Elmhirst v. United States
| Decision Date | 03 March 1930 |
| Docket Number | No. J-653.,J-653. |
| Citation | 38 F.2d 915 |
| Parties | ELMHIRST v. UNITED STATES. |
| Court | U.S. Claims Court |
Willard Straight, while in the military service of the United States, died in Paris, France, on the 30th of November, 1918, and was at and before the time of his death a citizen of the United States. The plaintiff, Dorothy Whitney Elmhirst (formerly Dorothy Whitney Straight), is a citizen of the United States, a resident of the state of New York and the Second internal revenue collection district of said state, and by the will of Willard Straight, which was duly admitted to probate in the Surrogate's Court of New York County, N. Y., was named executrix of his estate and qualified as and ever since has been and is now such executrix.
As executrix there came into plaintiff's hands certain stocks, which were appraised by the Surrogate Court as of the aggregate value at the date of the death of the decedent of $2,158,510, and which appraised values were the true market values of said stocks at that date.
Said stocks were not specifically bequeathed by Willard Straight, but constituted a part of his general estate which came into the hands of plaintiff as executrix. During the fiscal year ending November 30, 1919, in the orderly administration of the estate, it was necessary for the plaintiff as executrix to sell said stocks, and they were sold for the aggregate sum of $2,639,287.96. Said stocks had been purchased by decedent, Willard Straight, during the years 1916, 1917, and 1918 at an aggregate cost of $2,415,248.60. The amounts received from the sale of these stocks were $480,777.96 in excess of their appraised value and $224,039.36 in excess of their cost to the decedent, Willard Straight.
The Commissioner of Internal Revenue treated as income to the estate said sum of $480,777.96, being the difference between the appraised value and cost aforesaid, and assessed against the plaintiff a tax of $198,392.29 in excess of the amount that would have been assessed if only the difference between the cost to Willard Straight and the sale price, to wit, $224,039.36, had been considered as income.
Plaintiff protested the deficiency found by the commissioner upon the basis aforesaid, as set out in a deficiency letter dated January 14, 1925, and on March 14, 1925, filed her petition of appeal before the Board of Tax Appeals. The appeal was argued and submitted on April 29, 1925, and under leave briefs were filed on or before May 16, 1925.
The decision of the board affirming the action of the commissioner was promulgated some two years later on June 6, 1927, four members dissenting (7 B. T. A. 184), and on June 9, 1927, the plaintiff filed with the board a motion for rehearing. By order of the board dated June 13, 1927, the motion for rehearing was set down for June 21, 1927, and on that date was heard. On October 4, 1927, the board entered an order reciting that argument had been heard in support of said motion and that "after due consideration of the motion and argument of counsel thereon, the board is of the opinion that the conclusion reached by it in its decision promulgated June 6, 1927, was correct, and the motion of the petitioner is therefore denied." On October 15, 1927, the Board of Tax Appeals by an order affirmed the ruling of the Commissioner of Internal Revenue.
On December 19, 1927, demand for payment of the tax assessed by the commissioner as aforesaid was made by the collector of internal revenue for the Second district of New York, and on December 29, 1927, the balance of the tax demanded, that remained unpaid after credit of a refund due the estate of Willard Straight had been had, was paid by plaintiff.
On June 25, 1928, plaintiff, as executrix, filed with the collector of internal revenue, Second district, New York, her claim for refund of the sum of $198,392.29, with interest, and in said claim as the ground in support thereof stated that the commissioner had determined the taxable income to said estate resulting from the sale of said stocks upon the basis of their value at the time of the death of decedent and that such determination was erroneous and not in accord with law and because of the use of such wrongful basis the refund claimed should be made. On July 18, 1928, the Commissioner of Internal Revenue rejected said claim, and on July 31, 1928, the rejection of said claim was duly set forth in the schedule of the commissioner.
On November 7, 1928, plaintiff filed in this court her claim against the United States.
The case having been heard by the Court of Claims upon a stipulation of facts signed on behalf of plaintiff by her attorneys, Sherley, Faust & Wilson, and on behalf of defendant by Assistant Attorney General Herman J. Galloway, and the evidence, the court makes the following special findings of fact:
1. Dorothy Whitney Elmhirst, the plaintiff, is a citizen of the United States. Willard Straight died testate on the 30th of November, 1918, and was at or before the time of his death a citizen of the United States.
