Taft v. Commissioner
304 U.S. 351 (1938)

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U.S. Supreme Court

Taft v. Commissioner, 304 U.S. 351 (1938)

Taft v. Commissioner of Internal Revenue

No. 746

Argued April 25, 1938

Decided May 16, 1938

304 U.S. 351

Syllabus

1. A decedent in her lifetime promised educational institutions to establish an endowment fund and to pay salaries of orchestral musicians and a director of art. The promises were accepted and acted upon, and, under the state law, were binding upon her estate. Held that, in valuing the estate for taxation under the Revenue Act of 1926, the executor was not entitled to deduct the amounts payable under the promises, as being claims contracted "for an adequate and full consideration in money or money's worth," § 303(a)(1), or as "transfers," to or for the use of the promisee corporations, id., § 303(a)(3). Pp. 304 U. S. 355, 304 U. S. 357.

Page 304 U. S. 352

2. The legislative and administrative history of § 303(a)(1) of the Revenue Act of 1926, shows that a promise by a decedent to pay money to a charitable or educational institution, where the only consideration was a stipulated application of the amount received, does not constitute a claim against the estate contracted for an adequate and full consideration in money or money's worth, notwithstanding the fact that, under local law, the promise is enforceable. P. 304 U. S. 355.

3. A binding promise by a decedent to pay money to a charitable or educational institution, not attended by any allocation of funds in decedent's lifetime, is not a "transfer" within the meaning of § 303(a)(3), Revenue Act of 1926, and payment by the executor does not make it such by relation. P. 304 U. S. 357.

4. Only such transfers inter vivos as are testamentary in character are deductible under subsection (3), supra. P. 304 U. S. 358.

92 F.2d 667 affirmed.

Certiorari, 303 U.S. 631, to review a judgment of the Circuit Court of Appeals which affirmed a decision of the Board of Tax Appeals, 33 B.T.A. 671, sustaining the disallowance of certain deductions in the valuation of an estate for taxation.

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