Court Opinion

ID: 4631221
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:09:11.230866+00
Date Added: 2024-06-11T07:57:41.291100
License: Public Domain

APPEAL OF THE FARMERS' LOAN & TRUST CO. AND ISABELLE W. TILFORD, EXECUTORS, ESTATE OF HENRY MORGAN TILFORD, DECEASED.Farmers' Loan & Trust Co. v. CommissionerDocket No. 3286.United States Board of Tax Appeals3 B.T.A. 884; 1926 BTA LEXIS 2546; February 18, 1926, Decided Submitted July 3, 1925.  *2546  The New York State transfer tax held a legal deduction from the gross income of the estate during the period of administration.  Russell l. Bradford, Esq., for the taxpayer.  E. C. Lake, Esq., for the Commissioner.  SMITH *884  Before SMITH, JAMES, LITTLETON, and TRUSSELL.  This appeal involves a deficiency in income tax for the year 1920 in the amount of $198,716.09.  The question in issue is the right of the taxpayer to deduct from gross income for the taxable year $605,976.18, New York transfer tax paid during the year.  FINDINGS OF FACT.  Henry Morgan Tilford was a resident of Tuxedo Park, N.Y.  He died on December 3, 1919, leaving a will naming The Farmers' Loan & Trust Co. and Isabelle W. Tilford as executor and executrix, respectively.  An income-tax return was filed for the estate, for the year 1920, on or before the date specified for the filing of such return.  Subsequently, an amended return was filed for that year, showing gross income of approximately $580,623.68, and deductions of $163.58, representing interest paid, and $923,974.30 as estate, transfer, and inheritance taxes paid to the various States in which the testator*2547  owned property.  Of the amount so deducted, $605,976.18 was paid to the State of New York as transfer tax.  The books of the taxpayer were examined by a field agent of the Bureau of Internal Revenue, who reported the gross income of the estate at $580,720.62, and allowable deductions as follows: Interest, $163.58; amounts distributable to beneficiaries, $169,079.94; and transfer taxes paid to the States of Maryland, Pennsylvania, and Utah, in the amount of $14,166.01.  The amount paid as transfer tax to the State of New York was disallowed as a deduction.  The report of the revenue agent was accepted by the Commissioner in determining the deficiency here in question.  DECISION.  The determination of the Commissioner is disallowed.  *885  OPINION.  SMITH: The asserted deficiency in this appeal rests entirely upon the claim of the Commissioner that the New York State transfer tax is not an allowable deduction from gross income.  Both the courts and the Board have held otherwise.  ; *2548 ; ; .