Hamar v. Comm'r of Internal Revenue
| Decision Date | 11 August 1964 |
| Docket Number | Docket Nos. 2088-62,3726-62,3727-62. |
| Citation | 42 T.C. 867 |
| Parties | JEANNE HAMAR, SUCCESSOR TRUSTEE UNDER THE WILL OF LOTTIE HAMAR, DECEASED, TRANSFEREE, ET AL.,1 PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Harry Friedman, for the petitioners.
Joseph P. Crowe, for the respondent.
1. Held, that petitioner Jeanne Hamar, as successor trustee of the testamentary trust created under the will of a decedent, is severally liable as a transferee of said decedent's estate in the limited amount determined by the Commissioner, for the unpaid deficiency in estate tax and addition to tax owed by said decedent's estate, plus interest according to law; and that the existence of such liability is not prevented by the facts: (1) That the residuary legatee of the decedent's estate also is severally liable as a transferee for said taxes and interest; or (2) that the estate tax liabilities involved were neither asserted nor determined against the decedent's estate until after the legacy to the testamentary trust had been paid; or (3) that the decedent's estate may have had a right to obtain reimbursement from said residuary legatee.
2. Held, that petitioner Myron Hamar, who was the residuary legatee of said decedent's estate, also is severally liable as a transferee of said estate for said deficiency in estate tax and addition to tax as determined by the Commissioner, plus interest according to law; that said liability was not subsequently extinguished or terminated by his discharge in bankruptcy; and that his liability in respect to interest on the estate tax deficiency includes both prepetition-in-bankruptcy interest and postpetition interest.
The respondent determined the following transferee liabilities, in respect of an unpaid deficiency in estate tax, addition to tax for fraud, and interest, which this Court in a prior case determined to be due from the estate of Lottie Hamar, deceased:
+-----------------------------------------------------------------------------+
¦Docket ¦Transferee-petitioner¦Nature of liability ¦
+-------+---------------------+-----------------------------------------------¦
¦No. ¦ ¦ ¦
+-------+---------------------+-----------------------------------------------¦
¦ ¦ ¦ ¦
+-------+---------------------+-----------------------------------------------¦
¦ ¦Jeanne Hamar, ¦Liability as transferee in the limited amount ¦
¦2088-62¦successor trustee ¦of $50,000 plus interest, arising from transfer¦
¦ ¦under will of said ¦to the testamentary trust of assets of the ¦
¦ ¦decedent. ¦decedent's estate. ¦
+-------+---------------------+-----------------------------------------------¦
¦ ¦ ¦Liability as transferee in the amount of ¦
¦ ¦Myron Hamar, alleged ¦$55,708.71 plus interest, arising from ¦
¦3726-62¦transferee. ¦transfers of assets both from the decedent ¦
¦ ¦ ¦during her lifetime and also from her estate at¦
¦ ¦ ¦or after her death. ¦
+-------+---------------------+-----------------------------------------------¦
¦ ¦ ¦Personal liability as a fiduciary under sec. ¦
¦ ¦ ¦3467 of the Revised Statutes, as amended (31 ¦
¦3727-62¦Jeanne Hamar, ¦U.S.C. 192), in the limited amount of $50,000 ¦
¦ ¦fiduciary. ¦plus interest, arising from making nonpriority ¦
¦ ¦ ¦payments and distributions before satisfying ¦
¦ ¦ ¦and paying debts due the United States. ¦
+-------+---------------------+-----------------------------------------------¦
¦ ¦ ¦ ¦
+-----------------------------------------------------------------------------+
All of said cases were consolidated for trial.
Regarding the case bearing docket No. 3727-62, respondent has conceded on brief that, due to his failure to prove actual or constructive notice to the fiduciary as to the Government's tax claims against the decedent's estate, the personal liability of said fiduciary has not been established. Accordingly, said case is here decided in favor of the petitioner.
The remaining issues to be decided are:
(1) In docket No. 2088-62, whether Jeanne Hamar as successor trustee of the trust created under the will of Lottie Hamar, deceased, is liable as a transferee of assets of the estate of said decedent.
(2) In docket No. 3726-62, whether the liability of Myron Hamar as a transferee of assets of the estate of Lottie Hamar, deceased (which he has conceded on brief resulted from transfer to him of estate assets), was thereafter extinguished by his discharge in bankruptcy.
