Peck v. Comm'r of Internal Revenue (In re Estate of Dancy )
| Decision Date | 14 September 1987 |
| Docket Number | Docket No. 11774-85 |
| Citation | 89 T.C. 550,89 T.C. No. 39 |
| Parties | ESTATE OF JOSEPHINE O'MEARA DANCY, DECEASED, JOHN J. PECK, EXECUTOR, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
D's executor, on her behalf, undertook to renounce and disclaim her survivorship rights in certain personal property which D had acquired as joint tenant with right of survivorship from her husband, who had predeceased her by eight days. Such interests were excluded from D's Federal estate tax return.
HELD: (1) The disclaimers were invalid for Federal estate tax purposes because they were invalid under applicable state law (North Carolina).
(2) As to joint interests created after December 31, 1981, the disclaimers did not qualify under the provisions of I.R.C. sec. 2518(c)(3), so as to avoid the applicability of state law. Newman A. Townsend Jr. and Maria M. Lynch, for the petitioner.
Edwina L. Charlemagne, for the respondent.
Respondent determined a deficiency in petitioner's Federal estate tax in the amount of $70,173.22. After concessions by both sides, the issue which we must decide is whether petitioner's executor, on behalf of Josephine O'Meara Dancy, Deceased, made a qualified disclaimer, for Federal estate tax purposes, with respect to certain undivided interests which decedent owned as joint tenant, with rights of survivorship, at the time of the death of her husband (who predeceased her) in certain stocks and bonds, certificates of deposit, and a money market fund.
Petitioner herein, the Estate of Josephine O'Meara Dancy, acting by and through John J. Peck, Executor, was a resident of Jacksonville, North Carolina, at the time the petition herein was filed. Petitioner's decedent, Josephine O'Meara Dancy (hereinafter ‘decedent‘), died testate on August 22, 1982. Her last will and testament was duly probated in the North Carolina State Courts. Decedent's will left all her property to her husband, John Spencer Dancy, if he survived her. If he predeceased her, decedent's will then left $10,000 in trust for one individual and the balance to her nephew, John J. Peck (the executor herein).
In fact, decedent's husband, John Spencer Dancy (hereinafter ‘Dancy ‘), predeceased decedent, dying on August 14, 1982. His will was likewise probated in the North Carolina Courts. Under his will, Dancy left all his property to his wife, decedent herein, if she survived him, and otherwise left $20,000 for two individuals and the remainder to the same John J. Peck.
At the time of Dancy's death, he and decedent owned various stocks and bonds as equal joint tenants with rights of survivorship. Those securities, together with their dates of acquisition and their fair market values at the time of decedent's death, are as follows:
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¦ ¦ ¦ ¦Fair market¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦ ¦ ¦value ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦ ¦ ¦at time of ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦ ¦Date purchased¦decedent's ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦Item ¦or issued ¦death ¦
+---+-------------------------------------+--------------+-----------¦
¦1. ¦400 Shares of Reliance Insurance Co.,¦ ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦$2.68 cumulative preferred series A ¦09/02/76 ¦$3,650.00 ¦
+---+-------------------------------------+--------------+-----------¦
¦2. ¦$3,000 Carolina Tel & Tel convertible¦ ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦sub. debenture 5.75% due 1/15/88 ¦(1 ) ¦2,287.00 ¦
+---+-------------------------------------+--------------+-----------¦
¦3. ¦$3,200 AT&T unredeemed 8 3/4% ¦ ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦due 5/15/2000 ¦11/25/77 ¦2,311.00 ¦
+---+-------------------------------------+--------------+-----------¦
¦4. ¦200 Shares Interstate Power Co. ¦ ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦$2.28 preferred stock ¦(1 ) ¦3,300.00 ¦
+---+-------------------------------------+--------------+-----------¦
¦5. ¦300 Shares VEPCO ¦(1 ) ¦4,284.38 ¦
+---+-------------------------------------+--------------+-----------¦
¦6. ¦8 Shares Chrysler Corp. ¦(1 ) ¦65.00 ¦
+---+-------------------------------------+--------------+-----------¦
¦7. ¦1,000 Shares Duke Power Co. ¦04/02/79; ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦ ¦04/12/77; ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦ ¦05/09/78 ¦22,718.75 ¦
+---+-------------------------------------+--------------+-----------¦
¦8. ¦1,000 Shares CP&L ¦(1 ) ¦22,187.50 ¦
+---+-------------------------------------+--------------+-----------¦
¦9. ¦5,604 Shares Continental Telecom, ¦ ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦Inc. ¦(1 ) ¦92,466.00 ¦
+---+-------------------------------------+--------------+-----------¦
¦10.¦5,303 Shares United ¦ ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦Telecommunications, Inc., ¦ ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦$1.50 cumulative convertible ¦ ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦preferred 2d series ¦(1 ) ¦121,969.00 ¦
+---+-------------------------------------+--------------+-----------¦
¦11.¦50 Shares AT&T, $4 convertible ¦Prior to ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦preferred ¦01/01/77 ¦2,951.56 ¦
+---+-------------------------------------+--------------+-----------¦
¦12.¦706 Shares AT&T ¦Prior to ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦ ¦01/01/77, with¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦ ¦exception of ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦ ¦138 shares ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦ ¦on 11/17/77 ¦39,933.13 ¦
+---+-------------------------------------+--------------+-----------¦
¦13.¦54.641 Shares Duke Power Co. under ¦ ¦ ¦
+---+-------------------------------------+--------------+-----------¦
¦ ¦dividend-reinvestment program ¦(1 ) ¦1,241.38 ¦
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1 Not disclosed in this record. No stocks and bonds were acquired by decedent and her spouse during the nine-month period preceding the February 2, 1983, filing of the Statement of Renunciation.
At the time of Dancy's death, he and decedent also owned, as equal joint tenants with rights of survivorship, certain certificates of deposit. A description of those certificates of deposit, together with the dates when issued and the fair market value of each at the time of decedent's death is as follows:
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¦ ¦ ¦Fair market value¦
+---------------------------------------------+-----------+-----------------¦
¦ ¦ ¦at time of ¦
+---------------------------------------------+-----------+-----------------¦
¦Item ¦Date issued¦decedent's death ¦
+---------------------------------------------+-----------+-----------------¦
¦1. Certificate of deposit No. 25082 - Peoples¦ ¦ ¦
+---------------------------------------------+-----------+-----------------¦
¦Bank & Trust Co., original principal ¦ ¦ ¦
+---------------------------------------------+-----------+-----------------¦
¦amount of $10,000 ¦10/11/76 ¦$13,565.44 ¦
+---------------------------------------------+-----------+-----------------¦
¦2. Certificate of deposit No. 1864 - Home ¦ ¦ ¦
+---------------------------------------------+-----------+-----------------¦
¦Federal Savings & Loan Association, ¦ ¦ ¦
+---------------------------------------------+-----------+-----------------¦
¦Dunn, N.C., original principal amount ¦ ¦ ¦
+---------------------------------------------+-----------+-----------------¦
¦of $45,000 ¦11/04/81 ¦45,000.00 ¦
+---------------------------------------------+-----------+-----------------¦
¦3. Certificate of deposit No. 655033454 - ¦ ¦ ¦...To continue reading
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