Court Opinion

ID: 8537051
Source: CourtListenerOpinion
Date Created: 2022-11-23 11:07:29.981144+00
Date Added: 2024-06-11T16:52:04.523892
License: Public Domain

Mr. Justice Negrón Fernández,
with whom Mr. Justice Marrero and Mr'. Justice Pérez Pimentel join,
concurring.
The question for decision in this appeal is precisely the one which we left pending consideration in the case of Blanco v. Tax Court, 72 P.R.R. 799,1 809: Whether - an estate, as such, is entitled to deduct from the income accrued during the period of administration and settlement of the estate left at the time of the ancestor’s death, the payment of the inheritance tax imposed on the heirs.
The fact having been established in this case that the inheritance tax was paid by the Estate of Tristán L. Luchetti *136Aeosta out of the income received by the Estate as rents from the inheritance estate during the period of administration and settlement, as well as the fact that the income tax return corresponding to its taxable year was filed by the Estate-on the basis of the income received that year, we agree with the petitioner and with the trial court that the Estate was-entitled to deduct from its gross income for the taxable year 1946-47 the tax it paid to the Public Treasury on the undivided inheritance of the deceased.
An estate, by virtue of § 20(a) (3) of the Income Tax Act of 1924, as amended — which is the applicable law — is bound to declare the income received during the period of administration or settlement of the property of decedents, and its net income should be computed pursuant to § 20 (6),. “in the same manner and on the same basis as provided in section 14,” with some exceptions not pertinent here. For the purpose of said Act an estate is, therefore, a “taxpayer”,, which term pursuant to § 2(a) (9), means “any person subject to a tax imposed by this Act”. The term “person” pursuant to § 2(a) (1), means “an individual, a trust or estate, a civil or mercantile, an industrial or agricultural partnership, or a corporation.” (Italics ours.)
An estate (sucesión) has no existence as an artificial person under our civil law, Heirs of Belaval v. Acostay, 64 P.R.R. 104, but it does exist as a “person” in our tax law. The tax personality which the law attributes to it flows precisely from the undivided condition of the inheritance during its administration and settlement. This is a reality of the civil law which the tax law confronts in order to levy a tax on the incomes which belong to the heirs since the ancestor’s death, before it comes to their hands and of which they cannot dispose.
Since the tax law itself acknowledges the personality of an estate as a subject of taxation and since § 20(6) provides, as we have seen, that the net income of an estate for *137the purpose of said Act shall be computed in the same manner and on the same basis as provided in § 14 for computing the net income of individuals, that is, “the gross income as defined in section 15, less the deductions allowed by sections 16 and 9,” then we must conclude that the estate is entitled to deduct from its gross income the inheritance tax paid within the taxable year, for this is a tax and the .same is not excluded from the deductions allowed under § 16(a) (3) of the law2 to individuals, and therefore, to estates. State ex rel Davis v. State Bd. of Equalization (Mont. 1937) 64 P. 2d 1057, 108 A.L.R. 1397, 1401.
Although the inheritance tax is cast upon the heirs3 —§ 2, Act No. 99 of August 29, 1925, as amended, also applicable to the ease at bar — the administrators, executors, fiduciaries or any other persons who administer the property subject to said taxation being liable for the payment thereof — § 9 — the truth is that in the light of their obligation which renders them legally liable for such taxes, and the consequences which the law itself establishes as to the .reception and enjoyment of the property by the heirs, the payment of the inheritance tax made out of undivided funds of the Estate — the rents yielded by the inheritance estate — ■ ■even if viewed in connection with an obligation imposed by law directly on the heirs, is just as much a legal obligation to be discharged by the administrator, and once he has done *138so it should benefit the Estate as a taxable entity which is. bound to declare the income belonging to the heirs and which, it has received during such period.
Section 16(a) (3) authorizes the deduction of taxes paid or accrued within the taxable year, without stipulating any condition. Although the general rule is that taxes may be-deducted as such only if they represent a liability of the taxpayer who pays them, and that the voluntary assumption of the tax liability of another does not give rise to a deductible item, 5 Mertens, Law of Federal Income Taxation, sec. 27.02, pp. 6 and 7, it is also part of that rule that personal liability is not always a prerequisite to a deduction for-said payment of taxes. 5 Mertens, op. and sec. cit., p. 8,, n. 26. Here, the tax liability, (inheritance tax) is imposed, on a person (heir) and the law itself, in the alternative, allows — rather demands — its payment by another (the estate), with whom the first has a juridical nexus by-virtue of which the latter acquires its taxable personality.. This is a typical case to apply the rule that the omission of' the requisite of the personal liability does not bar the deduction for which the payment is made.
The criterion which should govern as to the right of an. estate to deduct from the gross income declared in its income tax return the inheritance tax already paid, is not that the tax is not imposed on the estate but on the heirs, but the-inherent juridical nexus existing between the taxable entity estate and the heirs constituting it, in connection with the-state of transitory community in which the forced payment, of the inheritance tax is made, and the identical state of community in which the deduction is claimed after the-estate, as a taxable entity, fulfills its legal obligation of paying a tax on the income of the members of the estate during-the period of administration and settlement of the inheritance.
For the foregoing reasons, I concur in the result.

 In Hernandez v. Tax Court, 73 P.R.R. 659, 668, 669 (on reconsideration) we overruled the following dictum in the Blanco case: “Since the burden of the inheritance tax falls in this case on the minor daughters, they alone were allowed to deduct it from their income.”

 Pursuant to said section the following deductions are allowed: '“Taxes paid or accrued within the taxable year except (A) income and excess profits taxes imposed by the authority of The People of Porto Rico, (B) . . . (C) . . . (D) . . . For the purpose of this paragraph, inheritance, legacy, and succession taxes accrue on the due date thereof except as otherwise provided by the law of the country imposing such taxes;”.

 Construing the Federal Income Tax Act of 1924, from which our .Act of 1924 is an outgrowth, the Federal Bureau of Income Tax frequently •denied the admissibility of deductions to the Estates for payments of inheritance tax made under state laws on the theory that such tax was imposed on the heirs, legatees or beneficiaries and that it was deductible by them. The decisions of Keith v. Johnson, 271 U. S. 1, 70 L. Ed. 795 and United States v. Mitchell, 271 U. S. 9, 70 L. established a contrary rule, 5 Mertens op. cit. sec. 27.45, p. 56.