Sharpe v. COMMISSIONER OF INTERNAL REVENUE
| Decision Date | 09 September 1938 |
| Docket Number | Docket No. 82530. |
| Citation | 38 BTA 502 |
| Parties | CATHARINE D. SHARPE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Paul F. Myers, Esq., for the petitioner.
Ralph F. Staubly, Esq., for the respondent.
This proceeding involves a deficiency in estate taxes asserted against the petitioner as transferee of the property of Fannie G. Dixon, deceased. The amount of the asserted deficiency is $46,970.63. Two questions are presented for determination — first, whether there should be included in the decedent's estate, i. e., estate of Fannie G. Dixon, the fair market value of an interest which the decedent had in the property of her father, the petitioner's grandfather, and, second, whether the respondent can lawfully assert a tax against the petitioner as transferee after having found and ruled that there was no tax liability on the part of the estate arising from the alleged vested interest of the decedent in properties of her father's estate.
The proceeding was submitted upon the pleadings, an agreed statement of facts with attached exhibits, and briefs. We will set forth in our findings only those portions of the stipulated facts and the exhibits that are deemed pertinent to the determination of the issues presented.
FINDINGS OF FACT.
The petitioner, Catharine D. Sharpe, is an individual citizen of the United States, residing at Haverford, Pennsylvania. She is the daughter of Fannie Gilbert Dixon, deceased, and the granddaughter of John Gilbert, deceased.
John Gilbert, of the city of Philadelphia, Pennsylvania, died June 28, 1877, leaving a last will and testament dated May 19, 1877. The said will was duly probated in the office of the Register of Wills of Philadelphia County on July 20, 1877, and letters testamentary were granted to Samuel H. Gilbert, P. W. Sheafer, and J. Thomas Audenreid, as executors and trustees of his will. John Gilbert left surviving him his widow, Catharine H. Gilbert, and five children, Kate H. Gilbert, Clara M. Gilbert, Fannie Gilbert (mother of petitioner herein), Ida E. Gilbert, and Samuel H. Gilbert.
After giving and bequeathing to his wife, Catharine, the use, benefit, improvement, and profit of his residence during her natural life and after giving and devising to her a farm for "her own use, benefit and profit during her natural life", John Gilbert's will provided as follows:
Item. — I give and devise all my estate, right, title and interest in and to certain coal lands, situate in Township, Schuylkill County, Pennsylvania, and the rents, issues and profits thereof to my executors, hereinafter named, and the survivors or survivor of them in trust, nevertheless, for the following uses and purposes, to wit:
1. To pay out of the rents and profits, from whatever source, all of my just debts, funeral expenses, and the expenses of these lands, as soon as practicable.
2. To pay to my beloved wife an annuity of fifteen thousand dollars, in half yearly instalments, each and every year during her natural life, which shall be in lieu of her dower in any of my real estate, and at her death the payment of this annuity is to be continued and distributed pro rata, or share and share alike, as provided under the intestate laws of this Commonwealth, to my children and grandchildren.
3. To pay to each of my children an annuity of two thousand dollars, in half-yearly instalments, during each of their natural life or lives, and in the event of the death of any of my children, the share of such deceased child or children to be paid to the child or children of such deceased child or children.
4. To pay to my sister-in-law, Margaret McConnell, the sum of one thousand dollars absolutely, if any funds remain after the foregoing provisions of my will have been carried out and fully complied with, but if no funds remain this bequest or any part of it shall not be paid until there are funds in hands sufficient from this source. And lastly, the balance from this source (if any), after the payment of taxes and other expenses incident to these coal lands, I direct to be distributed at the expiration of each year to my wife and children, share and share alike, or to the child or children of any deceased child or children.
