have never had occasion explicitly to reconsider our 1940 precedents, we have since 1946 decided two cases based on the Commissioner’s concessions that support rights may constitute consideration in money or money’s worth. In Commissioner v. Estate of Nelson, 396 F.2d 519, 522 n. 2 (2d Cir.1968), we noted the parties’ concession (presumably based on Rev. Ruling 12367, 1946-2 C.B. 166), “that the relinquishment of support rights ... qualified] ... as ... consideration” under § 2053(c)(1)(A). We expressed no opinion on the correctness of that concession and did not discuss our prior opinions, but we clearly decided the case, in part, on the basis of that concession and contrary to what those precedents would require. The same occurred in Commissioner v. Converse, 163 F.2d 131, 131 (2d Cir.1947). There too, we accepted the concession and breathed not a word about Meyer’s Estate.

It is clear, then, that the Commissioner and other courts have rejected the broad reading of the phrase “other marital rights in the decedent’s property or estate” suggested in Meyer’s Estate. It is equally clear that we ourselves have simply ignored that rule in post-1946 eases. Under the circumstances, we choose not to decide this case by relying on our 1940 decisions. Instead, we focus on whether — whatever the meaning of the phrase “other marital rights in the decedent’s property or estate” as used in § 2043(b)(1) and regardless of whether a right to equitable distribution might be covered by that phrase — Harriet traded away a right that could be considered “adequate and full consideration in money or money’s worth” under § 2053(c)(1)(A). That inquiry requires us to determine whether the arrangement between Harriet and Herbert would bootstrap what would have constituted a taxable transfer — had it been effectuated at the time their contract was entered into— into a deductible claim against Herbert’s estate, thereby avoiding taxation.

C. The Right Foregone by the Widow

Here, Harriet had no currently enforceable claim against any of Herbert’s property. Nor would she obtain such a claim during their marriage. At most, she traded away a contingent future right to an equitable share of her husband’s property in the event of divorce. Had they divorced, that right would have ripened. But no divorce took place and the couple was still married when Herbert died. Harriet’s waiver, therefore, did not add a penny to Herbert’s estate. And, were we to allow the deduction here sought, the effect would be that his taxable estate would be diminished by the full amount of what he gave up, in exchange for a waiver that added nothing to it.

In this respect the result would be directly analogous to what would happen if dower and curtesy rights could be given up in exchange for a valid claim against the estate. As in the dower and curtesy cases, if the taxpayer were to prevail in the case before us, a valid deductible claim against the estate would be created in exchange for the waiver of rights that would not have reduced the taxpayer’s estate. With dower or curtesy this would happen because they are includible in the gross estate under § 2034. And, as to such marital rights, this is precisely what § 2043(b)(1) was designed to prevent. In this case it would occur because the waiver of rights was contingent and had no value when Herbert died. But either way, the result is the same: Both would convert nondeductible claims into deductible claims, thereby depleting the estate.

In eases of this sort, the Tax Court’s decisions give us no cause to believe that valid consideration exists. In Estate of Glen, the parties had executed a settlement agreement in contemplation of divorce, which followed within a few months. 45 T.C. at 326-27, 329. In return for her husband’s creation of a trust in her favor, the wife agreed to waive her presently enforceable rights to a one-third share of his real and personal property. Id. at 331-32. In holding that the wife had given valid consideration in money or money’s worth, the Glen court specifically limited its holding as follows: “Section 2043(b) is not applicable to the relinquishment of a presently enforceable claim to an outright portion of a spouse’s property upon divorce.” Id. at 342.

Estate of Carli, which reaffirmed Glen’s construction of “other marital rights,” is no more helpful to the taxpayer before us. For our purposes, the crucial fact in Carli was that the widow’s community property interest in her husband’s future earnings was also a presently enforceable right. Absent her waiver of that interest, half his earnings would have been excluded from his gross estate because they would have been her property, not his. That is because “[u]nder a community property system a surviving spouse takes outright ownership of half of the community property, which therefore is not included in the deceased spouse’s estate.” Northeastern Pa. Nat’l Bank & Trust Co. v. United States, 387 U.S. 213, 219, 87 S.Ct. 1573, 1577, 18 L.Ed.2d 726 (1967) (dictum); see Ahmanson Found. v. United States, 674 F.2d 761, 773 (9th Cir.1981). Because the widow’s waiver increased her husband’s taxable estate, any transaction in which she received equivalent value would not give rise to tax avoidance.

