Sherman v. United States, 72-1465 Summary Calendar.
| Decision Date | 17 July 1972 |
| Docket Number | No. 72-1465 Summary Calendar.,72-1465 Summary Calendar. |
| Citation | 462 F.2d 577 |
| Parties | Louis G. SHERMAN, Jr., and Randolph W. Commins, Executors of the Estate of Louis G. Sherman, Sr., etc., Plaintiffs-Appellees, v. UNITED STATES of America, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Scott P. Crampton, Asst. Atty. Gen., Daniel B. Rosenbaum, Meyer Rothwacks, Attys., Tax Div., Dept. of Justice, Washington, D. C., John W. Stokes, Jr., U. S. Atty., Julian M. Longley, Jr., Asst. U. S. Atty., Atlanta, Ga., for defendant-appellant.
Hugh Gibert, Atlanta, Ga., for plaintiffs-appellees.
Before BELL, DYER and CLARK, Circuit Judges.
At the non-jury trial of this estate tax case the Government's motion to amend the court-approved pretrial order to raise the issue of the valuation of a claimed deduction from the gross estate was denied. Being of the view that the amendment should have been permitted, we reverse and remand for a trial of the valuation issue. We affirm the district court's judgment, 334 F.Supp. 1311, based upon its finding, that the estate's obligation, under a separation agreement, to pay the wife a monthly sum until her death or remarriage, was supported by adequate and full consideration in money or money's worth and was deductible for tax purposes.
The decedent and his wife were separated in 1962, approximately two years prior to his death. They entered into a separation agreement which provided, inter alia, that the husband pay the wife $1500 a month as alimony and for maintenance and support, until her death or remarriage. It further provided that should the husband predecease the wife, the payments were to be continued by his estate. The agreement referred to the husband's previously established irrevocable inter-vivos trust under which the trustees had full discretionary power to distribute the principal and income of the trust to the wife, or to the decedent's lineal descendants, or to accumulate the trust income. The agreement also recited the obligation of the husband to establish in his Will a testamentary trust and directed that the trustees be required to distribute each month to the wife, from the income or corpus of the testamentary trust, the difference between the amount distributed from the inter-vivos trust, and $1500.
The decedent died in 1964, survived by his wife. When the estate tax return was filed, the executors deducted from the gross estate the commuted value of a promise to pay $1500 a month to a woman of the wife's age until her death or remarriage. The Commissioner disallowed the deduction and assessed a deficiency. The deficiency was paid by the taxpayer and a claim for refund was filed. This was denied by the Commissioner, precipitating this suit for refund.
The district court entered a pretrial order agreed to by the attorneys for both parties, which raised only the issue of the adequacy of the consideration for the support obligation under Sections 2043 and 2053(c) (1) (A) of the Internal Revenue Code of 1954. In deciding the stipulated issue, the court held that the consideration for the husband's obligation to pay $1500 a month to the wife until death or remarriage was the relinquishment by the wife of her support rights, which unlike "marital rights" such as dower and the like, qualified under §§ 2043 and 2053 of the Code as full and adequate consideration.
We cannot say that this finding is clearly erroneous. Under Georgia law the wife's right to support may be satisfied by periodic payments or given to her in a lump sum or by an interest in the husband's property. Bateman v. Bateman, 1968, 224 Ga. 20, 159 S.E.2d 387; Harper v. Harper, 1965, 220 Ga. 770, 141 S.E.2d 403. The husband's gross income of over $50,000 in the year of separation, the high standard of living of the husband and wife, the good state of health of both parties in spite of their ages of 69 and 70 years, and...
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