#### IRVING BANK-COLUMBIA TRUST CO., AS EXECUTOR OF HERMAN SIELCKEN, DECEASED, v. THE UNITED STATES 1

[No. E-561.

Decided November 8, 1926]

*On the Proofs*

*Federal estate tax; deduction of same from gross estate.*— The Federal estate transfer tax is imposed upon the transfer of the net estate, and is not a proper deduction from the gross estate within the meaning of section 203 of the revenue act of 1916.

*The Reporter’s*statement of the case:

*Messrs. Raymond D. Thurber*and *John L. MoMaster*for the plaintiff. *Mr. Leonard B. Smith*and *Smith de Agate*were on the briefs.

*Mr. Alexander H. McCormick,*with whom was *Mr. Assistant Attorney General Herman J.*Galloway, for the defendant.

The court made special findings of fact, as follows:

I. Herman Sielcken died at Baden-Baden, Germany, on October 8, 1917, where he then resided.

II. On January 26, 1918, letters testamentary were duly issued by the Surrogate’s Court for the County of New York, State of New York, to the Columbia Trust Company as executor of the last will and testament of the decedent. The Columbia Trust Company had formerly done business under the name and style of Columbia-Knickerbocker Trust Company, and under said name and style was appointed by the decedent in his last will and testament as the executor as to all property within the United States. Subsequent to January 26, 1918, the Columbia Trust Company was duly merged with the Irving Bank into the Irving Bank-Columbia Trust Company, the plaintiff herein. The said Irving Bank-Columbia Trust Company is a corporation duly ■organized and existing under the laws of the State of New York. It has succeeded to, and become vested with, all the powers and liabilities of said Columbia Trust Company and has become the executor of this estate as to all property *565within the United States. The letters testamentary continue in full force and effect, and the plaintiff as such executor is the owner of the claim on which this suit is brought.

III. The Columbia Trust Company as executor filed on or about October 3, 1918, a tentative estate-tax return on Form 706 with the collector of internal revenue for the second district of New York. This tentative return showed no tax due and no taxable estate. Thereafter, on or about December 31, 1918, the executor filed an amended and supplemental return with the said collector, which disclosed a net estate within the United States of $2,811,234.54 and tax in ¿he sum of $315,572.84, which tax was duly paid on January 3, 1919. This amended return was made the subject of a field audit by the Commissioner of Internal Revenue, and this field audit was the basis of an additional assessment of $294,862.42, as fully set forth in' letter of said commissioner dated January 22, 1921.

IY. Following this additional assessment, the executor filed a claim for abatement of tax amounting to $65,831.38, and on February 26,1921, paid the sum of $229,031.04, representing the remainder of said additional assessment. On December 12, 1921, the Commissioner of Internal Revenue allowed said claim as to the sum of $39,086.51, and rejected it as to the remaining sum of $26,744.87. On June 10, 1921, the said executor made a further payment of $2,105.28, and on January 11,1922, a further payment of $26,766.03, aggregating the said amount of tax rejected under the claim for abatement, with interest. After these payments the total estate tax paid amounted to $573,475.19.

Y. Thereafter, on April 8,1924, said executor filed a claim for refund of the sum of $115,176.42, which on October 20, 1924, was allowed by said commissioner as to the sum of $113,294.34 and rejected as to the balance. After the allowance of this claim the net amount of estate tax paid was $460,180.85.

YI. In arriving at the taxable net estate as finally determined in the amount of $3,738,630.32 the Commissioner of Internal Revenue, acting in accordance with rules and regulations established by him, failed and refused to allow as a *566deduction from the gross estate the amount of the Federal estate tax payable by the estate, or any part thereof.

VII. On or about January 27,1925, the plaintiff, as executor as aforesaid, filed with the collector of internal revenue of the second district of New York a claim for refund based on the failure and refusal of the commissioner to allow as a deduction from the gross estate as a “ charge ” against the estate, under section 203 of the revenue act of 1916, as amended, the amount of Federal estate tax payable by the estate or any part thereof. This claim was rejected by the Commissioner of Internal Revenue in a letter received by the plaintiff on or about August 8, 1925.

VIII. This estate was fixed as the estate of a nonresident,* and the deductions allowed from the gross estate were apportioned between the property in the United States and the property wherever situated. The total deductions as determined by the commissioner, before being apportioned, amounted to $709,995.64. The gross estate in the United States was found to be $4,296,451.35 and the gross estate wherever situated $5,468,223.09, making the proportion within the United States 78.57125 per cent.

IX. The plaintiff is a citizen of the United States; and Herman Sielcken was a naturalized citizen of the United States, having been admitted to citizenship in the year 1875 in the city and county of San Francisco, State of California. The plaintiff has never voluntarily aided, abetted, or given encouragement to rebellion or to any act of disloyalty to the United States of America.

The court decided that plaintiff was not entitled to recover.

1

 Writ of certiorari denied.

Moss, Judge,

delivered the opinion of the court:

This action is brought to recover an alleged excess payment of Federal estate tax.

In order to determine the question involved it is necessary for the court to consider the revenue act of 1916, section 203, 39 Stat. 777, the applicable portions of which are as follows:

> “ Sec. 203. That for the purpose of the tax the value of ■he net estate shall be determined—

> *567“(a) In the case of a resident, by deducting from the a alue of the gross estate—

> “(1) Such amounts for funeral expenses, administration ■expenses, claims against the estate, unpaid mortgages, losses incurred during the settlement of the estate arising from .fires, storms, shipwreck, or other casualty, and from theft, when such losses are not compensated for by insurance or otherwise, support during the settlement of the estate of those dependent upon the decedent, and such other charges against the estate, as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered.”

Plaintiff contends that the Commissioner of Internal Revenue should have deducted from the gross estate the amount of the estate tax itself in arriving at the value of the net estate upon the theory that the estate tax is a charge against the estate in the meaning of the statute.

The court is unable to accept plaintiff’s theory.

The Federal estate tax is imposed upon the transfer of the net estate; and the net estate is the difference between the total value of the gross estate and the total of the authorized deductions.

Section 203 above referred to definitely authorizes the deduction of certain expenses and charges, and then states,

> and such other charges against the estate, as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered.”

It is not to be assumed that the Congress, in attempting to promulgate a rule by which the net estate is to be determined, would describe in precise terms items which are to be deducted, some of which might or might not exist in certain cases, and yet leave unmentioned a highly important item which must surely apply in all cases.

Under the structure of the Federal estate tax act the tax is not a charge against the estate in the meaning of section 203.

The case of *Edwards*v. *Slocum,*264 U. S. 61, while dealing with a different issue from that involved in the instant case, determined the principle which controls the question here in the following language:

> “ It [the estate tax act] levies a sum equal to a certain percentage of the value of the net estate, and provides the *568criteria by which the net estate shall be ascertained. It thus manifestly assumes that the net estate will be ascertained before the tax is computed.”

The petition should be dismissed. And it is so ordered.

Graham, *Judge;*Hat, *Judge;*Booth, *Judge;*and Camp-éele, *Chief*Justice, concur.