Likewise, Revenue Ruling 12367, 1946-2 C.B. 166, and the decisions of the other circuits, which do not follow the broad rule of Meyer’s Estate with respect to support rights, do not further the taxpayer’s position. Support rights are presently enforceable rights, and payment of support does not constitute a taxable gift. When a wife gives up her support rights, the estate of her husband is therefore enhanced. It follows that the husband’s transfer to her of an equivalent value, in exchange for her waiver of such support payments, does not deplete his estate. But that is not true of a never-ripened right to equitable distribution of property. As we noted earlier, the value of Herbert’s taxable estate would go down by the amount of Harriet’s claim were the taxpayer to prevail, but it had not risen at all due to Harriet’s waiver of her equitable distribution rights.

It follows that the Revenue Rulings, the Tax Court decisions, and the other circuit court case are all consistent with a holding that the transaction before us is taxable. Any other result would give rise to significant avenues of tax avoidance. While we have no reason to believe that the parties before us had any such motives, it would not be long before others took advantage of the loophole that would ensue. If we accepted the taxpayer’s position, husbands and wives might routinely sign prenuptial agreements waiving divorce rights in exchange for terminable interests. And such terminable interests might thereby avoid taxation in the estate of either spouse.

All this is not to say that agreements like the one before us are invalid in other respects. To the contrary, they are fully enforceable. And, if divorce occurs, they may even have significant and favorable tax consequences. In such actual divorce circumstances, two things have occurred: the contingent right (which was waived) has come into effect and, as the Court and the Code have recognized, the likelihood of tax avoidance has been rendered negligible by the arms-length nature of the unhappy context. See Natchez, 705 F.2d at 674. Under those circumstances, if the agreement is either consummated within the three-year time limit imposed by § 2516 and § 2043(b)(2) (safe harbors created by Congress for certain divorce agreements), or is incorporated in a divorce decree as required by Harris v. Commissioner, 340 U.S. 106, 71 S.Ct. 181, 95 L.Ed. 111 (1950) (which insulates some divorce settlements from transfer taxation), or finally, if it has become the equivalent of a nontaxable transfer of support rights (because the right is no longer contingent), the Commissioner would recognize the adequacy of the consideration.

III. Conclusion

We hold that the estate tax prohibits a person from converting nondeductible claims against the estate into deductible claims through the simple device of a contract. In the current ease, Harriet traded away only a contingent right to an equitable distribution of her husband’s property in the event of a divorce that never occurred. In exchange, she received the right to a definite part of her husband’s estate. What she gave up added nothing to her husband’s estate; what she received depleted it. On these facts, Harriet did not give “adequate and full consideration in money or money’s worth” under I.R.C. § 2053(c)(1)(A). Her life interest in her husband’s apartment must therefore be included in her husband’s estate.

Affirmed.

      . At common law, "dower” entitled a widow to a life interest in one-third of the land of which her husband had been seised at any time during marriage and which was inheritable by the issue of husband and wife. "Curtesy” entitled a widower to a life estate in all lands so held by his wife, but only if children were bom of the marriage. Jesse Dukeminier & Stanley M. Johanson, Wills, Trusts, and Estates 375-76 (4th ed.1990). By and large, dower and curtesy have been supplanted by laws that entitle a surviving spouse to choose between accepting whatever is provided for the spouse in the decedent’s will or taking a statutorily fixed percentage of the estate. Id. at 377-78.

      . Transfers of "qualified terminable interest property” (QTIP) and certain other terminable interests are deductible if they meet the requirements specified in I.R.C. § 2056(b). These requirements are designed to guarantee that, although the interest is terminable, it will nonetheless be taxed in the survivor’s estate.

      . Whether on the facts of the case, and as the source of the life estate that she had received from her husband, the wife had created a retained life estate that would be taxable in her estate under § 2036, or an annuity that could escape taxation, was an issue that could arise only upon her death and hence was not before the court.

      . Under the law of other circuits and pursuant to the Commissioner’s Revenue Rulings, for example, such a right would not constitute an "other marital right[ ] in the decedent’s property or estate” if it were analogous to presently enforceable support rights. And, of course, it would be irrelevant whether it were covered by § 2043(b)(1) at all if the right had been given up in a property settlement that was consummated within a three-year window around the time of divorce, see I.R.C. § 2043(b)(2) (incorporating by reference I.R.C. § 2516), or if the right had been traded away in a settlement agreement that was incorporated into a divorce decree pursuant to Harris v. Commissioner, 340 U.S. 106, 71 S.Ct. 181, 95 L.Ed. 111 (1950).

      . On the question of possible taxation in the estate of the surviving spouse, see note 3 supra.

        . Under the agreement in this case, of course, Harriet would not receive the life interest in Herbert's apartment if the couple divorced — so there would be no claim against Herbert’s estate, and no issue of deductibility at all.