Wilber National Bank of Oneonta v. Commissioner of Internal Revenue, Docket No. 21666.
| Decision Date | 28 September 1929 |
| Docket Number | Docket No. 21666. |
| Citation | 17 BTA 654 |
| Parties | WILBER NATIONAL BANK OF ONEONTA, N. Y., EXECUTOR AND TRUSTEE, ESTATE OF GEORGE I. WILBER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Alva Seybolt, Esq., for the petitioner.
P. M. Clark, Esq., and C. C. Holmes, Esq., for the respondent.
These proceedings are for the determination of a deficiency in estate tax on the estate of George I. Wilber, who died July 13, 1922.
The deficiency determined by the Commissioner amounts to $22,725.55, of which amount the petitioner concedes that $409.55 is due, leaving a balance of $22,316 contested.
Since the Commissioner's determination other expenses have been paid or incurred, which petitioner claims are deductible from the gross estate, as indicated in our findings of fact.
FINDINGS OF FACT.
The petitioner is a national banking corporation and the executor and trustee of the last will and testament of George I. Wilber, deceased, who died July 13, 1922. Said last will and testament was probated and the petitioner was appointed executor and trustee thereof by the Surrogate of Otsego County, New York, on August 25, 1922, and is now acting as such.
The petitioner duly filed a return for Federal estate tax on January 3, 1924, in which the amount of said tax as computed by the petitioner was stated at $224,826.03. This amount was duly paid. The Commissioner under date of November 25, 1925, notified petitioner of his audit and review of said return resulting in a tentative determination of a deficiency in said tax of $44,684.64. A copy of said tentative determination is attached to the petition.
The petitioner protested each of the Commissioner's tentative determinations and submitted considerable evidence by affidavit in support of its protest. An oral hearing before the Commissioner was held June 14, 1926, and on October 8, 1926, the Commissioner mailed his final determination in which some of the protests were upheld, and in which the tentative deficiency was reduced from $44,684.64 to $22,725.55, the amount then determined to be due.
Of the last amount stated the petitioner concedes that $409.55 is due the Federal Government, leaving a balance of $22,316, the amount involved in this appeal.
The Commissioner's final determination increases the valuation of the decedent's Wilber National Bank capital stock by $100 per share or $76,700 and disallows the deduction of $82,700, the value of the property bequeathed to Glenwood Cemetery Association as a charitable gift, thereby increasing the amount of the estate and decreasing the deduction as set up in the return.
It was stipulated by the attorneys for the parties herein (1) that the sum of $4,335.44 had been paid by the petitioner as such executor as administration expenses in addition to the amount allowed in the determination; (2) that the executor had handled interest, dividends and other property which entitled the executor to commissions to the extent of $12,858.14 over and above the amount determined to have been earned; (3) that the executor had paid to its attorney for his legal services since said determination the sum of $20,000; and (4) that said sums are deductible amounts.
The decedent owned 767 shares of the capital stock of the Wilber National Bank of Oneonta, N. Y. The total capital stock of 1,000 shares of a par value of $100 was held at the time of decedent's death by about 24 different stockholders, none of whom was a member of decedent's family. The bank never paid over 12 per cent dividends. At the time of decedent's death banking was going through a period of readjustment. Government bonds were selling below par. The bank had suffered losses. The book value of the stock of the bank at the date of the death of decedent was $600 per share. The fair market value of the stock at that date was $500 per share. At the date of the death of decedent the bank became the owner of real estate including the bank building appraised at $95,000.
