Estate of Thiele v. Comm'r of Internal Revenue
| Decision Date | 29 September 1947 |
| Docket Number | Docket No. 8366. |
| Citation | 9 T.C. 473 |
| Parties | ESTATE OF WALTER THIELE, WILLIAM H. JEFFERS, ADMINISTRATOR C.T.A., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Walter Thiele, the decedent herein, died December 25, 1940. His wife, Helen Agnes Thiele, died testate on February 26, 1940. Under her will she named her husband the sole legatee and executor of her estate. Her estate was still in the process of administration at the time of her husband's death. On February 26, 1940, Walter Thiele owed his wife $34,766.72, plus interest, for money he had previously borrowed from her. This amount, plus interest, was included in the wife's gross estate as an account receivable asset of her estate for Federal estate tax purposes, and was also included as an asset of her estate in the accounting filed with the surrogate in 1942. Thereafter, the surrogate court approved the account and ordered the administrator of the wife's estate to pay the administrator of the husband's estate the balance of the principal of the wife's estate including the said account and interest due from the husband's estate. Held, the estate of Walter Thiele is entitled, under section 812(b)(3) of the Internal Revenue Code, to deduct from the value of its gross estate the amount of the said debt, plus interest, as a claim against the estate. Wilbur H. Friedman, Esq., George F. Kurzman, Esq., and Gerald Silbert, Esq., for the petitioner.
Thomas R. Charshee, Esq., for the respondent.
This proceeding is for a redetermination of a deficiency of $8,675.62 in estate tax. Petitioner claims an overpayment of $8,917.23.
The amended petition alleges that the determination of tax set forth in the notice of deficiency is based upon the following errors:
(a) Disallowance of administrator's commissions in the sum of $23,895.30.
(b) Disallowance of attorneys' fees and disbursements in the sum of $15,018.99, plus the reasonable fees and disbursements in conducting this proceeding.
(c) Disallowance of accountants' fees in the sum of $1,500.00.
(d) Disallowance of deduction of a debt of the decedent in the sum of $34,766.72, plus accrued interest of $1,363.06.
(e) Disallowance of deduction for obligations of the decedent in the sum of $29,744.57 and determination of previously taxed property in the sum of $157,654.63 instead of $187,210.37.
Assignments of error (a), (b), and (c) have been settled by stipulation, and effect will be given thereto under Rule 50. Most of the facts relating to assignments of error (d) and (e) have also been stipulated.
The stipulation of facts is incorporated herein by reference.
Walter Thiele, hereinafter sometimes referred to as the decedent, was a resident of New York County, New York, until his death on December 25, 1940.
William H. Jeffers, hereinafter sometimes referred to as the petitioner, is the duly qualified administrator, c.t.a., of the estate of Walter Thiele.
The estate tax return for the estate of Walter Thiele was filed with the collector for the third district of New York on March 26, 1942.
Helen Agnes Thiele, wife of Walter Thiele, died testate on February 26, 1940, a resident of New York County, New York. Under the terms of her will her husband, Walter Thiele, was the sole legatee and executor of her estate. He qualified as executor of his wife's estate, but after his death on December 25, 1940, Jeffers qualified as administrator, c.t.a., of the estate of Helen Agnes Thiele.
At the time of the decedent's death the estate of Helen Agnes Thiele was still in process of administration. No accounting had yet been filed. However, an accounting was filed with the surrogate of New York County on May 27, 1942.
From time to time, prior to the death of his wife, the decedent had borrowed from his wife certain sums of money in cash. He did not give her any notes for the amounts so borrowed. At the time of her death he owed her $34,766.72, plus interest of $212.44, or a total of $34,979.16. After Helen Agnes Thiele died the administrator included as an asset in her gross estate in the Federal estate tax return, when filed on August 9, 1941, the said amount of $34,979.16 as an account receivable due from Walter Thiele.
In the Federal estate tax return filed for the estate of Walter Thiele there were reported therein items of gross estate (using the optional valuation date under section 811(j) of the Internal Revenue Code) and deductions, as follows:
+-----------------------------------------------------------------------------+
¦Gross estate ¦Deductions ¦
+----------------------------------+------------------------------------------¦
¦Real estate ¦$51,750.00 ¦Funeral expenses ¦$1,614.21 ¦
+---------------------+------------+-------------------------------+----------¦
¦Stocks and bonds ¦842,017.20 ¦Executors' commissions ¦20,952.75 ¦
+---------------------+------------+-------------------------------+----------¦
¦Mortgages ¦81,454.66 ¦Attorneys' fees ¦22,500.00 ¦
+---------------------+------------+-------------------------------+----------¦
¦Miscellaneous ¦41,540.30 ¦Miscellaneous administration ¦2,556.54 ¦
¦property ¦ ¦expenses ¦ ¦
+---------------------+------------+-------------------------------+----------¦
¦Property previously ¦188,111.16 ¦Debts of decedent ¦323,667.96¦
¦taxed ¦ ¦ ¦ ¦
+---------------------+------------+-------------------------------+----------¦
¦Total ¦1,204,873.32¦Total ¦371,291.46¦
+-----------------------------------------------------------------------------+
Among the detailed items considered in the return in arriving at the above item of ‘property previously taxed‘ in the amount of $188,111.16 are the following:
Among the detailed items considered in the return in arriving at the above item of ‘debts of decedent‘ in the amount of $323,667.96 are the following:
+-----------------------------------------------------------------------------+
¦Debt due estate of Helen Agnes Thiele ¦$34,766.72¦
+------------------------------------------------------------------+----------¦
¦Accrued interest at 4% from Jan. 1, 1940 to death of Helen Agnes ¦212.44 ¦
¦Thiele ¦ ¦
+------------------------------------------------------------------+----------¦
¦Accrued interest at 4% from Helen Agnes Thiele's death to Walter ¦1,150.62 ¦
¦Thiele's death ¦ ¦
+------------------------------------------------------------------+----------¦
¦Other items not here involved ¦287,538.18¦
+------------------------------------------------------------------+----------¦
¦Total deducted in decedent's return as debts ¦323,667.96¦
+-----------------------------------------------------------------------------+
The Federal estate tax return filed for the estate of Walter Thiele reported $123,000.20 as representing the total estate tax payable. This amount was paid at the time the return was filed.
On April 3, 1943, the respondent determined a deficiency in estate tax against the estate of Walter Thiele in the amount of $21,535.28. This amount was paid on or about March 26, 1943. Among the adjustments that were made at that time were the elimination from ‘property previously taxed‘ of the debt of $34,766.72 and accrued interest of $212.44, and the increase of liabilities of the estate of Helen Agnes Thiele...
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