1. In computing the federal estate tax under the Revenue Act of
1916, state succession taxes (distinguished from transfer taxes),
are not deductible from the gross estate.
Leach v.
Nichols, 285 U. S. 165. P.
286 U. S.
426.
2. Tax imposed by California Inheritance Tax Act, as amended in
1915,
held a tax on succession, following decision of the
state court.
Id.
72 Ct.Cls. 695, 50 F.2d 1030, reversed.
Page 286 U. S. 425
Certiorari, 285 U.S. 532, to review a Judgment allowing a claim
to recover part of an amount exacted as a federal estate tax.
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
The question for decision is whether the sum of $261,811.42 paid
to the State of California for inheritance taxes should have been
deducted from the gross estate of the decedent before calculating
the federal estate tax under the Revenue Act of 1916, as
amended.
On April 25, 1917, Rosa von Zimmermann died in California, a
German alien enemy, leaving a net estate valued at $1,927,610.88.
Her will was probated there. Her executors, who were citizens of
that state, paid in 1918 to the United States an estate tax of
$144,889.78, and to California for inheritance taxes the sum of
$261,811.42. In the same year, the Alien Property Custodian served
notice and demand upon the executors to convey and pay over to him
all interest, in the estate, of the residuary legatees, who were
likewise German alien enemies. In 1922, the executors, having
rendered a final account and turned over the residue of the estate
to the Alien Property Custodian, were discharged. After March 4,
1923, the effective date of the Winslow Act, 42 Stat. 1511, c. 285,
a claim for refund was filed with the Commissioner of Internal
Revenue by Barnim Kombst and the other residuary
Page 286 U. S. 426
legatees. One of the grounds assigned was that the sum paid to
California by way of an inheritance tax should have been deducted
from the gross estate before calculating the federal estate tax.
Subsequently, the Alien Property Custodian filed a like claim. The
Commissioner rejected both claims. Thereupon, the legatees and the
Alien Property Custodian brought this action in the Court of Claims
to recover the amount alleged to have been wrongfully exacted. The
court sustained their contention, and allowed recovery of
$23,563.03, with interest. 52 F.2d 1030. Certiorari was granted,
285 U.S. 532. The government contends that the sum paid to
California was not deductible, and that, even if it should have
been deducted, there can be no recovery, because the claim for
refund was not made within the period allowed by law.
The Revenue Act of 1916, ยง 203(a)(1), under which the excise tax
is laid, does not allow as a deduction from the gross estate a sum
paid by way of succession tax, as distinguished from an estate tax.
* Leach v.
Nichols, 285 U. S. 165;
New York Trust Co. v. Eisner, 256 U.
S. 345,
256 U. S. 350.
Compare United States v. Woodward, 256 U.
S. 632,
256 U. S. 635.
Whether the California tax was a succession tax or an estate tax is
to be determined by reference to the decisions of its highest
court.
Leach v. Nichols, supra; Keith v. Johnson,
271 U. S. 1,
271 U. S. 8. The
California tax was levied under the Inheritance Tax Act of
1913,
Page 286 U. S. 427
Cal.Stats.1913, p. 1066, as amended Cal.Stats.1915, pp. 418,
435. This Act differs in no substantial respect from its
predecessors, Cal.Stats.1905, p. 341, and Cal.Stats.1911, p. 713,
which have uniformly been held by the supreme court of the state to
impose a tax upon the succession.
Estate of Kennedy, 157
Cal. 517, 523, 108 P. 280;
Estate of Hite, 159 Cal. 392,
394, 113 P. 1072;
Estate of Miller, 184 Cal. 674, 678, 195
P. 413.
Compare Estate of Potter, 188 Cal. 55, 204 P. 826;
Estate of Letchworth, 201 Cal. 1, 255 P. 195.
See
Stebbins v. Riley, 268 U. S. 137,
268 U. S.
144.
It is urged that the original and all later California
inheritance tax acts were patterned after the New York act, and
that, under the New York act, the tax is one upon the transfer.
Keith v. Johnson, 271 U. S. 1.
Compare United States v. Mitchell, 271 U. S.
9. As the highest court of California has construed its
statutes as laying a succession tax, we have no occasion to
consider the construction given by the courts of New York to its
legislation.
Compare Stonebraker v. Hunter, 215 F. 67,
69.
The Commissioner properly refused to allow as a deduction the
amount paid to the state. We have therefore no occasion to consider
the question whether the claim for refund was filed in time.
Reversed.
* Act of September 8, 1916, 39 Stat. 756, 778, c. 463:
"Sec. 203. That, for the purpose of the tax, the value of the
net estate shall be determined -- "
"(a) In the case of a resident, by deducting from the value of
the gross estate --"
"(1) Such amounts for funeral expenses, administration expenses,
claims against the estate, unpaid mortgages . . . and such other
charges against the estate, as are allowed by the laws of the
jurisdiction . . . under which the estate is being administered. .
. ."