Donnan v. Heiner, 6520.
| Decision Date | 08 April 1931 |
| Docket Number | No. 6520.,6520. |
| Citation | 48 F.2d 1058 |
| Parties | DONNAN et al. v. HEINER, Collector of Internal Revenue. |
| Court | U.S. District Court — Western District of Pennsylvania |
William G. Heiner, of Pittsburgh, Pa., for plaintiffs.
Louis E. Graham, U. S. Atty., and John A. McCann, Sp. Asst. Atty., both of Pittsburgh, Pa., and C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and W. T. Sabine, Jr., Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., for defendant.
This matter comes before us upon defendant's statutory demurrer to plaintiffs' statement. The facts disclosed by the statement are substantially as follows:
John W. Donnan died at Washington, Pa., on December 23, 1928. The present plaintiffs, executors of his estate, made a return for estate tax purposes on December 19, 1929, which showed a net taxable estate of $1,173,987.21, and a tax due of $62,578.98. Credit was claimed thereon of 80 per cent. paid to the state of Pennsylvania in the amount of $50,063.10, and the balance, $12,515.80, was paid to the United States. Upon examination of the return, the Commissioner increased the amount of the gross estate by adding three certain items which had been omitted by the executors in their return: First, a note in the amount of $5,000 dated October 3, 1923, representing an advancement to Sydney B. Donnan, a son of the decedent; second, a note in the amount of $32,500, dated September 15, 1927, representing an advancement to Alvan E. Donnan, another son of the decedent; and, third, a trust fund created by deed of trust dated March 1, 1927, whereby the decedent transferred assets valued by the executors at $1,700,000 to trustees, who were to pay the life income therefrom to the four children of the decedent and to distribute the same twenty years after the death of the last survivor. In his addition to the gross estate, the commissioner placed a value upon the trust property of $2,200,885.26. No question arises in the instant matter in respect to the propriety of the commissioner's increase in the value of the trust fund. The additions to the gross estate resulted in an increase of liability for estate tax of $226,067.31. Against this amount an 80 per cent. credit for payment made to the state of Pennsylvania was allowed in the amount of $180,853.85. Plaintiffs subsequently paid the difference of $47,733.87 to the defendant on February 17, 1931, and on February 24th following filed a claim for refund, which was denied on March 6, 1931. Thereupon the instant action was instituted on March 11, 1931.
The statement of claim asserts that the advancements to his sons, evidenced by notes aggregating $37,500, and the amount of the trust fund, represented complete and irrevocable gifts to his children which were made during the lifetime of the decedent, and were not made in contemplation of death. Consequently, the inclusion of such gifts by the Commissioner in the gross estate of the decedent for purposes of estate tax was illegal. Plaintiffs seek to recover the amount of tax paid to the defendant by reason of the alleged wrongful increase of the decedent's gross estate. To the statement of claim the defendant has filed a statutory demurrer wherein he asserts, in substance, that plaintiffs' statement is insufficient in law, in that section 302(c) of the Revenue Act as amended in 1926 (26 USCA § 1094(c) makes said advancements and trust fund taxable, irrespective of whether or not the advancements were made, or the trust fund executed, in...
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Succession of Wiener
...of the statute, answering affirmatively the question certified to it by the Circuit Court of Appeals for the Third Circuit 48 F.2d 1058, of whether or not sentence in this section reading: 'Where within two years prior to his death but after the enactment of this Act and without such a cons......