Spicer v. United States
| Citation | 217 F. Supp. 44 |
| Decision Date | 02 May 1963 |
| Docket Number | No. W-2332.,W-2332. |
| Parties | Maude E. SPICER, Executrix under the Will of Z. N. Spicer, Deceased, Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — District of Kansas |
COPYRIGHT MATERIAL OMITTED
John E. Royce, Salina, Kan., for plaintiff.
William Miner, Dept. of Justice, Washington, D. C., for defendant.
This is an action brought by the executrix of the estate of Z. N. Spicer, deceased, to recover $9,820.15, plus interest, which amount represents additional federal estate taxes assessed against the estate.
On behalf of the estate of Z. N. Spicer, the plaintiff herein filed a federal estate tax return and claimed therein one-half of the gross estate as a marital deduction. Upon examination of the return, the Commissioner of Internal Revenue disallowed the entire value of the estate claimed as a marital deduction on the ground that the joint and reciprocal Will executed by the decedent and the plaintiff herein established a terminal interest in the plaintiff of all of the property listed in the federal estate tax return and thus failed to qualify for the marital deduction under Section 2056(b) (5) of the Internal Revenue Code of 1954. (26 U.S.C.A. § 2056(b) (5))
The parties, by a written stipulation, have resolved many of the pertinent facts. In addition, there is contained in the record a certified copy of the administration proceedings in the Probate Court of Pratt County, Kansas, and the deposition of Maude E. Spicer. The stipulation discloses the following relevant details:
Z. N. Spicer died testate on October 1, 1955, survived by his widow, Maude E. Spicer, and five children. His Will, made and executed on January 21, 1952, was duly admitted to probate and record in the Probate Court of Pratt County, Kansas on November 10, 1955, and Maude E. Spicer was duly appointed and qualified as Executrix of said Will.
The Will of Z. N. Spicer was a joint and reciprocal Will, and provided as follows:
Said Will was duly executed by both Z. N. Spicer and Maude E. Spicer, and was witnessed and attested as required by law.
The inventory filed in said estate disclosed property of a total appraised value of $127,665.17, including therein jointly owned property in the amount of $55,313.20. On November 30, 1956, a federal estate tax return was filed on behalf of said estate. In said return $1,334.00, representing a life insurance policy with accrued dividends was added to the appraised value of the property as disclosed by the inventory so that the total gross estate as shown on the return was $128,999.17, and the adjusted gross estate was $123,310.45.
Upon examination of said estate tax return by the Internal Revenue Service, an adjustment was made in the value of the Series "E" U. S. Savings Bonds held in joint tenancy. These bonds had been appraised at their face value of $36,100.00 in the inventory, and had been so shown on the estate tax return. The value of these bonds was adjusted to $29,201.00 to reflect their redemption value as of the date of death. Some other minor adjustments were also made so that the adjusted gross estate for the purpose of this litigation is $117,062.85, of which amount $48,414.20 represents the value of property held in joint tenancy at the date of death of Z. N. Spicer, and $1,334.00 represents the value of life insurance and accrued dividends on a policy of life insurance owned by Z. N. Spicer at the date of his death.
No objection is made to the inclusion of any of the property as a part of the gross estate of the decedent for estate tax purposes, nor is any objection made to the adjustments made nor the valuation of the adjusted gross estate as finally determined.
By Item II of his Will, set out above, the Testator bequeathed to his son, Beryl Zane Spicer, all of the construction equipment and machinery, forms and tools used by the Spicer Construction Company in its operations. The value of the the property passing to Beryl Zane Spicer under Item II was appraised at $35,240.00. In the estate tax return, all of the remainder of the property in the amount of $93,759.17 was claimed to have passed to the surviving spouse, and, deducting funeral expenses, debts and expenses of administration and federal estate tax payable out of this property, $87,971.14 allegedly qualified for the marital deduction. Since this amount exceeded one-half of the adjusted gross estate, a marital deduction equal to one-half of said adjusted gross estate was claimed as a marital deduction on Schedule M of said return. Said return, as filed, disclosed a taxable estate in the amount of $1,655.23, upon which a federal estate tax in the amount of $49.66 was paid to the District Director of Internal Revenue.
The Commissioner of Internal Revenue, as stated previously, disallowed the entire value of said estate claimed as a marital deduction on the ground that the interest passing to the surviving spouse did not qualify for the marital deduction under Section 2056(b) (5) of the Internal Revenue Code of 1954. On the basis of the adjustments made, and the disallowance of the marital deduction, there was proposed against the decedent's estate a deficiency of federal estate tax in the amount of $8,579.55; and that sum, together with interest thereon in the amount of $1,240.60, totaling $9,820.15, was duly paid to the District Director on May 29, 1959.
Thereafter, on or about July 26, 1960, a claim for refund of estate tax was filed, and on August 4, 1960, a supplemental claim for refund was filed.
After more than six months had expired since the date of filing said claims for refund, plaintiff commenced this action for refund of said estate tax. (Subsequent to the filing of this action, and on March 8, 1961, said claim for refund and supplemental claim for refund were disallowed.)
Summarizing, the property involved in this matter is classified generally as follows:
"(a) Construction Company equipment and machinery
forms and tools used by the Spicer Construction Company
which was specifically bequeathed to Beryl
Zane Spicer, son of deceased and his spouse under
Item II of the Will and of the value of ...............$35,240.00
(b) Property held in joint tenancy
(1) Series "E" and "G" U. S. Government Savings
Bonds of an adjusted value of .....................$29,201.00
(2) Savings Account, Western Savings Association
of the value of ...................................$10,772.23
(3) Commercial Bank Account in Peoples State Bank
Pratt, Kansas .....................................$ 7,840.37
(4) Real estate of the value of .......................$ 600.00
(The total adjusted value of the property, both real
and personal, held in joint tenancy by decedent and
his spouse at the date of his death equaled ...........$48,414.20.)
(c) Life Insurance with accrued dividends on a policy of
life insurance and owned by decedent at the time of
death of the value of .................................$ 1,334.00."
QUESTIONS PRESENTED
1. Whether the interest which passed to the surviving spouse under the Last Will and Testament of Z. N. Spicer, deceased, qualifies for the marital deduction.
2. Whether the interest in the life insurance proceeds and jointly owned property which...
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