Bausch's Estate v. Commissioner of Internal Revenue
| Decision Date | 25 January 1951 |
| Docket Number | 21772.,No. 91,Dockets 21771,92,91 |
| Citation | 186 F.2d 313 |
| Parties | BAUSCH'S ESTATE et al. v. COMMISSIONER OF INTERNAL REVENUE (two cases). |
| Court | U.S. Court of Appeals — Second Circuit |
Nixon, Hargrave, Middleton & Devans, Rochester, N. Y., for petitioners; Scott Stewart, Jr., Rochester, N. Y., of counsel.
Theron Lamar Caudle, Asst. Atty. Gen., Ellis N. Slack, Robert N. Anderson, and George D. Webster, Sp. Asst. to the Atty. Gen., and Charles Oliphant, Washington, D. C., for respondent.
Before L. HAND, Chief Judge, and SWAN and AUGUSTUS N. HAND, Circuit Judges.
These petitions were to review deficiencies found by the Tax Court in the income taxes of the Estates of Edward Bausch and William Bausch. The underlying facts, as found by the Tax Court, are not in dispute. The taxpayers are the executors of these respective estates. Each of the decedents had been in the employ of Bausch & Lomb Optical Company upwards of fifty years. Edward Bausch had been vice-president for many years, and finally became president and subsequently chairman of the board. William Bausch, who was for a long time secretary of the company, in 1935 became vice-president and succeeded Edward Bausch as chairman of the board, upon the latter's death. Each was receiving a salary of $1500 per month at the time of his death. The company paid to the estate of each decedent the sum of $1500 per month for a period of twelve months following his death. Edward Bausch left as his closest surviving relatives his brother, William Bausch, his sister, and three nieces and a nephew. William Bausch left as his closest surviving relatives the same sister, nieces and nephew. Edward Bausch left a will under which, after providing specific bequests to various individuals and charitable corporations, he bequeathed the residue of his estate four-fifths to his nieces and nephew and one-fifth to the nephews and nieces of his deceased wife. William Bausch made specific bequests to various individuals and charitable corporations and gave the residue of his estate in equal shares to his nieces and nephew and to a nephew of his deceased wife.
The company had made similar payments to the heirs or estates of deceased officers in the past. There was no agreement between the company and Edward or William Bausch to make the payments in question. The decision to make them was made by the president and treasurer and other principal officers, but the board of directors adopted no resolution relating to the payments here in question. The company deducted them from its income tax returns for the years in which such payments were made.
It was found that the payments to the Estates of Edward Bausch and William Bausch were made because the company had paid a year's salary to the widow of one former vice-president, who died December 30, 1936, and to the estate of another vice-president who died in 1939. These four officers had all been with the company for over fifty years and had been largely responsible for its growth. It was therefore thought reasonable to do as well for the estates of Edward Bausch and William Bausch as in the case of the first two.
The question before us is whether the foregoing payments constituted taxable income to the petitioners under Sections 22(a) and 126 of the Internal Revenue Code, or were gifts under Section 22 (b) (3), 26 U.S.C.A. §§ 22(a, b) (3), 126. The fact that they were voluntary and could not have been enforced by action did not necessarily render them gifts within...
To continue reading
Request your trial
-
Wilner v. United States
...United States, 7 Cir., 1958, 261 F.2d 497, certiorari denied 1959, 359 U.S. 944, 79 S.Ct. 724, 3 L.Ed.2d 677. See Bausch's Estate v. Commissioner, 2 Cir., 1951, 186 F.2d 313; Estate of Russek v. Commissioner, C.C.H.1961 Tax Ct.Mem. ¶ 25 See United States v. Allinger, 6 Cir., 1960, 275 F.2d ......
-
Gaugler v. United States
...executives to remain with the company as any legal undertaking on the part of the company to make such payments. Bausch's Estate v. Commissioner, supra 2 Cir. 1951, 186 F.2d 313." (261 F.2d at p. It was stated in Bounds v. United States, 4 Cir. 1958, 262 F.2d 876, that, "It can be seen that......
-
Jensen v. U.S.
...F.2d 681; Smith v. Commissioner, 3 Cir. 1962, 305 F.2d 778; Simpson v. United States, 7 Cir. 1958, 261 F.2d 497; Bausch's Estate v. Commissioner, 2 Cir. 1951, 186 F.2d 313. 8 When, on the other hand, courts have characterized payments to a widow as gifts, they have commonly emphasized that ......
-
United States v. Ellis
...§ 126) is whether the post-death payments are in fact due to services performed by a decedent in his lifetime. Bausch's Estate v. Commissioner, 2 Cir., 1951, 186 F.2d 313; O'Daniel's Estate v. Commissioner, 2 Cir., 1949, 173 F.2d 966; Flarsheim v. United States, 8 Cir., 1946, 156 F.2d 105; ......