Tyson v. Commissioner of Internal Revenue, 11997.
| Decision Date | 28 April 1954 |
| Docket Number | No. 11997.,11997. |
| Citation | 212 F.2d 16 |
| Parties | TYSON v. COMMISSIONER OF INTERNAL REVENUE. |
| Court | U.S. Court of Appeals — Sixth Circuit |
John B. Poole, Detroit, Mich., for petitioner.
Fred Youngman, Washington, D. C. (H. Brian Holland, Ellis N. Slack, A. F. Prescott, George F. Lynch, Washington, D. C., on the brief), for respondent.
Before ALLEN and McALLISTER, Circuit Judges, and GOURLEY, District Judge.
The appeal relates to the interpretation of section 311(a) (1), (f) of the Internal Revenue Code and poses the question:
Does the Commissioner of Internal Revenue have authority to hold a wife-beneficiary of a life insurance policy liable for unpaid income taxes of a deceased spouse as transferee of her husband's assets?
The Tax Court answered in the affirmative and sustained a deficiency assessment by the Commissioner.
After consideration of the records, briefs, and arguments of counsel for the parties, we believe the decision should be reversed.
The statutes involved in the adjudication of the problem provide that the transferee of property of a taxpayer, which includes heirs, legatees, devisees, and distributees, shall be personally liable for taxes due by the transferor equivalent to the value of the property transferred.1
To place the question in its proper perspective, brief reference is made to the facts:
The decedent was solvent to the date of death, he had a substantial monthly income, his wife was beneficiary on the policy from the date of issuance to the date of death (which was more than 14 years), and there was no evidence of intent to defraud or prejudice creditors. He reserved the right to change the beneficiary of the policy, to borrow on the policy (which right he had exercised), and to demand its cash value. However, due to loans on the policy, it had no cash value on the date of his death. Claim was made against the proceeds of said policy, since his estate was insufficient to pay the income tax determined.
As the policy had no cash value, no transfer is involved that would authorize the imposition of transferee-liability against appellant wife. The failure of the husband to change the beneficiary from his wife to his estate is not a voluntary transfer of the proceeds of said policy within the meaning and scope of the Federal Transferee Statute, § 311 (a) (1), (f) of the Internal Revenue Code.
The appellant places strong reliance on the decision of the Court of Appeals for the Third Circuit in the case of Pearlman v. Commissioner, 3 Cir., 153 F.2d 560.
That case is distinguishable from the case at bar since the deceased husband in that case was insolvent prior to death, and his income-tax difficulties were in litigation prior to his death. In the present case the husband was solvent at date of death, by reason of loans on the policy it had no cash value, and he was involved in no dispute or litigation concerning his income-tax...
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Commissioner of Internal Revenue v. Stern
...rested its decision upon two grounds: (1) that the respondent beneficiary was not a transferee within the meaning of § 311, Tyson v. Commissioner, 6 Cir., 212 F.2d 16; and (2) that in any event Kentucky statutes, Ky.R.S., 1948, §§ 297.140, 297.150, limit the beneficiary's liability to credi......
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United States v. Gilmore, 15130.
...be impeachable as to creditors, it would not be as to the United States, and this view has been followed in the Sixth Circuit, Tyson v. C. I. R., 212 F.2d 16; in the Second Circuit, in Rowen v. Commissioner, 215 F.2d 641; and in the Seventh Circuit in United States v. New, 217 F.2d 166. Cf.......
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United States v. Truax, 15356.
...of Exchange Nat. Bank v. United States, supra, and hold that the liability of the beneficiary is determined by state law. Tyson v. Commissioner, 6 Cir., 212 F.2d 16; United States v. New, 7 Cir., 217 F.2d 166; Rowen v. Commissioner, 2 Cir., 215 F.2d 641, 644. The Rowen case is the best reas......
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United States v. Bess
...223 F.2d 229; United States v. New, 7 Cir., 1954, 217 F.2d 166; Rowen v. Commissioner, 2 Cir., 1954, 215 F. 2d 641; Tyson v. Commissioner, 6 Cir., 1954, 212 F.2d 16.3 Each of these cases distinguishes, or differs from Pearlman v. Commissioner, 3 Cir., 1946, 153 F.2d 560, upon which the Gove......