The opinion of the court was delivered by: FOLLMER
Lavere C. Senft, Administrator of the Estate of Elmer J. Writer instituted his action for a refund of estate tax paid by the estate by reason of the disallowance of a claim of the estate that it was entitled to a 'charitable deduction' from the gross estate of the portion thereof which escheated to the Commonwealth of Pennsylvania. Cross motions for summary judgment have been filed. The parties have executed a stipulation covering the pertinent facts.
Plaintiff's decedent, Elmer J. Writer, died intestate, a resident of York County, Pennsylvania, on May 23, 1957. At the time of his death, there were no relatives within the degrees of consanguinity entitled to take under the Intestate Laws of Pennsylvania. Accordingly, under the Act of April 24, 1947, § 3, 20 P.S. § 1.3(6), which provides 'In default of all persons hereinbefore described, then to the Commonwealth of Pennsylvania,' the estate descended to the Commonwealth of Pennsylvania.
Section 2001 of the Internal Revenue Code of 1954, 26 U.S.C.A. § 2001, provided for an estate tax 'on the transfer of the taxable estate, determined as provided in section 2051, of every decedent, * * *.' Section 2051 provided that 'For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate the exemption and deductions provided for in this part.'
Plaintiff claims that he is entitled to a deduction from the gross estate for the amount escheating to the Commonwealth of Pennsylvania by reason of Section 2055 (Transfers for public, charitable, and religious uses), the pertinent portion of which is:
'(a) In general. -- For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate the amount of all bequests, legacies, devises, or transfers (including the interest which falls into any such bequest, legacy, devise, or transfer as a result of an irrevocable disclaimer of a bequest, legacy, devise, transfer, or power, if the disclaimer is made before the date prescribed for the filing of the estate tax return) --
'(1) to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes;
'(2) to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, * * *.' (Emphasis supplied.)
The Revenue Act of 1916 (39 Stat. 777) while containing a Federal estate tax provision did not, under the allowable deductions from gross estate, contain anything covering transfers for public, charitable or religious uses. Section 403(a)(3) of the Revenue Act of 1918 (40 Stat. 1096) did allow a deduction from the gross estate of 'bequests, legacies, devises, or gifts, to or for the use of the United States, any State * * * for exclusively public purposes * * *.' (Emphasis supplied.) The Revenue Act of 1921 (42 Stat. 277) substituted for the word 'gift' the word 'transfer' so that the Revenue Act of 1920 and the subsequent Revenue Acts down to the Internal Revenue Code of 1954 (Section 2055, supra) contained the language 'bequests, legacies, devises, or transfers.' (Emphasis supplied.)
The pertinent regulation under the Internal Revenue Code of 1954 is: (26 CFR 20.2055-1)
'Deduction for transfers for public, charitable, and religious uses; in general.
'(a) General rule. A deduction is allowed under section 2055(a) from the gross estate of a decedent who was a citizen or resident of the United States at the time of his death for the value of property included in the decedent's gross estate and transferred by the decedent during his lifetime or by will --
'(1) To or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes.'
The defendant points out that 'The regulations in question have been a part of our estate tax law since July 27, 1922, when regulations 63 were promulgated under the Revenue Act of 1921. Since that time, the applicable statutory provision has been repeatedly re-enacted without change relevant to the instant case.'
Plaintiff in his argument likewise concedes that 'Oddly enough, this language in the regulation itself has a history almost as old as the statutory language. Regulations 37 under the Revenue Act of 1918 contained nothing on the subject of deductions; but Regulations 63 (approved July 27, 1922) under the Revenue Act of 1921, article 47, stated that a deduction would be allowed for the value of property transferred 'by will' or by the decedent in his lifetime in contemplation of or intended to take effect in possession or enjoyment at or after his death. Identical language appeared in Regulations 68 (approved March 26, 1925), article 44, under the Revenue Act of 1924 and in Regulations 70 (approved August 24, 1926), article 44 under the Revenue Act of ...