In and by the terms of the last will and testament of said Willard Straight, which was duly admitted to probate in the Surrogate Court of Nassau County, N. Y., on April 12, 1919, the plaintiff (then known as Dorothy Whitney Straight) was named executrix. She qualified as executrix and entered upon her duties as such and is now and ever since her appointment has been acting as such executrix.
On April 3, 1925, plaintiff was married to Leonard K. Elmhirst, and became and is now known as Dorothy Whitney Elmhirst.
2. The plaintiff is and at all times herein mentioned was a resident of the state of New York and of the Second internal revenue collection district of said state. The plaintiff made a return for the estate of Willard Straight, deceased, for the fiscal year ending November 30, 1919, showing a tax liability of $5,459.70, which sum, on April 13, 1920, she paid to the collector of internal revenue for the Second district, state of New York. A copy of the return is attached hereto as Appendix A, and is a true and correct copy of the return filed by plaintiff as executrix of the estate of Willard Straight, with the collector of internal revenue for said district of New York.
3. There came into plaintiff's hands as executrix of said estate, among other property, certain shares of stock purchased during the years 1916, 1917, and 1918 by said decedent. The names of said stocks, the number of shares, the date of purchase, and the cost price of same are as follows:
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Date of purchase | Name of company | No. of | Cost price
| | shares |
-------------------|------------------------------------------|----------|--------------
Oct., 1916 ....... | Haskell & Barker Car Co. ............. | 1,000 | $42,050.00
Oct. 3, 1918 ..... | Lackawanna Steel Co. ................. | 500 | 40,062.50
July, 1918 ....... | Midvale Steel & Ordnance Co. ......... | 1,000 | 51,875.00
Sept.-Oct., 1918 . | U.S. Steel Corporation ............... | 3,000 | 327,437.50
April 25, 1918 ... | American Int'l Corp'n. ............... | 760 | 39,748.60
1915 ............. | American Int'l Corp'n. ............... | 2,650 | 159,000.00
Jan., 1917 ....... | Atlantic Gulf & West Indies S.S. Co. . | 500 | 59,262.50
Nov.-Dec., 1916 .. | | American Locomotive Co. .............. | 1,300 | 102,962.50
Feb., 1917 ....... | | | |
Sept., 1918 ...... | American Locomotive Co. .............. | 500 | 33,500.00
June-Oct., 1918 .. | Crucible Steel Co. ................... | 1,000 | 64,925.00
Aug., 1918 ....... | Atlantic Gulf & West Indies S.S. Co. . | 500 | 52,412.50
Nov., 1918 ....... | Corn Products Ref'g Co. .............. | 1,000 | 47,775.00
Feb. 1918 ........ | Ohio City Gas Co. & Rts. ............. | 2,000 | 81,787.50
Sept., 1918 ...... | American Locomotive Co. .............. | 500 | 33,500.00
May-Oct., 1918 ... | Lackawanna Steel Co. ................. | 4,000 | 336,212.50
June-July, 1918 .. | Midvale Steel & Ordnance Co. ......... | 2,000 | 105,500.00
Dec., 1917 ....... | | American Smelting & Refining Company . | 2,700 | 223,025.00
Apr., 1918 ....... | | | |
Sept.-Oct., 1918 . | U.S. Steel Corporation ............... | 3,500 | 384,875.00
Oct.-Nov., 1918 .. | U.S. Steel Corporation ............... | 2,100 | 229,337.50
| | | ____________
| | | 2,415,248.60
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Said stocks were not specifically bequeathed by the said decedent, Willard Straight, in and by his last will and testament, but constituted a part of his estate which came into the hands of plaintiff as executrix thereof, and such stocks, with other assets of the estate of the decedent, were duly appraised by appraisers appointed by the Surrogate Court, and the values as of the date of the death of said decedent of said stocks were appraised as follows:
=====================================================================
Name of company | Number of | Inventory
| shares | value
-------------------------------------------|-----------|-------------
Haskell & Barker Car Co. ................. | 1,000 | $47,000.00
Lackawanna Steel Co. ..................... | 500 | 34,625.00
Midvale Steel & Ordnance Co. ............. | 1,000 | 44,000.00
U.S. Steel
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