Estate of Waldman v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 104898.

• Citation: 46 BTA 291
• Decision Date: 10 February 1942
• Docket Number: Docket No. 104898.
• Parties: ESTATE OF LEONARD S. WALDMAN, DECEASED, BY THE NATIONAL COMMERCIAL BANK AND TRUST COMPANY OF ALBANY, EXECUTOR, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

46 B.T.A. 291 (1942)

ESTATE OF LEONARD S. WALDMAN, DECEASED, BY THE NATIONAL COMMERCIAL BANK AND TRUST COMPANY OF ALBANY, EXECUTOR, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 104898.

Board of Tax Appeals.

Promulgated February 10, 1942.

Robert C. Poskanzer, Esq., for the petitioner.

James C. Maddox, Esq., for the respondent.

OPINION.

ARUNDELL:

The Commissioner determined a deficiency in estate tax of decedent's estate in the sum of $956.09. The first issue is whether or not furniture, clothing, and an automobile set off to decedent's widow in accordance with a New York statute is includible in decedent's gross estate. The second issue is whether or not respondent correctly computed the amount of a deduction for a charitable bequest.

Most of the facts were stipulated and are hereby adopted as a part of our findings. Of the stipulated facts we set forth herein only such facts as are material to our discussion of the issues. Additional facts were adduced from evidence presented at the hearing.

Leonard S. Waldman, hereinafter referred to as decedent, died April 4, 1937, leaving a last will and testament which provided, after several specific bequests, that "all the rest, residue and remainder" of decedent's estate should be placed in trust for his wife, Eleanor Elsie Waldman, until her death or remarriage. The will further provided:

It is my will, and I hereby direct, that the devise and bequests herein made and given to my said wife, and the trusts created for her benefit, shall be free from any and all legacy, transfer, inheritance, estate or succession taxes, State or Federal; and that all taxes, which may be payable in respect to said devise and bequests to my said wife, and to the estate given in trust for her benefit, shall be paid by my Executor out of my residuary estate, and that my residuary estate be charged with the payment thereof.

The will provided that at the death or remarriage of decedent's wife "all the rest, residue and remainder" of the estate should be placed in trust for the Albany Jewish Community Center, a charitable institution. At the time of decedent's death his widow's age was 53 years, 7 months, and 6 days. The will was duly admitted to probate and letters testamentary were duly granted on April 26, 1937.

The estate tax return for the estate of Leonard S. Waldman was filed with the collector of internal revenue for the fourteenth district of New York, at Albany, New York.

The appraisers appointed by the Surrogate's Court for Albany County, New York, set apart to decedent's widow items of household furniture valued at $634, an automobile valued at $450, and wearing apparel amounting to $25. In the account of proceedings of the estate rendered to the Surrogate's Court by the executor the above items, aggregating $1,109, were reported as set apart to the widow pursuant to section 200 of the Surrogate's Court Act of the State of New York. This account of proceedings was duly approved by the Surrogate's Court of Albany County by decree entered July 28, 1938.

Pursuant to waiver of restriction on assessment and collection, a deficiency of $488.36 was assessed against decedent's estate and was paid on September 6, 1939. This amount is a part of the deficiency under consideration in the present proceeding.

The first issue is whether or not the personal property set off to decedent's widow, in accordance with state statute, constitutes a part of decedent's gross estate. We think that there is no doubt that the amounts in question were a part of the gross estate of decedent as defined by section 302 (a) of the Revenue Act of 1926, as amended. Estate of Louis M. Faber, 40 B. T. A. 1070.

Nor are the items proper deductions from gross estate. Section 303 (a) (1) (E) of the Revenue Act of 1926, as amended by section 805 of the Revenue Act of 1932 and section 403 (a) of the Revenue Act of 1934, provides that there may be deducted from the value of the gross estate amounts "reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent * * *." Petitioner contends that although the New York statutes provide for no such payments for support, the amounts set apart to decedent's widow constitute payments in lieu of payments for support and should be deductible from the estate. We do not agree. It is difficult to comprehend that furniture, an automobile, and $25 of clothing might be "amounts reasonably required and actually expended for the support" of a widow. Respondent is sustained on this issue.

The second issue concerns the computation of the deduction from decedent's gross estate of the charitable devise made by decedent to the Albany Jewish Community Center. Petitioner contends that respondent erred in his application of section 303 (a) (3) of the Revenue Act of 1926, as amended by section 807 of the Revenue Act of 1932,¹ to the charitable remainder here under consideration. That section provides that where, by terms of the will or local law, estate, succession, legacy, or inheritance taxes are payable out of bequests, legacies, or devises otherwise deductible under that section, the deductible amount is the amount of the bequests, legacies, or devises, reduced by the amount of such taxes. A provision similar to this was first inserted in the Revenue Act of 1924 as the result of a decision of the Supreme Court in Edwards v. Slocum, 264 U. S. 61, wherein it was held that a residuary bequest to charity was deductible in full from gross estate even though death taxes were actually payable out of the bequest. S. R. No. 398, 68th Cong., 1st sess. (Revenue...