Estate of Wolf v. Comm'r of Internal Revenue, Docket No. 58662.
| Decision Date | 12 December 1957 |
| Docket Number | Docket No. 58662. |
| Citation | 29 T.C. 441 |
| Parties | ESTATE OF CHARLES B. WOLF, CHARLES S. WOLF, FRANCIS G. WOLF, EXECUTORS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Ralph F. Fisher, Esq., and Albert G. Blakey III, Esq., for the petitioner.
Stephen P. Cadden, Esq., for the respondent.
1. The value of payments due decedent's wife on his death as a result of his naming her beneficiary of pension plans and a profit-sharing trust created by his employers in which he had enforceable vested rights is includible in his gross estate. Sec. 811(a) and (f)(2), I.R.C. 1939.
2. Petitioners have failed to prove that decedent, after assigning to his wife an insurance policy on his life which named her as beneficiary, did not continue to pay the premiums indirectly; accordingly, the face amount of the policy is includible in his gross estate. Sec. 811(g)(2), I.R.C. 1939.
3. (a) Certain claims against decedent were barred by the relevant statute of limitations; accordingly, they are not deductible from his gross estate. Sec. 812, I.R.C. 1939. (b) Claims against decedent which were not barred by the statute of limitations are, on the facts of this case, deductible from his gross estate. Sec. 812, I.R.C. 1939.
Respondent determined a deficiency in the estate tax of Charles B. Wolf in the amount of $55,714.21. As a result of various concessions and adjustments made by the parties the issues remaining in this litigation may be summarized by the following three questions:
1. Is the present value of amounts payable under a profit-sharing trust and certain retirement agreements includible in decedent's gross estate under any section of the Internal Revenue Code of 1939?
2. Is the face amount of a life insurance policy on the life of decedent naming his wife beneficiary includible in his gross estate under section 311(g) (2), I.R.C. 1939?
3. Did the decedent's wife and children have claims deductible from his gross estate under section 812(b), I.R.C. 1939?
Some of the facts have been stipulated and are incorporated in our findings by this reference.
The petitioners are the executors of the will of Charles B. Wolf, who was born on June 19, 1891, and died on January 8, 1951. His wife was Frances G. Wolf. They had four children: Frances Jane Wolf (now McCabe), Charles S. Wolf, Jessie C. Wolf (now Sherrill), and Mary Julia Wolf.
Decedent, from 1932 until his death, was an officer and employee of Superior Paper Products Company (hereinafter referred to as Superior). He also owned stock in Superior.
On October 30, 1942, Superior established a ‘Profit Sharing Trust’ by the terms of which decedent and certain other employees (sometimes referred to as participants) became eligible to receive payments at a future date. Contributions to the trust were to be made solely by Superior; they were to be made annually and were to be in an amount equal to 15 per cent of the compensation otherwise payable to the participating employees. The trust agreement provided in part as follows:
Section 1. A participant's interest in the Trust shall be non-forfeitable, except in case of his
(a) voluntarily quitting the Company's employ, except for the purpose of immediately entering the armed services of the United States, and except in cases in which, in the judgment of the Trustees, such quitting was necessitated by injury, illness, disability or other sufficient cause, or
(b) discharge for insubordination, intoxication or gross impropriety of conduct, certified to the Trustees by the Company.
Section 1. * * * The distribution amount of each participant in respect of each fiscal year shall be paid to him, his designated beneficiaries or his legal representatives, as follows:
(a) If on the date of this Trust Agreement the participant (if male) is less than 55 years old * * * , payment shall be made at the end of ten (10) years from the close of the fiscal year in respect of which said distribution amount exists, or at death, whichever shall first occur;
* * * Payments at death shall be made to the persons designed by the participant as his beneficiaries, by writing filed with the Trustees, in the respective amounts or proportions so designated, or, in the absence of such designation, or in case of the pre-decease of any of such beneficiaries (as to any amount or proportion affected by such pre-decease) then to the legal representatives of the deceased participant. * * *
This trust was irrevocable, but Superior was free to end its obligations to the trust after 5 years.
At the time of decedent's death the present value of the benefits payable with respect to his participating in the trust was $12,749.57.
On October 1, 1947, Superior created a ‘retirement and pension trust’ for all of its executives. Relative to this trust and also on October 1, 1947, Superior entered into an agreement with decedent, the relevant provisions of which follow:
Whereas, SUPERIOR PAPER PRODUCTS COMPANY desires to retain the services of CHARLES B. WOLF for a period of 10 years.
Now, Therefore, in consideration of the mutual covenants herein contained it is agreed as follows:
1. CHARLES B. WOLF may at his option, on attaining the age of 65, retire as an employee of SUPERIOR PAPER PRODUCTS COMPANY.
2. CHARLES B. WOLF agrees, after retirement, not to engage either directly or indirectly in any business which in any way competes with SUPERIOR PAPER PRODUCTS COMPANY.
3. CHARLES B. WOLF agrees, after retirement, and for a period of 10 years, to act as consultant for SUPERIOR PAPER PRODUCTS COMPANY, without any compensation, and to devote such time and attention to the business of SUPERIOR PAPER PRODUCTS COMPANY, as he, in his discretion, may deem necessary.
4. In the event CHARLES B. WOLF elects to retire at the age of 65, but before October 1, 1956, then, and in that event, SUPERIOR PAPER PRODUCTS COMPANY agrees to pay to CHARLES B. WOLF, from the date of his retirement, the sum of $12,600 per year, for a period of 10 years in equal monthly installments.
