Collins v. United States
| Decision Date | 27 April 1967 |
| Docket Number | Civ. A. No. 4-609. |
| Parties | Whitfield J. COLLINS, Independent Executor of the Estate of Gillis A. Johnson, Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
Allan Howeth, Fort Worth, Tex., for plaintiff.
Robert L. Waters, Pete Winstead, Attys., Tax Division Dept. of Justice, Fort Worth, Tex., for defendant.
This is an action for the refund of estate taxes which the taxpayer claims were erroneously and illegally assessed and collected with respect to the Estate of Gillis A. Johnson, whose date of death was September 29, 1962. The question presenting itself in this case is whether the Administrator may deduct 100% of the funeral expenses of the deceased from the gross estate or only 50% of such expenses on the ground that one-half thereof is chargeable against the surviving spouse's one-half interest in the community estate.
The statute involved in this case is § 2053 of the Internal Revenue Code (1954). From the reading of the statute, it is readily apparent that this question of deduction is determined by the laws of the State of Texas and, therefore, our problem becomes that of determining whether, under Texas law, funeral expenses should be charged against the decedent's estate under administration or whether one-half of such amount is chargeable against the wife's share of the community.
The facts are stipulated by the parties and may be briefly stated as follows: The decedent, Gillis A. Johnson, died testate at the age of 66 on September 29, 1962. His will, among other things, provided that all of his just debts, expenses of last illness, funeral expenses, expenses of the administration of his estate and Federal estate, State inheritance or other death and succession taxes be paid as soon as reasonably convenient by his Executor out of his residuary estate. (Footnote: Supplemental Pre-Trial Order).
The Plaintiff was appointed independent executor of his estate and in that capacity filed Federal estate tax returns wherein there was claimed a deduction for funeral expenses in the amount of $3,325.40, which amount constituted the entire expenditure for funeral expenses of the decedent. Upon examination of the return, the Internal Revenue Service determined that only one-half of the funeral expenses incurred should be allowed as a deduction. As a result of the foregoing adjustment, there were assessed additional estate taxes and interest against the Plaintiff which were duly paid. Thereafter, the Plaintiff timely filed a claim for refund of estate taxes and interest, totaling $559.25, plus interest, on the ground that the Commissioner of Internal Revenue incorrectly determined that the Plaintiff was not entitled to deduct funeral expenses in full in computing the estate tax due and owing. On March 1, 1966, the District Director disallowed Plaintiff's claim for refund and the present action was timely instituted.
The position taken by the Government regarding funeral expenses and regarding administration expenses, attorneys' fees, and other charges against the estate of a decedent, and their deductibility for Federal estate tax purposes is set forth in Revenue Ruling 66-21, 1966-4 Cum.Bull. 15. An examination of this ruling makes apparent an inconsistency with regard to these expenses. This ruling holds that generally administration expenses pertaining to the community estate are to be charged one-half to the decedent's estate and one-half to the share in the community property of the surviving spouse. The ruling says:
The Government thus recognizes that expenses clearly incurred solely for the...
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Hutson v. Comm'r of Internal Revenue (In re Estate of Hutson), Docket No. 3719-66.
...next attempts to avoid the impact of Stapf, at lease in part, by relying on the recent Federal District Court case of Collins v. United States, 266 F.Supp. 881 (N.D. Tex.) for the proposition that funeral expenses, unlike other obligations, must be borne in full by the husband's property in......