Source: https://openjurist.org/522/f2d/132/estate-mittleman-v-commissioner-of-internal-revenue
Timestamp: 2017-08-21 09:49:51
Document Index: 345956158

Matched Legal Cases: ['§ 2056', 'art:\n26', '§ 2056', 'art, 317', '§ 20', '§ 15', '§ 20', '§ 7482']

522 F2d 132 Estate Mittleman v. Commissioner of Internal Revenue | OpenJurist
522 F. 2d 132 - Estate Mittleman v. Commissioner of Internal Revenue
522 F2d 132 Estate Mittleman v. Commissioner of Internal Revenue
522 F.2d 132
173 U.S.App.D.C. 26, 75-2 USTC P 13,108
ESTATE of Jerome MITTLEMAN, Deceased, Henrietta Mittleman,
Irving B. Yochelson and Solomon Grossberg,
Executors, Appellants,
See Northeastern Pennsylvania Nat'l Bank & Trust Co. v. United States, 387 U.S. 213, 219, 87 S.Ct. 1573, 1577, 18 L.Ed.2d 726, 731 (1967); Jackson v. United States, 376 U.S. 503, 510, 84 S.Ct. 869, 873, 11 L.Ed.2d 871, 876 (1964); United States v. Stapf, 375 U.S. 118, 128, 84 S.Ct. 248, 255, 11 L.Ed.2d 195, 203 (1964); Del Mar v. United States, 129 U.S.App.D.C. 51, 53, 390 F.2d 466, 468, Cert. denied, 393 U.S. 828, 89 S.Ct. 92, 21 L.Ed.2d 99 (1968)
"(T)he underlying purpose (of the deduction) was to equalize the incidence of the estate tax in community property and common-law jurisdictions. Under 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. The marital deduction allows transfer of up to one-half of noncommunity property to the surviving spouse free of the estate tax." Northeastern Pennsylvania Nat'l Bank & Trust Co. v. United States, supra, 387 U.S. at 219, 87 S.Ct. at 1576-1577, 18 L.Ed.2d at 731.
See Northeastern Pennsylvania Nat'l Bank & Trust Co. v. United States, supra note 9, 387 U.S. at 219-222, 87 S.Ct. at 1577-1578, 18 L.Ed.2d at 731-732
26 U.S.C. § 2056(b)(1) (1971) provides in relevant part:
26 U.S.C. § 2056(b)(5) (1970) provides:
E. g., In re Estate of Glover, 150 U.S.App.D.C. 147, 149, 463 F.2d 1238, 1240 (1972); Greenwood v. Page, 78 U.S.App.D.C. 166, 168, 138 F.2d 921, 923 (1943); Evans v. Ockershausen, 69 App.D.C. 285, 290, 100 F.2d 695, 700, 128 A.L.R. 273 (1938), Cert. denied, 306 U.S. 633, 59 S.Ct. 462, 83 L.Ed. 1034 (1939)
E. g., In re Estate of Kerr, 139 U.S.App.D.C. 321, 331-332, 433 F.2d 479, 489-490 (1970); Hyman v. District of Columbia, 101 U.S.App.D.C. 179, 182, 247 F.2d 585, 588 (1957); Costello v. Costello, 80 U.S.App.D.C. 75, 76, 149 F.2d 379, 380, Cert. denied, 326 U.S. 733, 66 S.Ct. 41, 90 L.Ed. 436 (1945)
Application of local law. In determining whether or not the conditions set forth in paragraph (a)(1) through (5) of this section are satisfied by the instrument of transfer, regard is to be had to the applicable provisions of the law of the jurisdiction under which the interest passes and, if the transfer is in trust, the applicable provisions of the law governing the administration of the trust. For example, silence of a trust instrument as to the frequency of payment will not be regarded as a failure to satisfy the condition set forth in paragraph (a)(2) of this section that income must be payable to the surviving spouse annually or more frequently unless the applicable law permits payment to be made less frequently than annually. The principles outlined in this paragraph and paragraphs (f) and (g) of this section which are applied in determining whether transfers in trust meet such conditions are equally applicable in ascertaining whether, in the case of interests not in trust, the surviving spouse has the equivalent in rights over income and over the property.
But while the estates and interests arising from a testamentary disposition are matters of local law, just what estates and interests are to be taxed and to what extent are matters governed by the federal tax laws. Helvering v. Stuart, 317 U.S. 154, 161-162, 63 S.Ct. 140, 144-145, 87 L.Ed. 154, 159-160 (1942); Morgan v. Commissioner of Internal Revenue, 309 U.S. 78, 80, 60 S.Ct. 424, 425-426, 84 L.Ed. 585, 588 (1940); 26 C.F.R. § 20.2056(b)-5(e) (1975).
See note 1, Supra (emphasis supplied). If we accepted the Commissioner's interpretation of the will, there would be no testamentary disposition of any income accumulated should Ms. Mittleman fail to exercise her power of appointment. To this extent, that interpretation collides with the constructional canon disfavoring intestacy where a testamentary disposition of the entire estate appears to have been made. Boys Club v. Keay, 115 U.S.App.D.C. 247, 248, 318 F.2d 218, 219 (1963); Warner v. Warner, 99 U.S.App.D.C. 80, 86, 237 F.2d 561, 567 (1956); Thropp v. Farnum, 96 U.S.App.D.C. 175, 178, 223 F.2d 640, 643, Cert. denied, 350 U.S. 923, 76 S.Ct. 212, 100 L.Ed. 808 (1955)
(A) . . . (T)he decedent had previously had prepared by other counsel, a will which he brought to me at the time of our initial discussions. The will was substantially in the same form as (his final will), but the decedent wanted certain changes made. As I recall, he wanted some changes made in the specific requests (Sic ) which are enumerated in the will, but primarily and most important, he wanted changes in the trustees named in the trust created by the will . . .
