ESTATE OF PUTMAN v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 102689

• Decision Date: 28 October 1941
• Docket Number: 102690.,Docket No. 102689
• Parties: ESTATE OF HENRY W. PUTNAM, DECEASED, GUARANTY TRUST COMPANY OF NEW YORK, EXECUTOR, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

45 B.T.A. 517 (1941)

ESTATE OF HENRY W. PUTNAM, DECEASED, GUARANTY TRUST COMPANY OF NEW YORK, EXECUTOR, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket Nos. 102689, 102690.

Board of Tax Appeals.

Promulgated October 28, 1941.

J. H. Nichols, Esq., for the petitioner.

L. A. Spalding, Esq., for the respondent.

In Docket No. 102690, the respondent determined a deficiency in income tax liability in the amount of $1,509.13 against Henry W. Putnam, the decedent. This deficiency is based upon the exclusion from taxable income of the decedent of dividends in the amount of $2,400 declared prior to decedent's death, but not payable, however, until a month after his death and then to stockholders of record as of a week after his death. The respondent partially disallowed an accrual for taxes paid, the disallowance amounting to $34.09.

In Docket No. 102689, the respondent determined a deficiency in income tax liability against the decedent's estate in the amount of $2,658.64, based on the failure to report $21,651.75 in dividends received by the estate, although declared prior to the decedent's death. A second factor in this docket was the asserted failure to report $557.42 in dividends received by the estate, because deemed by the estate to be nontaxable.

In its petition in Docket No. 102689 the petitioner claims an overpayment by the estate of $2,400 in dividends now sought to be taxed as income of the decedent, and claims that respondent erred in adding to the gross income of the estate the amount of $21,651.75.

In its petition in Docket No. 102690 the petitioner claims that respondent erred in refusing to exclude from decedent's gross income as reported in the income tax return for 1938 the amount of $21,651.75 which petitioner alleges was not the income of the decedent. Petitioner also claims respondent erred in adding to decedent's gross income the amount of $2,400.

These two proceedings were consolidated for hearing and decision.

The sole question presented is whether dividends declared prior to the death of an individual stockholder, payable to stockholders of record on record dates subsequent to his death and payment dates subsequent to such record dates, are properly includible in the income tax return of that individual, or whether they are properly includible in the income tax return of his estate.

FINDINGS OF FACT.

The facts in these proceedings have been fully stipulated and are as follows:

1. The late Henry W. Putnam died on March 30, 1938. At the time of his death and at all times during 1938 until the time of his death he was a citizen of the United States of America and a resident of the Savoy-Plaza Hotel, Fifth Avenue and 59th Street, in the Borough of Manhattan, City, County and State of New York.

2. Guaranty Trust Company of New York is a corporation incorporated and existing under the laws of the State of New York, having its principal office and place of business at No. 140 Broadway, in said Borough of Manhattan.

3. Said Guaranty Trust Company of New York qualified as Executor of the Estate of said Henry W. Putnam in the Surrogates' Court of the County of New York on June 16, 1938, and is still qualified and acting as such Executor.

4. The Petitioner is the Estate of said Henry W. Putnam, deceased, Guaranty Trust Company of New York, Executor.

5. Said Henry W. Putnam at the date of his death owned 4,800 shares of Common Stock of The American Smelting & Refining Company, a New Jersey corporation. A dividend of $2,400 (50¢ per share) on said shares owned by said decedent was declared by said Company on March 1, 1938, payable on May 31, 1938, to stockholders of record on May 6, 1938. The petitioner received said dividend in the amount of $2,400 on or about May 31, 1938.

6. The Petitioner also received dividends in the total amount of $21,651.75 on shares of stock owned by said decedent at the date of his death on or about the payment dates as set forth below:

                Dividend of $1.25 per share on 1,255 shares General Motors Corporation
                     (a Delaware corporation) $5 Preferred Stock, declared on
                     February 7, 1938, payable on May 2, 1938, to stockholders of
                     record on April 4, 1938 ______________________________________________      $ 1,568.75
                Dividend of 50¢ per share on 50 shares United Profit Sharing Corporation
                     (a Delaware corporation) Preferred Stock, declared on
                     February 24, 1938, payable on April 30, 1938, to stockholders of
                     record on March 31, 1938 ______________________________________________         $25.00
                Dividends of 25¢ per share on 1,100 shares Westinghouse Air Brake
                     Manufacturing Company (a Pennsylvania corporation) Common
                     Stock, declared on November 16, 1937, payable on April 30, 1938
                     July 30, 1938, and October 31, 1938, to stockholders of record on
                     March 31, 1938, June 30, 1938, and September 30, 1938, respectively
                     _______________________________________________________________________      825.00
                

                Dividend of 15¢ per share on 2,000 shares Hecker Products Corporation
                    (a New Jersey corporation) Common Stock, declared on
                    March 23, 1938, payable on May 2, 1938, to stockholders of record
                    on April 9, 1938 __________________________________________________________    $300.00
                Dividend of 20¢ per share on 290 shares Philadelphia Company (a
                    Pennsylvania corporation) Common Stock, declared on March
                    18, 1938, payable on April 25, 1938, to stockholders of record on
                    April 1, 1938 ______________________________________________________________     58.00
                Dividend of 87½¢ per share on 1,000 shares United States Smelting
                    Refining & Mining Company (a Maine corporation) 7% Preferred
                    Stock, declared on March 23, 1938, payable on April 15, 1938, to
                    stockholders of record on April 1, 1938 _____________________________________    875.00
                Dividend of $1 per share on 18,000 shares American Can Company
                    (a New Jersey corporation) Common Stock, declared on March
                    29, 1938, payable on May 16, 1938, to stockholders of record on
                    April 25, 1938 _______________________________________________________________   18,000.00

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