Court Opinion

ID: 4619585
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:40:55.766803+00
Date Added: 2024-06-11T07:55:40.383001
License: Public Domain

JOSEPH SIMON, LATE EXECUTOR, ESTATE OF ANNA M. MAXWELL, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Simon v. CommissionerDocket No. 2732.United States Board of Tax Appeals9 B.T.A. 84; 1927 BTA LEXIS 2669; November 14, 1927, Promulgated *2669  Petitioner, formerly executor of estate of decedent, is liable for estate tax regardless of his discharge as such executor, and in determining the amount of the tax, property situate in a jurisdiction foreign to that granting letters testamentary may properly be included in the gross estate.  Joseph Simon, Esq., pro se.  Warren F. Wattles, Esq., for the respondent.  ARUNDELL*84  Proceeding for the redetermination of a deficiency in estate tax under the Revenue Act of 1921 in the amount of $87.58.  The petition alleges error in the action of the respondent in asserting a deficiency against an executor appointed by an Oregon court in respect of real property situate in the State of Washington.  The petition was amended to allege that the real estate in controversy was sold by decedent's heirs and offering to pay a tax based on the sales price as the value of the property.  FINDINGS OF FACT.  Anna M. Maxwell died September 7, 1923, a resident of Portland, Oreg.  On October 11, 1923, petitioner was appointed executor of decedent's estate by the Circuit Court of Multnomah County, Oreg.  *85  At the time of the death of decedent she owned*2670  certain real estate in Moore's addition to the City of Spokane, Wash., described as follows: Fractional lots, 1, 2 and 3 in block 4; Fractional lots 5 and 6 in block 9; Fractional lots 2, 3, 4 and 5 in block 21; All of lots 8 and 9 in block 21; All of lots 1 and 2 in block 12; North 60 feet of lots 11 and 12 in block 12; South 40 feet of lots 5 and 6 in block 18.  During decedent's lifetime, a friend, one Joseph T. Peters, made several unsuccessful efforts to dispose of the real estate for her.  There were some assessments or liens in undisclosed amounts against the property.  In an appraisal of decedent's estate filed in October, 1923, by the appraisers appointed by the Circuit Court of Multnomah County, the real estate above described was not listed nor was any reference made to it.  By order of the Circuit Court dated May 23, 1924, the final account of petitioner was approved and he was discharged as executor of the estate.  There was included in the order approving the final account a written agreement among the heirs agreeing to an equal distribution of the Spokane real estate.  The final account of the executor showed cash on hand in the amount of $7,911.50*2671  and a number of stocks and bonds.  During the period that petitioner served as executor of decedent's estate he filed a Federal estate-tax return and paid the tax disclosed thereby.  The respondent added to the gross estate as returned an amount not disclosed by the record as representing the value of the Spokane real estate.  By reason of such addition, respondent determined a deficiency in the amount of $87.58 and notified the petitioner thereof by letter dated February 16, 1925, which letter contained the following statement: No adjustment is made of real estate located in Spokane, Washington, as a further investigation discloses that the value of this property, as set out in Bureau's tentative audit dated July 31, 1924, is correctly determined.  The protest is accordingly denied.  OPINION.  ARUNDELL: Petitioner questions the right of respondent to enforce a deficiency in the estate tax of decedent against him after his discharge as executor.  The Revenue Act of 1921 places upon the executor of the estate of a decedent the duties of notifying the Federal Government of his *86  appointment, of filing the estate-tax return, and of paying the estate tax.  Sections 404*2672  and 406.  By section 407 it is provided: If the executor files a complete return and makes written application to the Commissioner for determination of the amount of the tax and discharge from personal liability therefor, the Commissioner, as soon as possible and in any event within one year after receipt of such application, shall notify the executor of the amount of the tax, and upon payment thereof the executor shall be discharged from personal liability for any additional tax thereafter found to be due, and shall be entitled to receive a receipt or writing showing such discharge.  As far as the record shows the petitioner made no effort to secure a discharge of his liability for the tax by the method described by section 407, and it is inconceivable that an executor by hastening administration and ignoring the prescribed means of absolution from liability can evade any tax liability.  . In the recent case of , the court discusses the liability of executors in the following language: All the Revenue Acts provide that the executor*2673  shall pay the tax.  This establishes a direct and primary liability upon him which is necessarily personal.  By Section 3467 of the Revised Statutes, any executor who pays any debt due by the estate before he satisfies debts due the United States becomes answerable in his own person or estate to the United States.  The limitation provided by Section 407 of the Revenue Act of 1918 (1921?) was designed to terminate this personal liability after the Commissioner had finally fixed or had had reasonable time and opportunity to finally fix the amount of tax due.  The second point raised by petitioner is that as his appointment as executor was made by an Oregon court his possession and control of decedent's property were limited to the boundaries of that State and he therefore can not be charged with a tax liability arising from property situate in the State of Washington.  We agree that the Oregon letters testamentary have no extraterritorial force.  The estate tax act, however, does not tax property as such but is an excise on the transfer of the net estate of a decedent. *2674 ; ; . The property itself is only a means of measuring the value of the net estate, the transfer of which is taxed.  It is upon this principle that the law imposing the Federal estate tax looks primarily to the domiciliary representative of a decedent, and not to a number of ancillary representatives, for a return listing the "* * * value * * * of all property * * * wherever situated." Executors are presumed to know the requirements of law regulating the return which they are required to make.  ; 5 Am.Fed. Tax Rep. 5935, 5940. *87  We do not have here any question as to whether the domiciliary representative might be liable for tax in excess of the amount of funds or property coming into his hands, as the final account filed with the probate court shows cash on hand far exceeding the tax liability.  We are without competent evidence as to the value of the Washington real estate and the value placed thereon by respondent must accordingly be allowed to*2675  stand as found by him.  After issue was joined petitioner filed an amended petition alleging that the real estate in controversy was sold in the current year by decedent's heirs, and setting forth his willingness to pay a tax measured by the amount received on such sale.  Respondent denied the averments of the amended petition and no proof thereof was offered.  Judgment will be entered for the respondent.Considered by STERNHAGEN and GREEN.