All of the facts have been stipulated; and they are so found. The stipulation of facts and all exhibits identified therein are incorporated herein by reference. Those facts which are relevant to the two remaining issues to be decided, may be summarized as follows:
Lottie Hamar (herein called the decedent) died testate on April 15, 1953, a resident of Cleveland, Cuyahoga County, Ohio. Her husband had predeceased her in 1950. Her will was admitted to probate on April 16, 1953, by the Probate Court of Cuyahoga County; and on the same date Myron Hamar, who was the decedent's son and only child, was duly appointed by said court as the executor. Myron thereupon accepted said appointment, qualified, and took possession and control of all the estate assets as executor. On May 5, 1953, he filed with said Probate Court an Inventory and Appraisal which was approved by the court on May 19, 1953; and he therein set forth the assets belonging to the estate at the total appraised value of $210,668.84, consisting of cash in a bank savings account of $4,639.84, and various corporate stocks valued at $206,029. As shown in the Federal estate tax return hereinafter mentioned, most of the securities originally included in the estate were liquidated by sale during the first 2 or 3 months after the estate was opened.
The will of the decedent provided as far as here relevant, as follows:
ITEM I.
I direct my Executor to pay out of my estate all of my just debts including the expenses of my last illness and funeral expenses.
My Executor may pay out of my estate, and to such person or persons as he may deem proper, such sum or sums of money, if any, as he shall, in his discretion, determine to be reasonable for the purpose of providing perpetual care for my grave and the grave of my beloved husband, Nathan Hamar.
I give and bequeath the sum of Three Thousand Dollars ($3,000.00) to my brother, Samuel Berman; to my brother, Harry Berman, the sum of Two Thousand Dollars ($2,000.00); to my nephew, Kenneth M. Berman, the sum of One Thousand Dollars ($1,000.00).
I give and bequeath to the Trustee hereinafter named, and to his Successor in Trust, the sum of Fifty Thousand Dollars ($50,000.00) for the benefit of my beloved son, Myron Hamar, who shall receive said trust property as hereinafter provided. Said sum shall be set apart by my Executor either in case or in securities at their fair value, as determined by my Executor and any such determination so made in good faith shall be binding on all concerned. Such assets shall be turned over to said Trustee as promptly as practicable after my death, and the income thereon shall be deemed to accrue to said Trust Estate from and after the date of my death.
Said Trustee is hereby authorized and directed to pay said sum together with all accruals thereon, to my beloved son, Myron Hamar, upon him reaching his fortieth birthday, and said trust upon proper receipt thereof by my Trustee shall terminate. All expenses in connection with said trust estate shall be first paid by said Trustee before payment to the said Myron Hamar.
The rest, residue and balance of my estate of whatsoever nature and description which I now own or may hereafter acquire, I give, bequeath and devise to my beloved son, Myron Hamar, if living; otherwise to the issue of his body.
I hereby nominate, constitute and appoint Myron Hamar as my Executor and Philip Lustig as Testamentary Trustee and Trustee of this, my Last Will and Testament, granting to them such authority and powers as Executor and Trustee to enable them to carry out their duties and responsibilities with promptness and dispatch, * * * The date on which Myron would attain the age of 40 years, and on which the trustee was authorized and directed (under Item IV of the will) to distribute the trust assets to him, was October 30, 1962.
On November 23, 1953, Philip Lustig filed an application for appointment as testamentary trustee of the trust mentioned in Item IV of the decedent's will. In this application he listed specifically by certificate numbers certain corporate stocks and bonds, and also specifically by check number, name of payor and amount, certain bank checks— all estimated to have a probable aggregate value of $50,000— which he stated were ‘contained in said trust.‘ Most of the securities and checks so listed in said application were not included in the above-mentioned executor's inventory as being assets owned by the decedent at the time of her death, and they also were not listed in the estate tax return hereinafter mentioned, as assets owned by the decedent. The Probate Court approved this application on the same date that it was filed; and thereupon Lustig was duly appointed as the sole trustee of said trust. Subsequently on July 16, 1954, Lustig as trustee filed with the Probate Court, an inventory of the assets comprising...
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...of creditors where a distribution to beneficiaries takes place before all allowable claims are satisfied. Compare Hamar v. Commissioner Dec. 26,917, 42 T.C. 867, 873-875 (1964). 17 Respondent has conceded that petitioner Phyllis is not liable as a transferee with respect to the jointly held......
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...F.2d 176 (10th Cir. 1976) ("Russell II") ("The government's suit is, in reality, no more than a simple action indebt."); cf Hamar v. Comm'r, 42 T.C. 867, 877 (1964) (suggesting that while transferee liability "is a liability for a tax," it "may not be a tax liability in the ordinary sense")......
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United States v. Johnson
...F.2d 176 (10th Cir. 1976) ("Russell II") ("The government's suit is, in reality, no more than a simple action indebt."); cf. Hamar v. Comm'r, 42 T.C. 867, 877 (1964) (suggesting that while transferee liability "is a liability for a tax," it "may not be a tax liability in the ordinary sense"......
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McKowen v. I.R.S., No. 01-1345.
...timely proof of claim is filed." Id. at 320.8 We find a better approach in the United States Tax Court's decision in Hamar v. Commissioner, 42 T.C. 867, 1964 WL 1241 (1964). In Hamar, the tax court rejected petitioner's argument that his transferee liability was discharged by his bankruptcy......