Lipkowitz v. Comm'r of Internal Revenue (In re Estate of Goldwater), Docket No. 5864-72.

• Decision Date: 08 July 1975
• Docket Number: Docket No. 5864-72.
• Citation: 64 T.C. 540
• Parties: ESTATE OF LEO J. GOLDWATER, DECEASED, IRVING D. LIPKOWITZ AND LEE J. GOLDWATER, EXECUTORS, PETITIONERS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

64 T.C. 540

ESTATE OF LEO J. GOLDWATER, DECEASED, IRVING D. LIPKOWITZ AND LEE J. GOLDWATER, EXECUTORS, PETITIONERS

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 5864-72.

United States Tax Court

Filed July 8, 1975.

Irving D. Lipkowitz, Roy Plaut, and Peter Jason, for the petitioners.

Kimball K. Ross and David N. Brodsky, for the respondent.

Where the Supreme Court of New York, County of New York, had issued a declaratory judgment holding a Mexican divorce obtained by a husband invalid and that the wife he attempted to divorce was his legal wife and this judgment was outstanding, unchallenged at the date of the husband's death, the wife he attempted to divorce is his surviving spouse within the meaning of sec. 2056, I.R.C. 1954, and not the person he purported to marry after the Mexican divorce decree was entered.

OPINION

SCOTT, Judge:

Respondent determined a deficiency in the estate tax of the Estate of Leo J. Goldwater in the amount of $73,284.86. Some of the issues raised by the pleadings have been disposed of by agreement of the parties leaving for decision whether Lee J. Goldwater is the surviving spouse of Leo J. Goldwater within the meaning of section 2056, I.R.C. 1954.¹

All of the facts have been stipulated and are found accordingly.

Irving D. Lipkowitz and Lee J. Goldwater are the executors of the Estate of Leo J. Goldwater (hereinafter referred to as the decedent). The address of both executors at the time of the filing of the petition in this case was New York, N.Y. The estate tax return for decedent's estate was filed with the District Director of Internal Revenue in New York, N.Y. Decedent was married to Gertrude B. Goldwater (hereinafter Gertrude) on June 20, 1946, in New York, N.Y., where they lived together as husband and wife until about June 1955.

From the time of his marriage to Gertrude until the time of his death, decedent and Gertrude were both residents of New York, N.Y., and the sole place of business of decedent was within the city, county, and State of New York.

In December 1956, Gertrude was awarded a final decree of separation from decedent by the Supreme Court of the State of New York, County of New York.

On March 20, 1958, decedent procured a decree of divorce from Gertrude in the State of Tlaxcala, Republic of Mexico. This decree states in part as follows:

JUDGMENT: Apizaco, State of Tlaxcala, March 20th, 1958

Upon consideration of the proceedings in the present divorce action or purpose of final judgment, it appears:

FIRST: The required petition was presented, and having satisfied all legal requisites, the Plaintiff accepted the jurisdiction and authority of this Court, and as prescribed by the Civil Code, complying with the requirements of residence as proven with Certificate Number: 1195784, issued to him by the Department of the Interior; instituted an action for necessary divorce against the Defendant, with the assistance of the duly admitted Attorney by this Court, declaring as grounds for divorce the Incompatability of Temperaments as prescribed by Article 206, Section VII, of the Civil Code, Chapter of Divorce; that the parties were married in the City of New York, State of New York, United States of America, on June 20th, 1946,— as evidenced in compliance with Law; that there were no issues born from said matrimony; further, also petitioning in the complaint that the Defendant be summoned in compliance with Law, and that upon having satisfied all legal requisites a judgment be entered declaring the aforesaid matrimony dissolved. The complaint was admitted and the Defendant was ordered to be summoned as provided by Law, and the legal term expired without the Defendant having filed an answer. The statements in the complaint were then presumed to have been admitted, and was introduced during the proceedings satisfactory evidence that the Defendant became personally served and was given an opportunity to defend, exhibiting (sic) the affidavit of service duly sworn to that effect, and executed by Deputy Sheriff of the City of New York, County and State of New York, dated March 14th, 1958, in full compliance with Law; * * *

NOW THEREFORE: Based upon the foregoing and in Articles 560, 561, 564, 566, 567, 571, also 75, and other provisions of the Code of Civil Procedure it is adjudged:

FIRST: The marriage entered into between LEO J. GOLDWATER, and GERTRUDE B. GOLDWATER (sic), on June 20th, 1946, in the City of New York, State of New York, U.S.A. is now legally dissolved leaving both parties free to enter into new nuptials, according to Article 205, of the Civil Code.

