251 Mass. 49 | Mass. | 1925
The complainants, citizens and inhabitants of this Commonwealth, are executors of the will of Arthur B. Emmons, an inhabitant of the State of Rhode Island, which will was admitted to probate by the Probate Court of the City of Newport, Rhode Island, August 24, 1922. They bring this complaint under G. L. c. 62, § 47, for an abatement of a tax on income assessed against them.
One thousand shares of American Can Company stock and twelve hundred rights to subscribe to new shares of the American Telephone and Telegraph Company, belonging to the estate, were sold by the complainants. The defendant assessed to the complainants a tax on $47,701.45, this amount being the difference between the total amount received by the executors from the sale of the securities and rights and the cost of the securities to the testator. Bingham v. Commissioner of Corporations & Taxation, 249 Mass. 79, had not been decided when the tax was assessed and the defendant concedes that the complainants are entitled to a partial abatement, but contends that the executors are liable to a tax on the gain on sale of the American Can Company stock over its value at the time of the testator’s death.
There was no real estate belonging to the testator in this Commonwealth. About one seventh of one per cent of the personal estate, consisting of a deposit in a national bank in Boston, was the only portion of his personal estate in this jurisdiction. The stocks and bonds of the testator were at the time of his death deposited in a safe deposit box in Newport. The shares of the American Can Company were general assets of the estate and were not specifically
The contention of the defendant is that, as the executors are inhabitants of this Commonwealth, they are liable to a tax on the income received from the sale of intangible personal property belonging to the estate; that by G. L. c. 62, § 13, the executors who are such inhabitants, appointed under a foreign will, are taxable. G. L. c. 62, § 10, provides that income received by trustees, any one of whom is an inhabitant of this Commonwealth or has been appointed by a court of this Commonwealth, shall be subject to a tax. By § 11, if an inhabitant of this Commonwealth receives income from a trustee who is not an inhabitant of this Commonwealth or has not received his appointment from a court of this Commonwealth, the income shall be taxed. Section 12 gives to the trustee the right to claim the exemption provided by subsection (a) of § 8. Section 13 enacts that these sections (10 to 12 inclusive) “ shall, so far as apt,” apply to executors, “ to the income received by them and to their beneficiaries.” Section 13, making § 10 applicable, does not authorize a tax on the complainants upon the income from the sale of intangibles. Sections 10 to 12 apply to trustees and by § 13 these sections apply to executors only “ so far as apt.” There are many instances where executors act as trustees. See Ricketson v. Merrill, 148 Mass. 76; Lathrop v. Merrill, 207 Mass. 6. There is nothing in the agreed statement of facts indicating that the executors were to act as trustees; their only appointment was that of executors, and their authority to act was, confined to the performance of their duty as such executors.
It was said in Wheelwright v. Tax Commissioner, 235 Mass.
The gain on the sale of intangibles on which was levied the assessment is not income by the law of the testator’s domicil, as between the life tenant and remainderman; nor is said gain income to be paid as such to a legatee or beneficiary to whom income is payable under the will; and even if the income were accumulated in trust for the benefit of unborn or unascertained persons with contingent interests, these circumstances would be insufficient to warrant the tax against the plaintiffs on the facts agreed to in this case. The executors held the funds in their hands as executors under a foreign appointment, and there is no provision in our tax statute authorizing a tax on such executors, while so acting, because they are inhabitants of this Commonwealth. As was said in Maguire v. Tax Commissioner, 230 Mass. 503, 513: “ Our income tax law is founded upon interstate comity. ... It taxes only residents of this Commonwealth in respect of property in which they have a beneficial interest. It exempts resident trustees. . . . But it taxes resident cestuis que trust in respect of income actually received by them from trust property held in other States and not there taxed.” The complainants were not taxable under G. L. c. 62, § 5 (c). Without considering the
The abatement is granted. The amount thereof is to be repaid to the complainants by the State Treasurer, with interest from the date when the tax was paid at the rate of six per cent per annum, and costs.
So ordered.