Court Opinion

ID: 8727877
Source: CourtListenerOpinion
Date Created: 2022-11-26 09:23:58.547852+00
Date Added: 2024-06-11T16:59:27.444267
License: Public Domain

LARAMORE, Judge.
I respectfully dissent for the following reasons:
If either the issue of possibility of re-verter or contemplation of death alone was sufficient to require the inclusion of the entire value of the trust corpus in decedent’s gross estate, it is, therefore, the task of this court to decide what issue or issues were the basis of the settlement. If the contemplation of death issue alone, or the contemplation of death and possibility of reverter by operation of law issues together were the basis of the settlement, we should hold against plaintiff. If only the possibility of reverter by operation of law issue was the basis of the settlement we should hold for the plaintiff on the authority of section 7 of the Technical Changes Act of 1949, and plaintiff would be entitled to the entire amount claimed. I believe it is impossible to split the amount of the judgment among the respective issues, that is, to determine that a certain percentage of the stipulated amount was paid because of the possibility of reverter issue and a certain percentage paid because of the contemplation of death issue. If this were done, the concession of the existence of the contemplation of death issue would necessarily bar the plaintiff from any recovery as that issue alone is capable of requiring the inclusion in the gross estate of the entire transfer in question. Once the contemplation of death question is shown to have existed and to have been a basis for the settlement, whether or not the only basis, any taxes paid as a result thereof were correctly levied and cannot be recovered in this action. This is so, notwithstanding the amendment to section 811(c), because of the issue’s singular capability of including the entire trust corpus in gross estate. The amendment to section 811(c) provides only for a refund of taxes when paid by virtue of the inclusion in gross estate of property transferred by the decedent in which there exists a possibility of re-verter by operation of law to decedent.
As stated above, it is impossible to split a judgment among the various issues when either of the issues alone is sufficient to require the inclusion of the entire value of the transfer in question in the gross estate. To allocate a judgment among the issues in that fashion it would be necessary to say that the judgment represents the total value of the prospective strength of the respective issues on trial; or to put it differently, a total of the proportionate value of the two issues. A tax judgment or settlement, however, does not represent such an evaluation. It is the settlement of a tax deficiency; and its payment represents not a payment of the value of issues on trial but a payment of the tax deficiency which was based on the inclusion in gross estate of certain property which could not have been so included and taxed without statutory authority. The additional tax arises because of the increase in value of the gross estate and not because of a determined value of the respective issues. Imposition of a tax on the later basis would be illegal as the statutes do not authorize it.