On October 16, 1958, Gertrude began an action against decedent in the Supreme Court of the State of New York, County of New York, based upon two causes of action, the first for a declaratory judgment to declare invalid the decree of divorce obtained by decedent in Mexico, and the second to permanently restrain and enjoin decedent from remarrying in New York State or elsewhere. In the prayer of her complaint Gertrude asked that the court restrain decedent from remarrying during the pendency of the action. Decedent made a cross-motion to dismiss the second cause of action in the complaint (seeking a permanent injunction against decedent's remarrying) for legal insufficiency. Gertrude's motion for a temporary injunction was granted and decedent's cross-motion to dismiss the second cause of action was denied by the Special Term of the Supreme Court, New York County, and decedent appealed from both orders to the Appellate Division of the Supreme Court, First Department. On December 9, 1958, the Appellate Division unanimously (1) reversed the order denying decedent's cross-motion and granted such cross-motion to dismiss the second cause of action; and (2) modified the order granting Gertrude's motion for a temporary injunction, denied the motion, and affirmed only such part of the order as had awarded Gertrude counsel fees.

Decedent did not contest Gertrude's first cause of action for a declaratory judgment, and on February 19, 1959, the Supreme Court of the State of New York, County of New York, rendered a declaratory judgment in Gertrude's action which provided:

1. That the alleged divorce procured by the defendant LEO J. GOLDWATER from the plaintiff GERTRUDE B. GOLDWATER, in Tlaxcala, Mexico, on or about March 20, 1958, was and is fraudulent, null, void and of no force and effect whatsoever.

2. That the alleged marriage of the defendant LEO J. GOLDWATER to Mrs. LEE F. JABLOW in December, 1958, in the State of Connecticut, was and is null, void and of no force and effect whatsoever.

3. That the plaintiff GERTRUDE B. GOLDWATER is, and at all times since June 20, 1946 has been, the lawful wife of the defendant LEO J. GOLDWATER.

4. That the defendant LEO J. GOLDWATER and Mrs. LEE F. JABLOW are not and never have been husband and wife.

Lee F. Jablow (Lee) referred to in the decree is Lee J. Goldwater, one of the executors of decedent's estate.

On December 9, 1958, decedent and Lee were purportedly joined in marriage in Connecticut with a justice of the peace officiating. On the certificate of marriage recorded in the State of Connecticut, both decedent's residence and Lee's residence are shown as New York City, N.Y. At all times after December 9, 1958, until decedent's death, decedent and Lee resided together as husband and wife in New York.

Decedent died on February 21, 1968. His last will and testament, dated January 17, 1964, was duly admitted to probate in the Surrogate's Court in New York County, New York, N.Y., on March 19, 1968, and letters testamentary were issued on that date to Lee J. Goldwater and Irving D. Lipkowitz, the petitioners herein who are still qualified and acting as such executors.

In decedent's last will and testament he devised and bequeathed to Lee an interest in property equal to or greater than 50 percent of the value of his adjusted gross estate.

On April 11, 1968, Gertrude served and filed a notice to take an elective share of Leo's estate pursuant to section 5-1.1 of the New York Estates, Powers and Trusts Law.² By agreement dated April 4, 1969, between Gertrude and decedent's executors, the petitioners herein, Gertrude's claim was compromised and settled in the amount of $205,000.³ The agreement was approved by decree of the Surrogate's Court, New York County, New York, N.Y., on April 25, 1969. The sum of $206,103.26 which passed from decedent's estate to Gertrude consisted of this $205,000 together with the proceeds of an insurance policy on decedent's life in the amount of $1,103.26, of which Gertrude was the beneficiary.

The estate tax return for decedent's estate, filed May 20, 1969, showed an estate tax due in the amount of $84,889.74 and this was paid. On this return, a full marital deduction of $395,242.17 representing 50 percent of the adjusted gross estate (as computed on the return) was claimed on the basis that an amount in excess of this sum was passed to Lee.

Respondent in his notice of deficiency disallowed $189,138.91 of the claimed marital deduction with the explanation that a marital deduction in the amount of $206,103.26, representing the value of the interest in decedent's property which passed to Gertrude was allowable. Respondent in his notice stated ‘that Lee J. Goldwater does not qualify as the surviving spouse within the meaning of Section 2056.’

Section 2056(a),⁴ with specified limitations, exempts from estate tax the value of a decedent's adjusted gross estate (not to exceed 50 percent thereof, section 2056(c)(1)) which passes from the decedent to the surviving spouse. This provision of the statute, first enacted in 1948, was intended to ‘produce approximate geographical equality’ in estate tax and to ‘equate the decedent in the common-law State with the decedent in the community-property State.’ H. Rept. No. 1274, to accompany H.R. 4790, 80th Cong., 2d Sess. (1948), 1948-1 C.B. 241, 261; S. Rept. No. 1013, to accompany H.R. 4790,...