Court Opinion

ID: 9455306
Source: CourtListenerOpinion
Date Created: 2023-08-04 19:18:14.54664+00
Date Added: 2024-06-11T17:34:32.810765
License: Public Domain

MOORE, Circuit Judge
(dissenting):
This case involves an important question in the field of federal-state relationships and in the treatment of inheritance taxes as levied by each political entity. Since, as the majority say, “There is virtually no authority to guide us,” the best approach would seem to be to attempt to decipher the purpose of the law.
The section (Sec. 2011) is clear enough. It deals with a “CREDIT FOR STATE DEATH TAXES,” and provides that the federal tax shall be credited “with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any State, * * * in respect of any property included in the gross estate *43* * There is no factual dispute that the estate “actually paid” to Connecticut a tax of $69,422.88 on a trust, which was part of the estate. The same trust, however, because of a different federal approach (remote reversionary interest of decedent less than 5%) was not subjected to a federal tax. For this reason, the statutory credit has been disallowed by the Internal Revenue Service on the theory that since no federal tax has been assessed against the trust the state tax thereon cannot be credited against the federal tax.
The Tax Commissioner of Connecticut filed a brief as amicus curiae because as he asserts “Connecticut is vitally interested in the outcome of this litigation insofar as it pertains to the correct interpretation of section 2011(a) because there is involved not only a potential loss of a substantial sum of money but a serious question of constitutionality and Federal and State relations.”
As related to the tax in question here, it appears that Connecticut has a theory of taxation of joint survivorship which is different from federal theory. This raises the fundamental question as to whether in order to obtain a credit for state taxes it is essential that each of the properties which give rise to the state tax also are taxable by the federal government.
There is nothing in section 2011(a) which either expressly or inferentially makes it a condition of the state tax credit that the same property be taxed by the federal authorities. Here the decedent’s reversionary interest in the trust was definitely a part of his gross estate. The fact that a difference in taxing rates or legal principles exists between state and federal governments in connection with specific properties comprising the estate should not affect the allowance of the credit. Nothing in the statute requires that each item be compared with respect to state and federal taxing policies and the credit allowed only if there'is a corresponding tax.
To me the issue is syllogistically clear. The statute says that a federal credit shall be given for state taxes paid with respect to property included in the gross estate. The property was in the gross estate (even though for federal reasons not taxed). The state tax was actually paid. Ergo, the statutory credit should be allowed. Regulations to the contrary do not overcome statutes. There well may be “virtually no authority to guide us.” Therefore, I would be guided by the belief that when the Congress wished to give a credit for state taxes paid, it meant what it said.
I would affirm the judgment.