Court Opinion

ID: 6866950
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:55:56.735711+00
Date Added: 2024-06-11T16:05:20.414195
License: Public Domain

WILBUR, Circuit Judge
(concurring).
I concur in reversing the decision of the District Court but for reasons which are not in entire accord with what is said in the main opinion.
It is clear from the provisions of section 800 of the Revenue Act of 1926 that the transfer of the right to receive the stock, which accrues under the law of California at the-time of the death of the decedent, imposes a stamp tax upon such a transfer. Consequently, the appellee has no right to recover the money which was thus paid. The statute having provided for the tax the regulations of the Treasury Department could not relieve the transferee of the obligation imposed by the statute. These regulations did not purport to do so. The regulation, article 34, Treas. Regulations 71, subd. M, make the tax applicable upon the transfer in pursuance of a be quest which is in accord with the statutorj requirement that such a transfer be taxed. The other regulations are evidently adapted to the situation which occurred in those states where the personal property of tht decedent vests in the administrator or executor in the first instance and is transferred by him to the heir or legatee. Ii, such cases it is provided that the transfer of the certificates of stock by the administrator or executor to the legatee or distributee is taxable (article 34, Regs. 71, subd. O), and to avoid double taxation it is provided in article 35 of the Regulations that there is no transfer tax when the property is transferred by the death of the decedent to the executor or administrator. This is transfer by operation of law, and is so designated by subdivision Q of the same article 35, which refers to transfers “resulting wholly by operation of law,” and indicates as an example the transfer of the stock from the decedent to executors. This provision of the regulations is applicable only to those states in which the personal property passes by operation of law to the executor or administrator and by transfei from the executor or administrator to the distributee. The argument that the transfer of the right to receive the stock from the decedent to the legatee or distributee, as occurs in California, is not taxable because of the fact that the transfer occurs in a sense by operation of law, entirely overlooks or misconceives the obvious purpose of this regulation which, so far as it applies to stock passing from the decedent, is applicable only to those states in which the title passes through the executor or administrator wherein it is provided by the regulations of the Treasury Department that the tax is to be collected upon the latter transfer to the legatee or distributee and not upon the first transfer to the personal representatives. There are, of course, many other situations in .which property may pass by operation of law, as, for instance, in cases of bankruptcy.
I conclude, first, that the statute makes the transfer from the decedent to the legatee in California taxable; second, that the regulations could not in the teeth of the statute make such a transfer nontaxable; third, that the regulations expressly provide for such tax in accordance, with the Revenue Act, and that, rightly construed, the exception contained in the regulations with relation to the property passing by operation of law has no application, to a bequest in California. For these reasons the judgment should be 'reversed.
MATHEWS, Circuit Judge.
I concur with Judge WILBUR.