Indiana Dept. of State Revenue, Inheritance Tax Div. v. Estate of Smith, 1-1083A316

• Decision Date: 29 March 1984
• Docket Number: No. 1-1083A316,1-1083A316
• Parties: INDIANA DEPARTMENT OF STATE REVENUE, INHERITANCE TAX DIVISION, Appellant, v. ESTATE OF Arthur Arnold SMITH, Appellee.
• Court: Indiana Appellate Court

Page 1263

460 N.E.2d 1263

INDIANA DEPARTMENT OF STATE REVENUE, INHERITANCE TAX

DIVISION, Appellant, v. ESTATE OF Arthur Arnold SMITH, Appellee.

No. 1-1083A316.

Court of Appeals of Indiana,

First District.

March 29, 1984.

Linley E. Pearson, Atty. Gen., Pamela R. Hutson, Deputy Atty. Gen., Indianapolis, for appellant.

John C. Vandivier, Jr., Raber & Vandivier, Danville, for appellee.

RATLIFF, Judge.

STATEMENT OF THE CASE

The Indiana Department of State Revenue, Inheritance Tax Division (Department) appeals the denial of its petition for rehearing, reappraisement and redetermination of inheritance and transfer tax. We reverse.

FACTS

Arthur Arnold Smith (decedent) died testate on September 13, 1982. His property consisted of an unemployment compensation check for $84.00, personal property valued at $1350.00, and real estate appraised at $14,000.00. In addition, there were bank account totalling $72,455.14 held in the names of decedent and Kenneth E. Smith (Kenneth), decedent's brother, as joint tenants with full right of survivorship.

Decedent's will naming his parents as beneficiaries, was probated and a petition for no administration and transfer of assets by affidavit was granted, thereby transferring the check, personal property and real estate to the beneficiaries under his will. ¹ Kenneth paid decedent's funeral expenses of $3,658.82, and appraisal for fees, court costs, and attorney's fees in the aggregate of $3,664.00 for a total of $7,322.82 which he claimed as deductions from the joint bank accounts for inheritance tax purposes. The court allowed these deductions and assessed the inheritance tax due on the transfer to Kenneth accordingly.

ISSUE

Were the funeral expenses and costs of administration paid by decedent's brother properly deducted from the gross amounts of the bank accounts held by decedent and his brother as joint tenants with full right of survivorship in determining the inheritance tax due thereon?

DISCUSSION AND DECISION

Property held in joint ownership with right of survivorship is subject to inheritance tax under Indiana Code section 6-4.1-2-5 which provides:

"If property is held by two (2) or more individuals jointly with rights of survivorship, the exercise of the rights of the surviving joint owner or owners to the immediate ownership or possession and enjoyment of the property upon the death of one (1) of the joint owners is a transfer to which the inheritance tax applies. The value of the property so transferred equals the remainder of (1) the total value of the jointly held property, minus (2) the value of that portion of the jointly held property which the surviving joint owner or owners prove belonged to him or them and never belonged to the deceased joint owner."

Deductions from the value of property transferred other than by will or intestate succession are limited by statute, Indiana Code section 6-4.1-3-14, which, insofar as applicable here, provides:

"The following items, and no others, may be deducted from the value of property interests which are transferred by a resident decedent but which are not transferred by his will, under the laws of intestate succession, or under a trust:

(1) Those taxes described in section 13(b)(5) [6-4.1-3-13(b)(5) ] of this chapter, and

(2) Liens subject to which the property interests are transferred. However, the amount of the decedent's debts or funeral expenses paid by a surviving joint owner of property held jointly with the decedent may be deducted from the value of the jointly held property if the assets of decedent's estate are insufficient to pay the debts or funeral expenses."

The determination and collection of inheritance tax and the rights and obligations of both the department of state revenue and the taxpayer are governed entirely by statute. Indiana Department of State Revenue v. Estate of Rogers, (1984) Ind.App., 459 N.E.2d 69; Matter of Estate of Compton, (1980) Ind.App., 406 N.E.2d 365. Authority to deduct the expenses claimed by Kenneth must, therefore, be found in the language of Indiana Code section 6-4.1-3-14, or not at all. Under that statute the amount of decedent's debts and funeral expenses "may be deducted from the value of the jointly held property if the assets of decedent's estate are insufficient to pay the debts or funeral expenses." (Emphasis supplied.) Id.

Kenneth claims the assets of the estate insufficient because there was no money or funds readily available to pay them, and the real estate would have to have been sold to obtain funds necessary to pay such expenses. He would have us interpret the words of the statute to mean if the cash or liquid assets were insufficient to pay the covered debts and expenses that the surviving joint owner who paid them would be entitled to a deduction. The statute clearly does not say that.

In construing a statute, if the language is clear and unambiguous it need not and cannot be subject to judicial interpretation. State ex rel. Southern Hills Mental Health Center, Inc. v. Dubois County, (1983) Ind...