Igoe v. Comm'r of Internal Revenue
| Decision Date | 27 February 1953 |
| Docket Number | 28499.,Docket Nos. 28498 |
| Citation | 19 T.C. 913 |
| Parties | ALMA IGOE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.JOHN FRANCIS IGOE, MARIE L. KELLER, GENERAL GUARDIAN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
G. A. Garvey, Esq., for the petitioners.
John Clark, Esq., for the respondent.
ESTATE INCOME PROPERLY CREDITED TO BENEFICIARIES— Sec. 162(c), I.R.C.—Under the facts, held that proportionate amounts of income of an estate for 1941 were properly credited in 1941 to each of the petitioners within the meaning of section 162(c) of the Code so that the respective amounts of income so credited are taxable to each of the petitioners in 1941.
The Commissioner has determined deficiencies in income tax for the year 1941 as follows:
+--------------------------------------+
¦Docket No. 28498, Alma Igoe¦$12,649.89¦
+---------------------------+----------¦
¦Docket No. 28499, John Igoe¦3,616.75 ¦
+--------------------------------------+
The petitioners are legatees of the estate of Andrew J. Igoe, deceased. The Commissioner has determined that income of the estate for 1941 is taxable to each petitioner, $30,355.42, to Alma Igoe, and $15,177.71, to the minor son of the decedent, John Francis Igoe. The Commissioner held that the above amounts of estate income for 1941 were ‘properly credited * * * by the executors of the estate of Andrew J. Igoe in the year 1941‘ to the respective accounts of the petitioners and, therefore, under section 162(c) of the Code, are taxable, respectively, to each petitioner.
The question to be decided is whether the income in question is includible in the income of the petitioners for 1941 under the provisions of section 162(c).
The facts which have been stipulated are found as facts, and the exhibits attached thereto are incorporated herein by reference.
The petitioners are residents of Brooklyn, New York. The income tax returns of the petitioners for 1941 were filed with the collector for the first district of New York. The petitioners' returns were made on the basis of a calendar year.
The petitioner, Alma Igoe, is the widow of Andrew J. Igoe who died on June 16, 1937, a resident of Kings County, New York. The petitioner, John Francis Igoe, is a minor child of Alma Igoe and Andrew J. Igoe, deceased. Marie L. Keller, a sister of Alma Igoe, was appointed the general guardian of John Francis Igoe by the Kings County Surrogate's Court on July 31, 1939. The decedent was survived by three children in addition to John Francis; there are, therefore, five surviving legatees.
The decedent, Andrew J. Igoe, died testate. In September 1937, his will was admitted to probate in the Kings County Surrogate's Court. His two brothers, Peter and James Igoe, and Alma Igoe, were duly appointed the coexecutors of the estate.
Under the will of the decedent, and by virtue of Subdivision 1 of Section 83 of the Decedent's Estate Law of New York, Alma Igoe and the decedent's four children, Peter and John Igoe, and Catherine Igoe Dailey, and Elizabeth Igoe Murphy are entitled to share the entire net estate as residuary legatees; Alma Igoe is entitled to receive a one-third share, and each child is entitled to receive a one-sixth share.
The will of the decedent, Andrew J. Igoe, is brief and provides, in general, as follows: After the payment of all debts and testamentary expenses, the residuary estate is bequeathed to the persons who would be entitled to receive it under the laws of New York had the decedent died intestate. The executors of the will are given broad powers to sell, transfer, and convey any and all property of the estate, real or personal, upon such terms as to them may seem best. The decedent authorized the executors to make distribution of his estate among the distributees in kind or in cash, or partly in kind and partly in cash, whichever to them may seem best. He directed that none of the executors should be required to file any bond for the performance of their duties.
The estate was in process of administration during 1941 and for at least 6 months after January 1, 1942. The estate made its income tax returns on the basis of a fiscal year ending May 31. The first fiscal year of the estate ended on May 31, 1938.
The assets of the estate of Andrew J. Igoe, deceased, consisted of stocks, bonds, interests in partnerships and joint ventures, miscellaneous property, mineral deeds, and real estate. The value of the gross estate as determined by the Commissioner of Internal Revenue for estate tax was $1,257,650.97. In his audit of the estate tax return, the Commissioner determined that allowable deductions amounted to $156,129.50, and that the net estate, before various credits, amounted to $1,101,521.47, as follows:
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¦Assets of the Estate ¦ ¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Real estate ¦$13,150.92¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Stocks and bonds ¦859,166.66¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Cash ¦751.11 ¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Insurance ¦99,015.17 ¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Jointly owned property ¦10,000.00 ¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Other miscellaneous property ¦121,904.11¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Transfers (gifts in lifetime) ¦153,663.00¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Total gross estate ¦ ¦$1,257,650.97¦
+----------------------------------------------------+----------+-------------¦
¦Expenses of the Estate ¦ ¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Funeral expenses ¦$2,971.50 ¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Executorial commissions ¦58,396.95 ¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Attorneys' fees (paid) ¦10,500.00 ¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Miscellaneous administration expenses ¦11,215.00 ¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Debts of decedent ¦73,046.05 ¦ ¦
+----------------------------------------------------+----------+-------------¦
¦Total above deductions ¦ ¦156,129.50 ¦
+----------------------------------------------------+----------+-------------¦
¦Value of the net estate before allowance of specific¦ ¦$1,101,521.47¦
¦exemptions ¦ ¦ ¦
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The Commissioner determined the Federal estate tax on the estate of the decedent to be $225,309.75. The obligations of the estate for payment of debts, administrative expenses, funeral expense ($156,129.50), and Federal estate tax, supra, totaled $381,439.25.
Included in the assets of the estate were debenture bonds, and preferred and common stocks in two corporations of the Igoe family, Igoe Brothers, Inc., an operating company, and Eybro Realty Corporation, a holding company in which the decedent owned about 25 per cent of the securities. The securities of the Igoe and Eybro corporations held by the estate, and the values placed thereon by the examining revenue agent are as follows:
Books of account for the estate were kept. The books of account were located at the offices of the Igoe corporation in Brooklyn. The estate employed an accountant, E. Glasser, to keep the accounts of the estate. The books were under the supervision of James J. Igoe, one of the executors.
Alma Igoe was an executrix of the estate at least until November 21, 1941, and prior to that time she had not received a discharge from her duties as executrix by the Surrogate's Court. Subsequently, on April 30, 1943, the Surrogate's Court approved Alma Igoe's resignation as executrix and discharged her from executorial duties. She filed an account of her acts as executrix and a petition for judicial settlement of her account as executrix in the Surrogate's Court on March 12, 1942, in which she petitioned the court, inter alia, to permit her to resign as executrix.
The estate received, during its fiscal years ended May 31, 1940, and May 31, 1941, net income in the respective amounts of $49,643.55, and $91,066.27, which it reported...
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