Schildmeier v. United States, IP 57-C-67.

• Decision Date: 07 January 1959
• Docket Number: No. IP 57-C-67.,IP 57-C-67.
• Citation: 171 F. Supp. 328
• Parties: Leah SCHILDMEIER, as sole Residuary Beneficiary under the Will and of the Estate of Henry C. Schildmeier, Deceased v. UNITED STATES of America.
• Court: U.S. District Court — Southern District of Indiana

171 F. Supp. 328

Leah SCHILDMEIER, as sole Residuary Beneficiary under the Will and of the Estate of Henry C. Schildmeier, Deceased v. UNITED STATES of America.

No. IP 57-C-67.

United States District Court S. D. Indiana, Indianapolis Division.

January 2, 1959.

As Corrected January 7, 1959.

I. Sidney Stein and Edward H. Knight, Indianapolis, Ind., for plaintiff.

U. S. Atty., Don A. Tabbert and Asst. U. S. Atty., James L. Miller, Indianapolis, Ind., for United States.

STECKLER, Chief Judge.

The above entitled cause, being at issue, was submitted to the court on April 17, 1958 for trial, without a jury, whereupon both parties by counsel submitted to the court and introduced in evidence a written agreed stipulation by both parties, as true, of all the material and relevant facts in issue herein; and neither party, as reserved by them, made any objections to any of such facts, or offered any further evidence; that thereafter, in lieu of any oral argument, each party filed written briefs with the court upon the issues, and also tendered therewith their respective versions of special findings of fact and conclusions of law for consideration by the court; whereupon the court took said cause under advisement.

And now the court, having duly considered all the pleadings and exhibits filed therewith and all the evidence of the parties, and being fully advised in the premises, now decides and finds for the plaintiff and against the defendant herein; and the court hereby adopts as true and correct, the aforesaid agreed stipulation of all the facts in issue, and the material and relevant portions thereof, pertinent to the controlling issue herein of the marital deduction, as claimed and denied, are summarized by the court in the following special findings of fact; including a summary of each of said exhibits so included in the stipulation by reference thereto, as pertinent herein to such controlling issue.

That the general kind and nature of each such exhibit is here identified as follows:

(A) being a copy of the order of the Probate Court of Marion County, Indiana, showing distribution to the widow of the residue and approving the final report in decedent's estate and closing same, and not otherwise material or relevant to the issues herein;

(B) being a certified copy of the joint and mutual and also several last wills of both of said spouses, as so probated in decedent's estate as his will, all the relevant items whereof are set out verbatim hereafter in the court's special finding of fact; and

(C) being a copy of the audit by the Collector's agent of the Federal Estate Tax Return in decedent's estate, the portions thereof material and relevant to the issue herein, being hereinafter stated in the special findings of fact; that said stipulation also included and made a part thereof, as true and complete, its own ten exhibits, identified as A to J, inclusive: (A) being a certified photostatic copy of the Federal Estate Tax Return filed by plaintiff in said estate, claiming the marital deduction here in issue, whereby no estate tax was found to be due, and which return is sufficiently referred to in the relevant portions of the aforesaid and hereinafter summarized; (B) to (I) inclusive, being certified or admittedly true, photostatic copies of the eight deeds of all parcels of real estate as originally acquired and held by said spouses, as tenants by the entireties and so owned by them until and at the time of decedent's death, and so listed in said stipulation as being the real estate here in issue to the claimed marital deductions; and (J) being a photostatic copy, admittedly true, of the contract of the spouses with the Merchants National Bank of Indianapolis, setting up their joint bank checking account, totalling at decedent's death $3,149.59, and being the only personal property so held in joint tenancy and here in issue as to the claimed marital deduction; all of such jointly owned property being applied in the estate tax return to reduce one-half of the adjusted gross estate and thereby eliminate any estate tax herein.

That in accord with the foregoing premises, and the finding and decision herein for the plaintiff, the court now makes and files its following special findings of fact, to-wit:

1. That the decedent, Henry C. Schildmeier, the husband of plaintiff herein, was born in Indianapolis, Indiana, and was a citizen of the United States of America at the time of his death on May 23, 1951, a resident of said city.

2. That decedent and this plaintiff were married in 1921 and had no children as issue of said marriage; but each, by prior marriages, had children, the decedent being survived by one son and two daughters, and the surviving wife having two sons; all being their respective children named in their joint and mutual last will.

