Court Opinion

ID: 4495120
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:09.774249+00
Date Added: 2024-06-11T15:04:02.563988
License: Public Domain

Black,
dissenting: I dissent from the conclusion reached by the majority on the first point.
I believe we were in error in the rule which we laid down in William Huggett, 24 B.T.A. 669, and that case should no longer be followed. I think the Court of Appeals of the District of Columbia, in Huggett v. Commissioner, 64 Fed. (2d) 705, was right wherein it held in substance that the basis of property acquired by a remainder interest under a will, upon the death of the life tenant, is the value of the property at the date of the death of the testator or where death of the testator occurred prior to March 1, 1913, the value on that date may be used; and that the Board of Tax Appeals was in error in holding that the value of the property on March 1, 1913, should be reduced by the value of the estate of the life tenant.
It may be stated also in support of this view that the Board, in Farley Hopkins, 27 B.T.A. 845, and in Isabel Richardson Molter, 27 B.T.A. 442, held that under the provisions of the testator’s will the taxpayer received a vested remainder interest and that the date of acquisition of the property sold in the tax years was the date of the death of the testator and that the basis for gain or loss was the value of the property at the time of the testator’s death.
We said nothing in either case about reducing the value of the property by the life estate which was imposed upon it. Apparently that issue was not raised in either case. We followed the same rule laid *1362down in Rodman E. Griscom, 22 B.T.A. 979. Our decisions in both of these latter cases have been affirmed and in affirming us in Hopkins v. Commissioner, 69 Fed. (2d) 11, the court cited with approval the opinion of the Court of Appeals of the District of Columbia in Huggett v. Commissioner, supra, reversing the Board.
So in view of these facts I think the weight of authority is that, in such facts as we have in the instant case, the basis for gain or loss is the value of stock at the time of the testator’s death, and if this event occurred prior to March 1, 1913, and the value at the time of the testator’s death is greater than the value on March 1, 1913, then the former figure becomes the basis for figuring gain or loss on a sale. Such seems to be the contention of the petitioner in the instant case as to the bonds of the Manitou & Pikes Peak Railway Co. They were of greater value at the time of testator’s death than on March 1, 1913.
It seems to me that petitioner is right in her contention as to the basis of loss on these bonds and should be sustained on that point.
MaRquette, Matthews, and Leech agree with this dissent.