Court Opinion

ID: 4485717
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:33:54.813403+00
Date Added: 2024-06-11T14:54:07.397949
License: Public Domain

SIMPSON, J., concurring in part and dissenting in part: I agree with the majority’s conclusions concerning the flower bonds and the includability in the estate of the gift taxes paid by the donees. I should like to add that, in my judgement, the conclusion that the gift tax is includable in the estate reflects a responsible effort to carry out the legislative objective. Tax legislation is generally carefully drafted, and the complex procedures for enacting such legislation provide many opportunities for perfecting it; nevertheless, oversights do occur, and in my judgment, it is the proper role and responsibility of a court to assist Congress by filling in the niches where possible. In our scheme of Government, Congress has been assigned the responsibility for making policy, and once it has exercised its authority and declared a policy, it then becomes our responsibility to carry out that policy. There can be no genuine doubt over the result intended by section 2035. If we do not hold that the gift tax paid by the donees is includable in the estate, it will simply be necessary for Congress to enact further legislation to achieve its objective. I must, however, disagree with the majority’s conclusion with respect to the deductibility of the claim for income taxes. In my opinion, that conclusion is inconsistent with the established precedents of this Court, and there is no reason for departing from those precedents. In Ithaca Trust Co. v. United States, 279 U.S. 151 (1929), the Court had to decide how to treat a claim for a life interest: should the claim be valued on the basis of the mortality tables, or should the Court look to the events that occurred after the death of the decedent. The Court held that the claim was to be valued by reference to the mortality tables and without regard to the events that actually occurred. In Estate of Hagman v. Commissioner, 60 T.C. 465 (1973), affd. per curiam 492 F.2d 796 (5th Cir. 1974), this Court had to decide whether, for estate tax purposes, a claim was to be allowed when the creditor failed to file a claim in probate and thereby allowed the debt to lapse. We relied upon the events after death and held that the claim was not allowable for estate tax purposes. Similarly, in Estate of Courtney v. Commissioner, 62 T.C. 317 (1974), this Court held that a deduction was not allowable merely because there was a contingent claim against the estate on a mortgage. In Estate of Theis v. Commissioner, 81 T.C. 741 (1983), affd. 770 F.2d 981 (11th Cir. 1985), we again took into consideration the events after death and held that a debt was not deductible for estate tax purposes because the creditor had allowed it to lapse under local law. This Court grappled with the distinction between these cases in Estate of Van Horne v. Commissioner, 78 T.C. 728 (1982), affd. 720 F.2d 1114 (9th Cir. 1983), and suggested that when the issue involves the valuation of a claim by reference to mortality tables, post-death events are not considered, but when the issue involves the enforceability of a disputed or contingent claim, post-death events are taken into consideration. In the present case, the majority has ignored that distinction. Here, the claim for the income tax liability was disputed at the time of the decedent’s death. Later, as a result of the Supreme Court’s decision in Diedrich v. Commissioner, 457 U.S. 191 (1982), the liability became fixed, and clearly a deduction for that liability was allowable, at that time, in computing the estate. However, still later, Congress decided to refund the taxes paid. Obviously, the statute of limitations had not run so that the computation of the estate tax liability was still open. The estate had been allowed a deduction for taxes, but those taxes had been refunded to it. Thus, it had both the deduction and the money for which the deduction had been allowed. To allow a deduction for a claim which was not required to be paid is, in my opinion, clearly inconsistent with our decisions in Estate of Hagmann, Courtney, and Theis. JACOBS and Wells, JJ., agree with this concurring and dissenting opinion.