Northeastern Pennsylvania Nat'l Bank & Trust Co. v. United States, supra note 4, 387 U.S. at 221, 87 S.Ct. at 1578, 18 L.Ed.2d at 732. See also Estate of Tilyou v. Commissioner of Internal Revenue, 470 F.2d 693, 695 (2d Cir. 1972); Dougherty v. United States, 292 F.2d 331, 337 (6th Cir. 1961)
In Friedman v. United States, 364 F.Supp. 484 (S.D.Ga.1973), the court decided a similar case against the Commissioner on the basis of a Georgia statute requiring distribution of all trust income at least annually. Id. at 488. The facts of the case at bar, apart from the absence of similar legislation, are more favorable to the taxpayer than in Friedman, for here the record contains uncontroverted evidence of intent to qualify for the marital deduction. In this respect, the case is similar to Estate of James S. Todd, 57 T.C. 288 (1971). See also Guiney v. United States, 425 F.2d 145, 147 (4th Cir. 1970); Estate of Wycoff v. Commissioner of Internal Revenue, 506 F.2d 1144, 1152-1153 (10th Cir. 1974) (dissenting opinion), cert. denied, --- U.S. ---, 95 S.Ct. 2398, 44 L.Ed.2d 667 (1975). No such evidence was cited by the Friedman Court, although an assumption that people generally intend their estates to qualify was thought to be the reason for enacting the Georgia statute. Friedman v. United States, supra, 364 F.Supp. at 488
Service v. Dulles, 354 U.S. 363, 372-373, 77 S.Ct. 1152, 1156-1158, 1 L.Ed.2d 1403, 1409-1411 (1957); United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260, 74 S.Ct. 499, 98 L.Ed. 681 (1954); Bonita v. Wirtz, 125 U.S.App.D.C. 163, 167, 369 F.2d 208, 212 (1966); Borough of Lansdale v. FPC, 161 U.S.App.D.C. 185, 194, 494 F.2d 1104, 1113 (1974)
We deem the Commissioner's position untenable. The power is clearly general, see D.C.Code § 15-1002 (1973); it is subject only to the condition that it be exercised by will a characteristic of all testamentary powers and that circumstance does not embarrass the marital deduction sought by appellants. See 26 C.F.R. § 20.2056(b)-5(g)(ii) (1975). The authority of the donee of a power is effectively circumscribed only by restrictions that are clearly expressed, 3 Powell, Real Property P 398 at 378.40 (1974); Restatement of Property P 324 (1940), and here we perceive none affecting Ms. Mittleman's ability to make an appointment in favor of her estate. See Morgan v. Commissioner of Internal Revenue, supra note 30, 309 U.S. at 78, 60 S.Ct. at 426, 84 L.Ed. at 589; Clauson v. Vaughan, 147 F.2d 84, 85 (1st Cir. 1945); Commissioner of Internal Revenue v. Solomon, 124 F.2d 86, 88 (3d Cir. 1941).
In so deciding, we do not impinge upon the rule that findings of fact by the Tax Court must stand unless clearly erroneous. See Commissioner of Internal Revenue v. Duberstein, 363 U.S. 278, 290-291 & n. 13, 80 S.Ct. 1190, 1200 & n. 13, 4 L.Ed.2d 1218, 1228 & n. 13 (1960); Farcasanu v. Commissioner of Internal Revenue, 140 U.S.App.D.C. 398, 400-401, 436 F.2d 146, 148-149 (1970). Since the Tax Court predicated its decision exclusively upon its interpretation of the ninth paragraph of the will, its ruling was a legal interpretation, not a finding of fact. Commissioner of Internal Revenue v. Buck, 120 F.2d 775, 779 (2d Cir. 1941); Welsbach Eng'r & Management Corp. v. Commissioner of Internal Revenue, 140 F.2d 584, 586 (3d Cir.), Cert. denied, 322 U.S. 751, 64 S.Ct. 1261, 88 L.Ed. 1581 (1944). And to the extent that the court failed to consider the evidence extrinsic to the will, its error was equally one of law. Silverman v. Commissioner of Internal Revenue, 253 F.2d 849, 852 (8th Cir. 1958). We are completely comfortable in our conclusion as to the testator's intent, for the evidence is "so overwhelmingly one way as to leave no doubt as to the fact," Silverman v. Commissioner of Internal Revenue, supra, 253 F.2d at 852, and any other conclusion on this record would leave us "with the definite and firm conviction that a mistake has been committed." Commissioner of Internal Revenue v. Duberstein, supra, 363 U.S. at 291, 80 S.Ct. at 1199-1200, 4 L.Ed. at 1228, quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541-542, 92 L.Ed. 746, 765-766 (1948). See also 26 U.S.C. § 7482(c)(1) (1970); Sweeney v. District of Columbia, 72 App.D.C. 30, 32, 113 F.2d 25, 27, 129 A.L.R. 1370 (1940), Cert. denied, 310 U.S. 631, 60 S.Ct. 1082, 84 L.Ed. 1402 (1940); Hughes v. Commissioner of Internal Revenue, 451 F.2d 975, 977 & n. 5 (2d Cir. 1971)