Commerce Union Trust Co. v. Commissioner

COMMERCE UNION TRUST CO., AS EXECUTOR AND TRUSTEE OF AND UNDER THE LAST WILL AND TESTAMENT OF JOHN H. LANGE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Commerce Union Trust Co. v. Commissioner Docket No. 17642. United States Board of Tax Appeals 21 B.T.A. 174; 1930 BTA LEXIS 1905; November 3, 1930, Promulgated *1905 Property held by decedent and his wife as tenants by the entirety is a part of the estate of the decedent subject to estate tax. Tyler v. United States,281 U.S. 497. J. G. Adams, Esq., for the petitioner. L. S. Pendleton, Esq., for the respondent. PHILLIPS *174 The Commissioner asserted a deficiency in Federal estate tax of $4,219.88 on the estate of John H. Lange, who died June 25, 1924. The petitioner brings this proceeding for a redetermination of the tax liability. It is alleged that the respondent erred (1) in including in the gross estate certain property in North Carolina which was conveyed by C. C. Miller et al. to Annie A. Lange on June 25, 1921, said property being described in the petition as item 5(a); (2) including in the gross estate seven items of real estate held by the deceased and his wife, Annie A. Lange, as tenants by the entirety; (3) the overvaluation of the decedent's business known as the Western Carolina Auto Co. At the hearing on February 25, 1929, the petitioner abandoned his contention as to (1) and (3) and the respondent confessed error as to the inclusion of certain items under (2). *1906 FINDINGS OF FACT. Petitioner is a North Carolina corporation with its principal office in Asheville, N.C. It is acting as executor and trustee of and under the last will and testament of John H. Lange, who died June 25, 1924. At the time of the death of the decedent, John H. Lange, the following properties were vested in him and his wife, Annie A. Lange, as tenants by the entirety: (1) Residence property "Witchwood," Ward 2, Sheet 6, valued at $40,000.00, was conveyed by Rachel Howland to Annie A. Lange and John H. Lange, by deed dated May 16, 1922, and registered in Book 259 at page 36; (2) Three lots, Nos. 19, 20 and 21, Ward 2, Sheet 1 on the west side of Market Street, valued at $52,500.00, were conveyed to J. H. Lange and wife, Annie A. Lange, by deed of J. T. Bledsoe, et al., dated March 21, 1921, and registered in Book 244, page 615; (3) The lot and building adjoining the Langren Hotel, on the North side of East College Street, Ward 2, Sheet 1, and valued at $33,000.00, was conveyed to J. H. Lange and Wife, Annie A. Lange, by deed of P. R. Moale, Commissioner, dated February 12, 1919, registered in Book 228, page 6; (4) The Lot No. 208, on the west side of Depot*1907 Street, Ward 4, Sheet 9, valued at $3,500.00 was conveyed to J. H. Lange and wife, Annie A. Lange, by *175 Kencheon Wells and wife, by deed dated December 22, 1904, registered in Book 135, page 542; (5) The lot and building No. 38, Ward 3, Sheet 1, west side of Broadway, value at $85,000.00, was conveyed to John H. Lange and wife, Annie Al. Lange, by deed of J. S. Pleasant, et al., dated December 14, 1904, registered in Book 137, at page 209; (6) The lot and building, No. 39, Ward 3, Sheet 1, west side of Pack Square, was conveyed to John H. Lange and wife, Annie A. Lange, by deed of J. S. Pleasant, et al., dated May 17, 1906, registered in Book 147, at page 180; (7) The lots and houses, Nos. 84 and 85, Ward 3, Sheet 1, Penald Steet, valued at $15,000.00, were conveyed to John H. Lange and wife, Annie A. Lange, egistered in Book 107, page 272. The respondent included the value of those properties held by decedent and his wife as tenants by the entirety in the gross estate of the decedent. OPINION. PHILLIPS: The single question presented for decision is whether the value of certain properties held by the decedent and his wife as tenants by the entirety was properly*1908 included by the Commissioner in computing the gross estate of decedent subject to estate tax. Since this case was submitted the Supreme Court has rendered its decision in Tyler v. United States,281 U.S. 497, upon authority of which we must decide against the petitioner. At the hearing in this proceeding counsel for the respondent stated that, in view of the amendment to the regulations by Treasury Decision 4248, error was confessed as to the inclusion in the gross estate of the value of those properties acquired by decedent and his wife prior to the enactment of the estate-tax law of September 8, 1916. The decision referred to amends the regulations of the Commissioner with respect to the inclusion in the gross income of property held as joint tenants or tenants by the entirety, by adding thereto a sentence reading: The statute applies only to joint ownerships based on the right of survivorship and created subsequent to September 8, 1916. This amendment was made after the decision of the Supreme Court in *1909 Nichols v. Coolidge,274 U.S. 531, and before the decisions in Chase National Bank v. United States,278 U.S. 327; Reinecke v. Northern Trust Co.,278 U.S. 339; and Tyler v. United States, supra. The Revenue Act provides for the inclusion of such estate whether created before or after the enactment of the Act, and the amendment made by the Commissioner to his regulations seems justified only if the Act, so far as it taxed such estates, was unconstitutional. In view of the more recent decisions of the Supreme Court, we have reached the conclusion in Estate of Grant H. Slocum,21 B.T.A. 169, *176 that the value of property held by a decedent and his wife as tenants by the entirety is to be included as a part of the gross estate whether the estate by the entirety was created before or after September 8, 1916; provided, of course, the other conditions set out in the Act exist. We find ourselves in the position of being unable to accept a confession of error based solely and expressly upon an interpretation of the law which we regard as wrong. Since the preparation of the foregoing*1910 opinion the amendment to the regulations made by Treasury Decision 4248 has been reversed by Treasury Decision 4294. Reviewed by the Board. Decision will be entered for respondent.