227 Wis. 407 | Wis. | 1928
On this appeal the executors of the will of Ludington Patton, deceased, challenge that part of an order
The Tax Commission contended that the appraisers’ valuation of the Lodgewood Company assets should be increased
In passing upon those contentions, it must be noted that sec. 72.01, sub. (8), Stats., relating to inheritance taxes, provides that “the tax so imposed shall be upon the clear market value” of the property; that secs. 72.13 and 72.14, Stats., require appraisals to be made at the “fair market value;” that sec. 72.15, subs. (1) and (3), provide that the court shall determine the “cash value;” and that sec. 72.15 (5), Stats., states that the property shall be appraised at its “clear market value.” In Will of Matthews, 174 Wis. 220, 182 N. W. 744, the court held that,—
“Under sec. 1087 — 13, Stats., requiring property to be appraised at its fair market value for inheritance tax purposes, and sec. 3821, requiring the general appraisers of a decedent’s property to fix its value in money, the terms ‘fair market value’ and ‘value in money’ are practically identical, the ‘value in money’ being the fair equivalent in money for the thing valued and the ‘fair market value’ the sum for which it could be exchanged in the open market under fair conditions, the purpose of the valuation not being an element to be considered in either case.”
And in relation to the stock of a close corporation, as to which there were no recent sales establishing the market value, we said in Estate of Lemke, 206 Wis. 5, 6, 238 N. W. 806:
“The company was a close corporation. Its stock was not listed on the stock exchange and there were practically*410 no sales of its stock within recent years. It had no market value. A determination of the inheritance tax due from the estate required that the actual value of this stock be ascertained.”
The executors, to establish that the Lodgewood Company sustained a loss of at least $87,825 upon and by reason of Patton’s death, rely on testimony to that effect by two witnesses who knew him and of his ability, skill, and experience in corporate management and finances, and who took into consideration that while he was president and in charge of the affairs of the Lodgewood Company and its predecessor, their assets had increased four hundred per cent in fourteen years. However, on cross-examination one of those witnesses testified that in appraising the value of the stock of the Lodgewood Company, on the day of Patton’s death, he would take the stocks, bonds, and securities, which it owned, at their liquidating value on that day; and in explanation thereof said:
“The value as of that day would not be affected by his death at all. The only thing is, as a result of his death the company in the future might not make so much money as they had in the past.”
The other witness testified to the same effect, so far as the corporation’s government bonds were concerned, but was not so sure that the same was true as to its list of stocks, which he had not analyzed. In support of their contention, the executors cite Newell v. Comm’r (7th Cir.), 66 Fed. (2d) 102, and In re Reed’s Estate, 243 N. Y. 199, 153 N. E. 47. In the Newell Case, supra, the court held that the proceeds of an insurance policy payable to the Ingalls Stone Company, upon the death of Charles C. Ingalls, its founder and one of its officers; should be included in its assets in appraising the value of its stock for inheritance tax against his estate; and that it was error not to find the amount of loss sustained by the corporation through his death and de
On this appeal the Tax Commission contends that the rule adopted in the Newell Case, supra, as to the value of the stock of the Ingalls Stone Company, which was probably an operating corporation, should not be held applicable to a close, personal holding corporation like the Lodgewood Company, whose assets consisted almost entirely of bonds and stocks which were appraised at but their market value, without including anything for the going value or good will of the Lodgewood Company. That contention is sound. All of the assets of that company, which were included in the appraisers’ valuation (excepting the comparatively small item of farm property), consisted of liquid securities or assets which had a definite, established, and known daily market value, and were equivalent thereto and readily reducible to cash at that value at any given time; and the amount of that cash value, together with the $131,609.80 realized on the insurance policies, and the low value placed by the appraisers on the farm property, constituted the actual value in money of those tangible, liquid corporate assets at the time of Patton’s death. As nothing is included in the amount of that cash value on account of the good will or going value of the Lodgewood Company, it is improbable that that cash value of those assets was diminished or affected by reason of Patton’s death. As the appraisal must be made as of that date, it is immaterial, in view of the nature of its business and the tangible and liquid character of the assets
By the Court. — Order affirmed.