Court Opinion

ID: 9636260
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:21:57.216598+00
Date Added: 2024-06-11T18:09:43.562429
License: Public Domain

*72SIBLEY, Circuit Judge
(dissenting).
Concerning the deduction for claims against an insolvent estate, it seems to me the Commissioner is right and the courts thus far are wrong. It is true that the words of the act are to be followed rather than some supposed intent not expressed by them, but I think the words of this act have not been observed'nor their true sense applied. In Commissioner v. Strauss (C.C.A.) 77 F.(2d) 401, no quotation of the statute was made and no argument put forth on the present question. The holding really was (page 405) only that a claim against the estate need not have been formally allowed by the probate court or paid by the administrator in order to be deducted. It cites only the case of United States v. Mitchell (C.C.A.) 74 F. (2d) 571, in which the court seriously misquotes (page 574) not only the Revenue Act of 1926 but those preceding it as providing for deduction of “claims against the estate.” The majority opinion here, though correctly quoting the statute, seems to regard it as authorizing deduction of “allowed claims against the estate” in the sense of proved claims. But Congress has been careful to say neither thing. The words in the Revenue Act of 1916, § 203, and in each act since, are that there shall be deducted “such amounts for * * * claims against the estate * * * as are allowed by the laws of the jurisdiction,” etc. The claims although proved or “allowed” in that-sense are not to be deducted, but such amounts as the local law allows for them from the estate. The administrator or executor is required to compile a return touching this tax, and in order to fix the deductions he must marshal his estate and see what the law of his administration allows for each deductible item. He cannot deduct for funeral expenses or expenses of administration what he may have spent or desires or intends to spend for them, but only such amounts as the law allows for them. So-also as to debts of the decedent which are claims against the estate. These always may be proved for their full, true amount, and if the estate is solvent the laws allozos for them their full amount in settling the estate, but if the estate be insolvent the law usually does not allow payment of any common claim in full but requires that such claims as have priority be first provided for, and that the remainder of the estate be prorated among the common claims. The law of Texas thus disposes of the present estate. The representative, since the estate is insolvent, must ascertain a percentage to be paid pro rata on the common claims. The amounts so arrived at are the “amounts allowed for” them by the law of the administration. Under the carefully chosen words of the Congress, these amounts only are deductible. The representative can deduct only what he is allowed by law to pay these creditors. The entire gross estate which goes to others than creditors is taxed. This is the true purpose of the act and the true meaning of its words.