Sulzberger v. Commissioner of Internal Revenue
| Decision Date | 12 February 1936 |
| Docket Number | Docket No. 63636,72976.,63637 |
| Citation | 33 BTA 1093 |
| Parties | HELEN B. SULZBERGER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. KATE F. BECKER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. JAMES H. BECKER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Harry Thom, Esq., Freeman Day, Esq., and Herbert A. Friedlich, Esq., for the petitioners.
Harold D. Thomas, Esq., for the respondent.
These are consolidated proceedings for the redetermination of deficiencies in income tax for the year 1929 as follows:
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Docket No. | Petitioner | Deficiency
--------------------------------------|--------------------------|------------
63636 _______________________________ | Helen B. Sulzberger ____ | $1,394.36
63637 _______________________________ | Kate F. Becker _________ | 4,910.89
72976 _______________________________ | James R. Becker ________ | 1,469.18
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Each petitioner claims an overpayment for the taxable year. The issues are (1) whether Federal estate taxes, assessed against the estate and paid by the beneficiaries after administration of the estate had been closed and the executors discharged, are deductible from gross income of the beneficiaries, and (2) whether interest thereon is also deductible by the beneficiaries.
FINDINGS OF FACT.
The facts were all stipulated by the parties, which stipulation is here adopted in full as our findings of fact, omitting only the exhibits incorporated by reference, as follows:
1. Abraham G. Becker died testate on May 14, 1925, survived by his widow Kate F. Becker, his son James H. Becker, and his three daughters Helen B. Sulzberger, Margtret B. Friedlich and Louise B. Shire. A copy of the last will and testament of said Abraham G. Becker is attached hereto as Exhibit A and by express reference thereto is made a part hereof. Said will was duly admitted to probate in the Probate Court of Lake County, Illinois, on June 6, 1925, and the Executors named in said will were duly qualified.
2. The residuary legatees under said will and the share of each in the residue of the estate of said Abraham G. Becker, deceased, were as follows:
Kate F. Becker, one-third; James H. Becker, one-sixth; Helen B. Sulzberger, one-sixth; Margaret B. Friedlich, one-sixth; Louise B. Shire, one-sixth.
3. On January 5, 1926, a partial distribution was made by said executors under said will to said residuary legatees of the following shares of stock in Quotation Securities Corporation, on which date said shares of stock for the purposes of this proceeding may be considered to have had a fair market value of approximately $30.0667 per share:
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Name | Number of | Value
| shares |
----------------------------------------------------|---------------|-----------------
Kate F. Becker ____________________________________ | 13,233 1/3 | $397,882.67
James H. Becker ___________________________________ | 6,616 2/3 | 198,941.33
Helen B. Sulzberger _______________________________ | 6,616 2/3 | 198,941.33
Margaret B. Friedlich _____________________________ | 6,616 2/3 | 198,941.33
Louise B. Shire ___________________________________ | 6,616 2/3 | 198,941.33
| _____________ | ____________
| 39,700 | 1,193,647.99
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On March 4th and 5th, 1926, a partial distribution was made by said executors under said will to said residuary legatees of the following shares of preferred and common stock of A. G. Becker & Co., on which dates said shares of preferred and common stock for the purpose of this proceeding may be considered to have had a fair market value of approximately $100 per share for the preferred stock and approximately $34.215 per share for the common stock:
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| Number of shares |
|---------------------------| Approximate
Name | | | value
| Preferred | Common |
---------------------------------------------|------------|--------------|-----------------
Kate F. Becker _____________________________ | 5,133 1/3 | 13,233 1/3 | $966,111.83
James H. Becker ____________________________ | 2,566 2/3 | 6,616 2/3 | 483,055.92
Helen B. Sulzberger ________________________ | 2,566 2/3 | 6,616 2/3 | 483,055.92
Margaret B. Friedlich ______________________ | 2,566 2/3 | 6,616 2/3 | 483,055.92
Louise A. Shire ____________________________ | 2,566 2/3 | 6,616 2/3 | 483,055.92
|____________|______________|________________
| 15,400 | 39,700 | 2,898,335.52
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Substantially all of the balance of the assets of said decedent's estate, consisting of cash and securities, was distributed to the said residuary legatees on or before July 20, 1926, and amounted to sums approximately as follows:
Kate F. Becker ______________________________ $700,000.00
James H. Becker _____________________________ 350,000.00
Helen B. Sulzberger _________________________ 350,000.00
Margaret B. Friedlich _______________________ 350,000.00
Louise A. Shire _____________________________ 350,000.00
_____________
$2,100,000.00
The final account of the Executors under said will was filed and approved by the Probate Court of Lake County, Illinois, and the Executors were discharged on January 13, 1927.
4. On or about April 30, 1926, the executors filed the original estate tax return and paid an estate tax thereon at the time of the filing of said return of $313,446.89, which payment was net after the proper deduction of the credit for State inheritance taxes of $214,809.34.
5. Subsequent to the filing of said estate tax return and after the said executors had been discharged, the respondent made an audit of said estate tax return and proposed a deficiency thereon in a substantial amount, as shown by a notice of deficiency addressed to the Executors of the Estate. Hearings were had in the Estate Tax Unit wherein an agreement was reached that the correct deficiency in Federal Estate Tax was $330,981.16.
The assessment roll, June, 1929, List F-304, L-2, shows an assessment of additional estate taxes of $330,981.16, and interest thereon (after credit) of $57,805.83, said assessment roll reading as follows:
Estate of Abraham G. Becker, James H. Becker, et al, Executors
Respondent, however, in view of the fact that said Executors had been theretofore discharged, refused to enter into a settlement agreement with said former Executors, but required that such settlement agreement be entered into by the individual legatees under said will. Pursuant thereto, on August 30, 1929, the said individual residuary legatees entered into an "Agreement as to Final Determination of Tax Liability (Form 866)" with the then acting Commissioner of Internal Revenue, a copy of said agreement being attached hereto as Exhibit "B" and by express reference thereto made a part hereof. On September 10, 1929, the petitioners and the other residuary beneficiaries under the Will of Abraham G. Becker paid the aggregate amount of $388,786.99 in full of said deficiency and interest thereon. For the convenience of said legatees, each such legatee paid to A. G. Becker & Co. his pro-rata share of such deficiency and interest and said Company issued its check for the full amount of such deficiency and interest, and at the request of the legatees said check was delivered to said Collector in full payment of said deficiency and interest thereon. The contribution of each of said legatees to such total payment was based on a statement rendered to each of said residuary legatees by A. G. Becker & Co., showing the proportionate amount of tax and interest on each as follows:
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| Tax | Interest | Total
------------------------------------------|-------------|------------|-------------
Kate F. Becker __________________________ | $110,327.05 | $19,268.61 | $129,595.66
Helen B. Sulzberger _____________________ | 55,163.53 | 9,634.30 | 64,797.84
Margaret B. Friedlich ___________________ | 55,163.53 | 9,634.31 | 64,797.83
Louise B. Shire _________________________ | 55,163.52 | 9,634.31 | 64,797.83
James H. Becker _________________________ | 55,163.53 | 9,634.30 | 64,797.83
| ___________ | __________ | ___________
| 330,981.16 | 57,805.83 | 388,786.99
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6. On September 10, 1929, the properties of each of the petitioners consisted of the property which they had received as a residuary legatee under the will of Abraham G. Becker as aforesaid and a comparatively small amount of property which they each had in their own right prior to the receipt of the...
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