Court Opinion

ID: 4615628
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:32:45.413827+00
Date Added: 2024-06-11T07:54:58.724515
License: Public Domain

MOSES E. GREENEBAUM, EXECUTOR, ESTATE OF EMMA E. GOODMAN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Greenebaum v. CommissionerDocket No. 10124.United States Board of Tax Appeals12 B.T.A. 823; 1928 BTA LEXIS 3452; June 25, 1928, Promulgated *3452  The value of certain securities involved herein owned by the decedent at the date of her death held to be a proper deduction in determining her net estate subject to the Federal estate tax, under section 403(a)(2) of the Revenue Act of 1921.  Sylvanus G. Levy, Esq., for the petitioner.  J. Harry Byrne, Esq., for the respondent.  MARQUETTE *823  This proceeding is for the redetermination of a deficiency in estate tax in the amount of $3,151.18.  The facts are stipulated by the parties and we find them to be as follows: FINDINGS OF FACT.  Elias Greenebaum (sometimes herein referred to as the "prior decedent"), the father of Emma E. Goodman, deceased, died on July 25, 1919, a resident of Chicago, Ill., leaving an estate located in Chicago upon which a Federal estate-tax return was duly and properly filed in accordance with the Federal estate-tax law, with the collector of internal revenue at Chicago, Ill., and an estate tax at the proper legal rate was paid thereon.  Elias Greenebaum had on August 29, 1918, prior to his death, made a gift of all of his personal property, consisting of bonds, mortgages and other securities, share and share*3453  alike, to his four children, of whom Emma E. Goodman, the decedent herein, was one.  All of said property was located in Chicago, Ill.  In May, 1919, he also conveyed to a trustee certain real estate in which he then gave Emma E. Goodman a one-fourth interest.  The Federal estate-tax return filed by the executor of the estate and of the will of said Elias Greenebaum, for his estate, included all *824  of the foregoing securities and real estate as a transfer in contemplation of his death, and included it in his gross estate, and a Federal estate tax at the proper and legal rate was duly paid thereon by or on behalf of his estate, in accordance with the Federal estate-tax law relating thereto.  Emma E. Goodman who was a resident of Chicago, Ill., died on July 1, 1923, leaving an estate upon which a Federal estate-tax return was made by the petitioner, Moses E. Greenebaum, who was and is the executor of the estate and will of said Emma E. Goodman, deceased.  The death of Emma E. Goodman was within five years of the death of Elias Greenebaum, and within five years of the receipt of said gift by her from him.  The value of the total gifts of securities and real estate (in*3454  trust as aforesaid) made by Elias Greenebaum to Emma E. Goodman, deceased, was determined by the Commissioner in determining the value of the gross estate of said prior decedent, to be the sum of $151,701.40, and a Federal estate tax on Elias Greenebaum's estate was paid by his executors upon said valuation.  Of the foregoing property received by Emma E. Goodman from her said father, she converted into cash and spent during her lifetime time the sum of $8,064.85, leaving $143,636.55 of said property.  Of the latter amount of $143,636.55, the said real estate, and also securities aggregating in total (including her interest in said real estate) the value of $45,464, were on hand in the possession of Emma E. Goodman at her death (and formed a part of her gross estate) in the identical form in which she received the same from the said prior decedent as aforesaid, and which amount the parties hereto agree is deductible in determining the Federal estate tax on Emma E. Goodman's estate as being a part of her gross estate identified as taxed in the estate of the prior decedent.  The balance of said $143,636.55 of property after deducting $45,464 of property, i.e., $98,172.55 of securities*3455  (which were securities received by Emma E. Goodman as a gift from the prior decedent as aforesaid, and which was the value placed by the Commissioner on said securities in determining the value of the gross estate of said prior decedent), was during the lifetime of Emma E. Goodman by her converted into $98,172.55 of cash by collecting or selling the said securities respectively, and the said cash received from each security was invested by her within a reasonable time in new securities valued at $98,172.55, all of which new securities were on hand at Emma E. Goodman's death as a part of her gross estate and were included at the value of $97,488.17, as part of her gross estate in her said Federal estate-tax return.  *825  The said $98,172.55 of new securities was found by the investigating Federal revenue agent and the Commissioner to be of the value of $97,488.17 at Emma E. Goodman's death, and the parties to this proceeding have agreed that they shall be valued at the amount of $97,488.17 in computing the Federal estate-tax on Emma E. Goodman's estate, and that $97,488.17 is the amount at which said new securities on hand at her death were included in her gross estate in her*3456  Federal estate-tax return.  Neither the value of said original securities or of the new securities was deducted under paragraph (1) or paragraph (3) of subdivision (a) of section 403 of the Federal estate tax law or Revenue Act approved November 23, 1921 (or the corresponding provision of any such law applying to this case), in computing the net estate of either Emma E. Goodman or the prior decedent.  