17 T.C.M. 965 | Tax Ct. | 1958
Memorandum Opinion
BRUCE, Judge: Respondent determined a deficiency in estate tax due from the Estate of Carlton A. Shively in the amount of $2,863.58. Certain of the adjustments made by respondent are not in dispute. The only issue presented for decision involves a deduction claimed for estate tax purposes relating1958 Tax Ct. Memo LEXIS 28" label="1958 Tax Ct. Memo LEXIS 28" no-link"="" number="2" pagescheme="<span class=">1958 Tax Ct. Memo LEXIS 28">*29 to the estate's obligation to make support payments to the decedent's former wife, as provided in a separation agreement subsequently ratified by a divorce decree. The parties orally stipulated at the trial that in the event petitioner prevailed on this issue the amount of the allowable deduction would be stipulated.
The facts have been stipulated and they, together with the attached exhibits, are adopted as our findings of fact. Carlton A. Shively, the decedent, died intestate on July 8, 1952, at New York, New York. At the time of his death, the residence of the decedent was Greenwich, Connecticut. Letters of administration were issued on August 5, 1952, by the Probate Court, Greenwich, Connecticut, to John E. D. Grunow.
The decedent was born on October 18, 1890. Marie Wilson Shively was born on January 27, 1907. The decedent and Marie Wilson Shively were married March 26, 1927, and they had one son, Glenn Shively.
On May 7, 1930, a separation agreement was entered into between the decedent and his wife. Said agreement provided, inter alia, for the payment by decedent of certain amounts for the support of Marie and Glenn from the effective date of the agreement. It was further1958 Tax Ct. Memo LEXIS 28" label="1958 Tax Ct. Memo LEXIS 28" no-link"="" number="3" pagescheme="<span class=">1958 Tax Ct. Memo LEXIS 28">*30 provided in the event Glenn attained the age of 21 and Marie had not remarried, that the decedent agreed to pay Marie the sum of $40 per week during her lifetime so long as she remained unmarried. It was also provided that such payments should be a charge upon decedent's estate in the event he predeceased Marie. On August 7, 1930, decedent and Marie entered into an amendment to the agreement of May 7, 1930. The provisions of said amendment are not pertinent to the issue presented in this case.
On August 28, 1930, a judgment and decree of divorce was duly made and entered in the Second Judicial District Court of the State of Nevada, County of Washoe. This decree adopted, approved, confirmed and ratified the terms of the separation agreement dated May 7, 1930, as amended on August 7, 1930.
The deceased was survived by Marie and by their son, Glenn. Marie remarried in June, 1953.
From the date of decedent's death on July 8, 1952, until her remarriage in June 1953, Marie was paid $40 per week from the decedent's estate pursuant to the separation agreement of May 7, 1930, as ratified by the divorce decree of August 28, 1930. The total sum so paid Marie during this period was $2,079.96.
1958 Tax Ct. Memo LEXIS 28" label="1958 Tax Ct. Memo LEXIS 28" no-link"="" number="4" pagescheme="<span class=">1958 Tax Ct. Memo LEXIS 28">*31 Upon her remarriage in June 1953, the aforementioned payments to Marie ceased. After her remarriage Marie had no enforceable claim against the decedent's estate under the laws of the State of Connecticut.
The estate tax return for decedent's estate was filed by the administrator on July 28, 1953, with the director of internal revenue at Hartford, Connecticut. The amount of $27,058.30 was included in Schedule K of the estate tax return as a claim against the estate. This is the amount which the petitioner claims as the present value of the estate's liability to make the payments to Marie in accordance with the separation agreement of May 7, 1930, as ratified by the divorce decree of August 28, 1930. The aforesaid amount of $27,058.30 was claimed as a deduction from the gross estate in the recapitulation contained in Schedule O of the estate tax return.
In the notice of deficiency the respondent disallowed the claimed deduction of $27,058.30 and determined that the allowable deduction was $8,442.33, for the reason that the excess of the claimed deduction over the deduction determined to be allowable was not based upon a good consideration in money or money's worth. Petitioner assigned1958 Tax Ct. Memo LEXIS 28" label="1958 Tax Ct. Memo LEXIS 28" no-link"="" number="5" pagescheme="<span class=">1958 Tax Ct. Memo LEXIS 28">*32 error to this adjustment.
On February 5, 1958, the respondent filed an amendment to his answer in this proceeding in which he claimed an increased deficiency in the amount of $1,166.05, making a total deficiency of $4,029.63. As grounds for the increased deficiency, the respondent has alleged that the deduction allowable from the gross estate for support payments owed to the decedent's former wife is limited to $2,079.96, which is the amount she actually received from the decedent's estate. Such allegation of increased deficiency is also disputed by petitioner.
It is well settled that amounts paid from a husband's gross estate in accordance with a separation agreement fixing the scope of the husband's obligation of support and incorporated in a divorce decree are deductible as claims against the estate within the meaning of
Petitioner contends that the amount of the deduction must be determined as of the date of the decedent's death and argues that the allowable deduction is equal to the commuted value of the estate's liability to make the $40 per week payments to Marie as determined by actuarial methods.
The nub of the controversy is whether the actual fact of Marie's remarriage may be substituted for the actuarial1958 Tax Ct. Memo LEXIS 28" label="1958 Tax Ct. Memo LEXIS 28" no-link"="" number="7" pagescheme="<span class=">1958 Tax Ct. Memo LEXIS 28">*34 determination of her probability of remarriage in the light of the facts and circumstances existing at the time of the decedent's death. In
In
In accordance with the principle of Ithaca Trust Co. and Estate of Pompeo M. Maresi, both supra, we hold for the petitioner on this issue. The parties having agreed to stipulate the amount of the allowable deduction,
Decision will be entered under Rule 50.
Footnotes
1.
Sec. 812 . NET ESTATE.For the purpose of the tax the value of the net estate shall be determined, in the case of a citizen or resident of the United States by deducting from the value of the gross estate -
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(b) Expenses, Losses, Indebtedness, and Taxes. - Such amounts -
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(3) for claims against the estate,
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as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered,
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