The opinion of the court was delivered by: MCVICAR
This is an action to recover from the United States, estate taxes in which the Commissioner included one-fifth interest, of the decedent in the Emma W. Coulter estate, and in which he also disallowed plaintiff's claim of attorney's fees in the amount of $ 4,500 and expenses in the amount of $ 112.79 incurred by plaintiff in prosecuting his claim for a refund.
Rebecca Coulter Barclay, residing at Greensburg, Pennsylvania, died testate June 22, 1937. The federal estate tax return was filed September 22, 1938, and the tax shown thereon, $ 124,333.84, was paid on the same day. The executor elected to value the estate as of one year after the date of decedent's death, under Sec. 302(j), added to the Revenue Act of 1926 by Sec. 202(a) of the Revenue Act of 1935, 26 U.S.C.A.Int.Rev.Acts, page 231.
The Commission determined a deficiency of $ 34,766.58, of which notice was given on July 12, 1940. On October 11, 1940, plaintiff filed a petition with the Board of Tax Appeals. The petition was dismissed by order of the Board entered February 14, 1941, for lack of jurisdiction on the ground that the petition was filed more than ninety days after mailing of the deficiency notice. Thereupon, the deficiency of $ 34,766.58, with interest of $ 4,267.03, was assessed, and the tax and interest were paid as follows: $ 8,000 on June 7, 1939; $ 20,000 on February 18, 1941; and $ 11,071.04 on April 11, 1941; a total of $ 39,071.04 including an excess payment of $ 37.43. On August 22, 1941, plaintiff filed a claim for refund of $ 40,796.15, predicated on the issues above stated and other issues. The claim was allowed for $ 13,937.16, made up of tax $ 12,093.15; interest $ 1,860.58; and excess payment $ 37.43. The claim was rejected as to the remainder by notice dated September 22, 1942. This suit was filed August 5, 1944.
It is conceded that plaintiff is entitled to a deduction of $ 4,500 for attorney's fees in connection with the taxpayer's claim for a refund. Plaintiff is also entitled to a deduction of $ 112.79 by reason of expenses incurred. Bourne v. United States, 1933, 2 F.Supp. 228, 76 Ct.Cl. 680, and Hoyt v. United States, 1937, 21 F.Supp. 353, 86 Ct.Cl. 19.
The question involved is whether the one-fifth interest in the residuary estate of Emma W. Coulter, over which decedent had a power of appointment, is includable in decedent's taxable estate under section 302(a) or section 302(f) (either or both) of the Revenue Act of 1926, as amended.
The statutes and regulations involved in considering this question are:
Sec. 302, as amended by section 404 of the Revenue Act of 1934, 26 U.S.C.A.Int.Rev.Acts, page 227.
'(a) To the extent of the interest therein of the decedent at the time of his death;
'(f) To the extent of any property passing under a general power of appointment exercised by the decedent (1) by will * * * .'
Sec. 303, as amended by section 403(a) of the Revenue Act of 1934, 26 U.S.C.A.Int.Rev.Acts, page 232.
'For the purpose of the tax the value of the net estate shall be determined -- -(a) In the case of a citizen or resident of the United States, by deducting from the value of the gross estate -- -(1) such amounts -- - * * * (B) for administration expenses * * * as are allowed by the laws of the jurisdiction, * * * under which the estate is being administered, * * * '.
Regulations 80 (1937 Edition) relating to the Estate Tax under Title III of the Revenue Act of 1926 and under such title as amended by the Revenue ...