By his will the decedent gave real and personal property to the Glenwood Cemetery Association valued at $82,700. The fourth clause of said will, omitting description of land devised, is as follows:
FOURTH: I Give and Bequeath to my Executor and Trustee, its Successor or Successors Four hundred shares of the Capital Stock of the Albany and Susquehanna Railroad Company, to be held by it in Trust for the benefit of the Glenwood Cemetery Association, partly located in the City and town of Oneonta, N. Y., the Net Income therefrom is to be paid to said Association during the lives of David W. Mix and David Forrest Wilber, Jr., (my nephew) or the longest lived of them; at the decease of the longest lived of them, the said Executor and Trustee, its Successor or Successors shall Transfer and deliver to the said Glenwood Cemetery Association the said shares of the Capital Stock of the Albany and Susquehanna Railroad Company, and I WILL and DIRECT that the same be held by the said Association for the purposes hereinafter stated, to wit:—the same to be held by it as an endowment stock, for a perpetual fund, and the Dividends, uses and Income therefrom to be used for the perpetual care of the lots known as the David Wilber and George I. Wilber Circle Burial lots; and any surplus income not needed for the care of these two described lots may be added to the endowment fund, to be used for the general expenses and upkeep of said Cemetery, and I suggest that a portion of the income of said stock shall be used for the erection of a public Vault, (unless previously erected) and for the erection, later on, when required of an Iron Vehicle Bridge across Glenwood Gorge, near where the old foot bridge formerly stood, when deemed advisable and when prices become more normal. The receipt of the Treasurer thereof shall be sufficient discharge to my Executor and Trustee for the same. This legacy is payable and to take effect immediately after my decease, so far as it relates to income, and lands. I ALSO GIVE — DEVISE and BEQUEATH to the said Glenwood Cemetery Association of Oneonta, N. Y., ALL MY RIGHT—TITLE—INTEREST and OWNERSHIP in and to the following lands and premises, located in the City and Town of Oneonta, N. Y., described as follows: * * *
The Glenwood Cemetery Association is an incorporated association, organized May 12, 1886, pursuant to chapter 133, Laws of 1847, entitled "An Act authorizing the incorporation of rural cemetery associations."
The decedent was much interested in the cemetery, and was a director of the same for over 28 years. His parents and his wife had been buried there. He was a lot owner therein and had helped the cemetery financially during his lifetime. There were two Wilber family lots or plots therein, circular in form, about 50 feet each in diameter. During decedent's life these family plots were mowed and received the same care as the rest of the cemetery.
The cemetery originally comprised about 60 acres of land, and after the devise of certain lands by the decedent, approximately 200 acres of land. In it there are about 1,100 lots and there have been about 1,500 interments. Burial has not been denied to anyone on account of poverty, race, color or previous condition of servitude. There have been only three or four burials in a section of the cemetery set apart for the burial of persons not able to buy a lot.
The Cemetery Association never issued any stock. Up to the time of decedent's death there were no salaried officers. The by-laws make no mention of salaries to any officers.
In a pamphlet or circular containing the by-laws, rules and regulations of the Glenwood Cemetery Association and the names of the trustees and officers thereof, it is stated:
When a lot has once been purchased with the enclosure of our ground, it becomes for all time the property of the family and cannot be taken for debt, or sold for secular uses, and the ground cannot be encroached upon for any purpose.
The trustees believe that all will aid in this great enterprise, and take an active interest in the improvement and prosperity of the Association.
They would add for the information of lot owners that the law is explicit pertaining thereto, and that all sums paid for lots, or for repairing or improvement upon the same, are expended solely for the care and advancement of the ground.
Sections 3 and 4 of Article III of the by-laws are as follows:
SEC. 3. Interments are subject to the following charges, to be paid to the Superintendent, before or at the time of interment, namely:
Opening, closing and sodding the grave of a person over seven years old, five dollars. Opening, closing and sodding the grave of a child under seven years old, three dollars.
SEC. 4. Single graves may be procured in public lots appropriated for that purpose, at ten dollars each for an adult and six dollars for a child, which price will include the opening and closing and sodding the grave. If lots should afterwards be purchased and the bodies removed the full cost of the graves located will be allowed after deducting the expense of the original interment, and for the disinterment of the remains.
At the hearing it was conceded by counsel for the Commissioner, and the evidence so warrants, that the petitioner is entitled to additional deductions as follows:
Administration expenses __________________________ $4,335.44
Executor's commissions ___________________________ 12,858.14
Legal services ___________________________________ 20,000.00
__________
Total ______________________________________ 37,193.58
The foregoing expenses, incurred since the original...
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