In the event CHARLES B. WOLF elects to retire after September 30, 1956, then, and in that event, SUPERIOR PAPER PRODUCTS COMPANY agrees to pay to CHARLES B. WOLF, from the date of his retirement, the sum of $14,000 per year, for a period of 10 years in equal monthly installments.
5. In the event CHARLES B. WOLF shall leave the employ of SUPERIOR PAPER PRODUCTS COMPANY for any reason, other than death, illness, or any injury permanently incapacitating him from rendering any service to the corporation, prior to his 65th birthday, then, and in that event, this agreement shall be null and void and CHARLES B. WOLF shall in no way be entitled to any payments whatsoever under this agreement.
6. In the event CHARLES B. WOLF shall die before he retires, then, and in that event, the SUPERIOR PAPER PRODUCTS COMPANY contributions to the pension fund shall cease and pension payments shall be made to the person or persons named by CHARLES B. WOLF in an instrument filed with the SUPERIOR PAPER COMPANY for a period of 10 years in accordance with the following schedule. Payments to commence from date of death.
+--------------------------------------------------------------+
¦If death occurs during 1st year of agreement ¦$1,400 per year ¦
+---------------------------------------------+----------------¦
¦If death occurs during 2nd year of agreement ¦$2,800 per year ¦
+---------------------------------------------+----------------¦
¦If death occurs during 3rd year of agreement ¦$4,200 per year ¦
+---------------------------------------------+----------------¦
¦If death occurs during 4th year of agreement ¦$5,600 per year ¦
+---------------------------------------------+----------------¦
¦If death occurs during 5th year of agreement ¦$7,000 per year ¦
+---------------------------------------------+----------------¦
¦If death occurs during 6th year of agreement ¦$8,400 per year ¦
+---------------------------------------------+----------------¦
¦If death occurs during 7th year of agreement ¦$9,800 per year ¦
+---------------------------------------------+----------------¦
¦If death occurs during 8th year of agreement ¦$11,200 per year¦
+---------------------------------------------+----------------¦
¦If death occurs during 9th year of agreement ¦$12,600 per year¦
+---------------------------------------------+----------------¦
¦If death occurs during 10th year of agreement¦$14,000 per year¦
+--------------------------------------------------------------+
7. In the event CHARLES B. WOLF shall die after retirement but before the completion of all of the pension payments set forth in Paragraph ‘4’ hereof, then, and in that event, the remaining payments shall be made to the person or persons named by CHARLES B. WOLF in an instrument filed with the SUPERIOR PAPER PRODUCTS COMPANY, in the same manner, and in the same amounts, as if he were still living.
8. In the event CHARLES B. WOLF shall leave the employ of SUPERIOR PAPER PRODUCTS COMPANY because of illness or any injury permanently incapacitating him from rendering any service to the corporation before he reaches the age of 65, then, and in that event, the SUPERIOR PAPER PRODUCTS COMPANY contributions to the pension fund shall cease and pension payments shall be made to him for a period of 10 years in accordance with the following schedule. Payments to commence from date of incapacity.
+------------------------------------------------------------------+
¦If incapacity occurs during 1st year of agreement¦$1,400 per year ¦
+-------------------------------------------------+----------------¦
¦If incapacity occurs during 2nd year of agreement¦$2,800 per year ¦
+-------------------------------------------------+----------------¦
¦If incapacity occurs during 3rd year of agreement¦$4,200 per year ¦
+-------------------------------------------------+----------------¦
¦If incapacity occurs during 4th year...To continue reading
Request your trial
-
Estate of Porter v. CIR
...Cir. 1962); Goodman v. Granger, 243 F.2d 264 (3d Cir.), cert. denied, 355 U.S. 835, 78 S.Ct. 57, 2 L.Ed.2d 47 (1957); Estate of Wolf v. CIR, 29 T.C. 441, 447 (1957), rev'd on other grounds, 264 F.2d 82 (3d Cir. The death benefits in this case appear to represent "deferred compensation" in t......
-
Fried v. Comm'r of Internal Revenue (In re Estate of Fried)
...F.2d 97; Goodman v. Granger, 3 Cir., 243 F.2d 264; Beaver Trust Co. v. United States, D.C., 184 F.Supp. 553, and Wolf's Estate v. Commissioner of Internal Revenue, 29 T.C. 441, reversed on other grounds, 3 Cir., 264 F.2d 82. These cases hold that death benefits are includable in the gross e......
-
Pelavin v. Comm'r of Internal Revenue (In re Estate of Lewis), Docket No. 6848-65.
...claim barred by the statute of limitations in the State of administration is not allowable under section 2053(a)(3). Estate of Charles B. Wolf, 29 T.C. 441, 449-450 (1957), affirmed in part and reversed in part 264 F.2d 82 (C.A. 3, 1959); Wolfsen v. Smyth, 223 F.2d 111 (C.A. 9, 1955); Brown......
-
Estate of Kleemeier v. Comm'r of Internal Revenue
...in section 2041(b)(1) and section 20.2041-1(c), Estate Tax Regs., also Estate of Rebecca Edelman, 38 t.c. 972 (1962); Estate of Charles B. Wolf, 29 T.C. 441, 447 (1957), modified on another issue 264 F.2d 82 (C.A. 3, 1959); and United States v. Turner, 287 F.2d 821, 824 (C.A. 8, 1961). We d......