The Commissioner of Internal Revenue on October 25, 1925, mailed a deficiency letter dated October 20, 1925, addressed to Moses E. Greenebaum, Executor, as aforesaid (which the executor received), and that said letter found and stated and determined a deficiency tax of $3,151.18 in the tax on said estate, based on the tax return for said estate filed for the Federal estate tax, from which deficiency and determination the petitioner is appealing herein.  The executor, Moses E. Greenebaum, of the estate of Emma E. Goodman, deceased, made a Federal estate-tax return upon her estate approximately during the month of December, 1924, and a Federal estate tax of $1,144.60 was calculated and shown to be due on said return and was paid thereon to the proper Federal authorities as required*3457  by the Federal estate-tax law in regard thereto.  The parties hereto have agreed that in calculating the Federal estate tax due and payable on the estate of Emma E. Goodman, deceased, her gross estate shall be taken as being of the value of $330,080.22; that deductions to be made therefrom for the purpose of determining her net estate for tax are as follows: Funeral expenses$696.50Executor's fee5,000.00Attorney's fee5,000.00Debts7,125.29Charitable bequests5,000.00Specific exemption50,000.00Property in her estate identified as being the same property she received from her deceased father, Elias Greenebaum, and on which a tax was paid by his estate; same being valued at not exceeding the value placed thereon by the Commissioner in determining the value of the gross estate of the prior decedent and not exceeding the value thereof included in decedent's gross estate and fixed by the Commissioner, in taxing the Emma E. Goodman estate, all as hereinabove set forth; deductible at45,464.00Total of foregoing118,285.79*826  Of the gross estate of Emma E. Goodman, deceased, shown on her Federal estate-tax return and not included*3458  in the foregoing deductions, she had on hand at her death $97,488.17 of new securities purchased with cash, which said cash was derived from the sale or collection of securities received by her from the prior estate (being so purchased, respectively, within a reasonable time after the sale or collection of said respective securities), all as hereinabove in these stipulations stated.  The parties hereto have also stipulated that if the contention of the petitioner is upheld and sustained by this Board, the deduction that should be determined as being the value of the property received from such prior decedent or which can be identified as having been acquired in exchange for property so received, should be the sum of $45,464 and $97,488.17, or a total of $142,952.17; that there will then be a total deduction for all purposes of $215,773.96; that the total gross estate of Emma E. Goodman in $330,080.22, and the net estate for tax is, therefore, $114,306.26, and that the - Federal estate tax upon this net estate is$1,786.13Tax already paid1,144.60Deficiency in tax would be341.53If the contention of the respondent herein is upheld and sustained by this Board, *3459  then the total gross estate is $330,080.22, and the total deductions are $118,285.79, leaving a net estate for tax of $211,794.43, upon which the - Tax is$4,353.83Tax already paid1,144.60Deficiency in tax2,909.23OPINION.  MARQUETTE: The only question presented by the record in this proceeding is whether the amount of $97,488.17, representing the value of certain securities acquired by Emma E. Goodman under the circumstances set forth in the findings of fact and owned by her at the time of her death, should be deducted in determining her net estate subject to the Federal estate tax under section 403(a)(2) of the Revenue Act of 1921, which provides: SEC. 403.  That for the purpose of the tax the value of the net estate shall be determined - (a) In the case of a resident, by deducting from the value of the gross estate - * * * (2) An amount equal to the value of any property forming a part of the gross estate situated in the United States of any person who died within five *827  years prior to the death of the decedent where such property can be identified as having been received by the decedent from such prior decedent by gift, bequest, devise, *3460  or inheritance, or which can be identified as having been acquired in exchange for property so received: Provided, That this deduction shall be allowed only where on estate tax under this or any prior Act of Congress was paid by or on behalf of the estate of such prior decedent, and only in the amount of the value placed by the Commissioner on such property in determining the value of the gross estate of such prior decedent, and only to the extent that the value of such property is included in the decedent's gross estate and not deducted under paragraphs (1) or (3) of subdivision (a) of this section.  This deduction shall be made in case of the estates of all decedents who have died since September 8, 1916.  We do not think that an extended discussion of either the facts or of the law applicable thereto is necessary.  The facts are strikingly similar to, and the issue identical with the facts and issue, respectively, in , and our decision therein is decisive of, and controlling in this case.  See also, *3461 . Upon the authority of those cases we resolve the issue here in favor of the petitioner, and hold that in computing the estate of the decedent subject to the Federal estate tax, the item in controversy should not be included therein. Judgment will be entered under Rule 50.