Additional "items" of John Gilbert's will may be summarized as follows: (1) a bequest to his cousin, Mary Collom, of $250, "half-yearly during her natural life, if she continue unmarried; and at her death I give and bequeath to her daughter Mary, if unmarried, the sum of one hundred and fifty dollars, half-yearly, if she continue unmarried, during her natural life, but not otherwise"; (2) the occupation during her life by said Mary Collom of the house and lot in Mt. Holly, New Jersey, then occupied by her, free of rent and taxes, and at her death the same to be sold and the proceeds invested and distributed as provided for with respect to Gilbert's other residuary estate; (3) the selling of a house and lot at 116 North 19th Street, then occupied by Gilbert's daughter Kate, to her at its appraised value, and if she decided otherwise, then the property was to be sold and the proceeds invested and distributed as part of Gilbert's residuary estate; (4) the sale of a house and lot at 918 Gilbert Street and a farm at Spring Mill, New Jersey, the proceeds to be invested and distributed as part of Gilbert's residuary estate; (5) the lease of a certain factory and premises to Gilbert's son, Samuel H. Gilbert, for 15 years or longer, at the son's option, at a fixed rental with an option to his son to purchase the property during the continuance of the lease, or at the expiration thereof, at its appraised value, and if the son did not desire to purchase the property, it was to be sold and the proceeds invested and distributed as part of Gilbert's residuary estate; and (6) the lease by the executors of the premises at 309 and 311 North Third Street and 205 Wood Street, Philadelphia, for a term of 10 years at a fixed rental to Gilbert's "present partners in the wholesale drug business" for the purpose of their carrying on the same business under the style and name of John Gilbert & Co.
The provisions of John Gilbert's will with respect to the residue of his estate are as follows:
Item. — I order and direct all the rest, residue, reversion and remainder of my estate, real, personal and mixed whatsoever, and wheresoever not hereinbefore disposed of and provided for, to be converted into cash as soon as conveniently may be after the determination of the particular estates hereinbefore created and granted; and for that purpose, I authorize and empower my executors hereinafter named, and the survivors or survivor of them, to sell and dispose of the residue of my estate, except the coal lands, at public or private sale or sales, for such price or prices and upon such terms and conditions as may be for the best interests of my estate, and to sign, seal, execute and deliver good and sufficient deed or deeds for the same; and the net proceeds of such rest and residue of my estate, I order and direct to be invested in first bonds and mortgages, and the interest accruing therefrom to be paid semi-annually one-third thereof to my wife, and the other two-thirds to my child or children, or the lawful issue of any deceased child or children then surviving, to all intents and purposes as is provided by the intestate laws of this Commonwealth. And lastly, I nominate, constitute and appoint as executors of this, my last will and testament, Samuel H. Gilbert, Peter W. Shaffer Sheafer, J. Thomas Audenreid.
Catharine H. Gilbert, the widow of John Gilbert, died on March 23, 1880.
Kate H. Gilbert, daughter of John Gilbert, married Curwen Stoddart, who died April 1, 1914, their only child having predeceased them, unmarried and without issue. Kate Gilbert Stoddart died April 23, 1915, and by will left her entire property, one-third to her sister Ida Gilbert Dixon; one-third to her sister, Fannie Gilbert Dixon; one-sixth to her niece, Gertrude Gilbert (now Loening); and one-sixth to her nephew, John Gilbert.
Clara M. Gilbert married Giddeon Stoddart and died February 23, 1898, without ever having had any children and by her will leaving her entire property to her said husband, Giddeon Stoddart, who died May 2, 1911, having previously intermarried with Frances Janney and leaving a will dated May 25, 1906, by which he left the residue of his property of every kind to his widow, Frances Janney Stoddart. By indenture dated December 14, 1922, Frances Janney Stoddart conveyed, sold, and released all her interest of every kind in the estate of John Gilbert, whether under will or by intestacy, one-third to Fannie Gilbert Dixon, one-third to Clayton G. Dixon, one-sixth to John Gilbert, and one-sixth to Gertrude Gilbert Loening.
Ida E. Gilbert married Henry P. Dixon and died November 22, 1916, leaving a will by which she left her entire estate to her husband, Henry P. Dixon, who died unmarried June 21, 1917, leaving a will by which he left his entire estate to his only child, Clayton Gilbert Dixon.
Samuel H. Gilbert married Georgeine Stoddart and died March 20, 1896, leaving a will by which he left his entire estate to his wife. He left to survive him a widow and two children, Gertrude Gilbert (now Loening) and John Gilbert. The widow of Samuel H. Gilbert subsequently intermarried with George F. Lasher, who died March 9, 1917. By instrument dated March 16, 1922, the said Georgeine Stoddart Lasher released to her only two children, John Gilbert and Gertrude Gilbert Loening, in equal shares, all her right, title, and interest in the estate of John Gilbert.
Fannie Gilbert married Samuel G. Dixon, who died February 26, 1918. Fannie G. Dixon died April 2, 1931, leaving a will which was duly probated in the office of the register of wills of Montgomery County on April 10, 1931, and letters testamentary were granted to her daughter, Catharine D. Sharpe, the...
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