3. That said spouses together executed, on December 5, 1947, their joint and mutual and several last will, which remained unchanged by them, and was effective at decedent's death as his own last will, and was duly admitted to probate in the Probate Court of Marion County, said widow qualifying as executrix; that after due administration the final report was approved showing distribution of decedent's separate property as provided for by the will, including distribution of all the residue of decedent's property to his widow, as the sole beneficiary of such residue; and said estate was closed and the executrix discharged on July 5, 1952.

4. That all of the eight parcels of real estate, as shown by the deeds therefor, copies whereof are so included as exhibits to said stipulation, were acquired by said spouses by purchase, between December 1941 and July 1946, solely as tenants by the entireties, and remained so until the decedent's death; that thereupon the absolute titles in fee to all thereof became vested solely in this plaintiff, as the surviving spouse, by operation of law, under said deeds; and that none of such eight parcels of real estate here in issue, passed from decedent to his surviving spouse, or to anyone else, by said will, or had ever been conveyed to anyone by such spouses prior to decedent's death.

5. That said spouses had formed the partnership business of H. C. Schildmeier Company on November 1, 1946, and became and thereafter remained equal and active partners and owners thereof, its actual assets consisting at all times only of personal property; and it never acquired any legal titles to any of the aforesaid eight parcels of real estate, which said spouses, as sole owners thereof, merely had used in the conduct by them of said business.

6. That as executrix of her husband's estate, plaintiff, on May 5, 1952, within the time required by law, filed a federal estate tax return for said estate, as shown by the copy thereof attached as Exhibit A to the aforesaid stipulation, showing in Schedule O a gross estate of $115,718.11, with claimed deductions for funeral and administration expenses and debts of decedent totalling $14,373.55, and showing bequests of the residue to his widow, set out in Schedule M, totalling $62,002.48 net, making the adjusted gross estate $101,344.56; and then claiming a marital deduction of one-half of such adjusted gross estate in the sum of $50,672.28; adding thereto the funeral, etc., expenses and debts of $14,373.55, made total allowable deductions of $65,045.83; that by Schedule P, after showing the specific exemptions for basic and additional taxes in addition to said total claimed deductions, there was shown to be no estate tax due under either of the applicable revenue acts; and plaintiff did not then pay any estate tax; and so reported in her final report to the Probate Court of Marion County in closing said estate.

7. That thereafter, upon an audit of said estate tax return by the agent of the Collector of Internal Revenue, dated May 4, 1953, he readjusted certain values as set out in Items 1 and 2, Schedule E, of the jointly owned real and personal property, alone here in issue, by listing same at full values instead of at half thereof as returned by plaintiff; and also adjusted the value of the realty listed in Item 3, not here in issue, and then allowed said widow a credit of $25,000 for her contributions to the joint property, all resulting in a gross estate of $127,280.69, instead of $115,718.11 as returned by plaintiff; that said audit also reduced two items of deductions in Schedule J by $50, and four items in Schedule K by $141.38, thereby reducing such total deductions, as allowed, to $14,182.17, leaving an adjusted gross estate of $113,098.52, and then eliminated all of the claimed marital deduction, as had been shown in Schedules M, O and P of the return in the aforesaid amount of $50,672.28, or in the sum of $56,549.26, on the corrected adjusted gross estate; that said agent then recalculated such total figures as returned and as so corrected and changed by him, to make a new net estate for basic tax of $13,098.52, and a new net estate for additional tax of $53,098.52; and then assessed gross basic and additional taxes totalling $7,774.63, less inheritance tax credit of $104.79; making a net deficiency assessment of $7,669.84, plus interest of $325.70, or a total of $7,995.54 then due.

8. That on May 7, 1953, plaintiff executed Form 890, a waiver of restrictions on the aforesaid deficiency assessment; which waiver, as stipulated by counsel herein, in no way deprived her of the right to file a later claim for refund, upon payment of the deficiency assessment.

9. That plaintiff paid to the District Director at Indianapolis, with interest as calculated therein, such total of $7,995.54; one payment of $7,984.50 being made on May 8, 1953, and the balance of $11.04 being paid on June 22, 1953, in full of such deficiency.

10. That on May 4, 1956, within the time then allowed by the Revenue Act then applicable thereto, plaintiff filed a claim with the local Director of Internal Revenue for refund of the...