Cox v. United States

• Decision Date: 10 October 1968
• Docket Number: Civ. A. No. 2688-N.
• Citation: Cox v. United States, 296 F.Supp. 145 (M.D. Ala. 1968)
• Parties: Callie L. COX and B. C. Cox, Jr., as Executors under the Will of B. C. Cox, Deceased, Plaintiffs, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Middle District of Alabama

296 F. Supp. 145

Callie L. COX and B. C. Cox, Jr., as Executors under the Will of B. C. Cox, Deceased, Plaintiffs, v. UNITED STATES of America, Defendant.

Civ. A. No. 2688-N.

United States District Court M. D. Alabama, N. D.

October 10, 1968.

W. H. Albritton, Albritton & Rankin, Andalusia, Ala., for plaintiffs.

Ben Hardeman, U. S. Atty., Montgomery, Ala., for defendant.

ORDER

FRANK M. JOHNSON, Jr., District Judge.

This is an action seeking a refund of estate taxes. It is agreed that this Court has jurisdiction pursuant to 28 U.S.C. § 1346(a). It has been further agreed that this cause be submitted upon the pleadings and upon an agreed Stipulation of Facts. This Court has also had the benefit of supporting briefs and oral argument September 6, 1968.

The decedent, B. C. Cox, died testate on April 29, 1960, leaving a widow and two children surviving. He left an estate valued at $322,875.60, consisting of both real and personal property. The widow dissented from the will, electing to take her statutory share under the law of Alabama. At the date of the decedent's death the widow owned no separate real estate, but did as of that date of death have a separate estate in personal property with a fair market value of $29,373.86. On the estate tax return the marital deduction was computed and given a value of $100,737.01. Upon audit, the marital deduction was reduced to $67,966.18, thereby creating an estate tax deficiency which was assessed in the amount of $9,796.63. The net reduction of the marital deduction was a result of five adjustments, and it is stipulated between the parties that the only adjustments in controversy are as follows:

(1) The defendant treated the widow's dower interest as a terminable interest and did not, as the plaintiffs contend is proper, increase the value of the marital deduction on account of such dower interest.

(2) The defendant in computing the value of the widow's intestate share of the personalty first subtracted the total of the federal estate tax from the net personal estate, whereas the plaintiffs contend that the widow's share should be computed prior to making allowance for federal estate tax.

On June 9, 1964, the Circuit Court of Covington County, Alabama, in Equity, entered a decree fixing the net marital share of the widow under statutes of Alabama at $42,863.18.

Following payment of the assessed deficiency, the plaintiffs filed a timely claim for refund, which claim was disallowed.

The questions presented for decision are the correctness of the Government's adjustments to the marital deduction outlined above. Both questions turn on state law: state law determines the existence and extent of relevant property interests, 26 U.S.C. § 2056, Aldrich v. United States, 346 F.2d 37 (5th Cir. 1965); state law determines the ultimate burden of estate tax payment, Riggs v. Del Drago, 317 U.S. 95, 63 S.Ct. 109, 87 L.Ed. 106.

In refusing to include the widow's dower interest in the marital deduction, the Government relies heavily upon a previous decision of this Court, Taylor v. United States, Civil Action No. 2316-N, M.D.Ala., Nov. 31, 1966, aff'd 388 F.2d 849 (5th Cir. 1967). Plaintiffs rely upon a dictum in the opinion of Judge Rives to distinguish the instant situation: "Since no steps were taken to quicken the widow's right of dower into a tangible asset, the application of section 43 cannot take into consideration the value of dower." Taylor v. United States, supra at 853. Plaintiffs contend that the action in the Circuit Court of Covington County, Alabama, "quickened" the right of dower into a...