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MELLON BANK, N.A. v. UNITED STATES

June 26, 1984

MELLON BANK, N.A., and Robert B. Reed, Jr., Executor of the Estate of A. Leon Davis, a/k/a Austin L. Davis, Deceased, Plaintiffs,
v.
UNITED STATES of America, Defendant



The opinion of the court was delivered by: MCCUNE

 McCUNE, District Judge.

 The issue before us on cross motions for summary judgment is whether or not the Verona Cemetery, a non-profit corporation, is a "corporation organized and operated exclusively for . . . charitable . . . purposes," under § 2055(a)(2) of the Internal Revenue Code of 1954, as amended.

 The plaintiffs have exhausted their administrative remedies. We have jurisdiction pursuant to 28 U.S.C. § 1346.

 Facts

 The following facts have been stipulated to by the parties and are therefore not in dispute.

 History of the Case

 A. Leon Davis died testate on December 6, 1976. His last Will dated October 11, 1972, and a Codicil dated November 21, 1975, provided as follows:

 
All of the rest, residue and remainder of my estate I give, devise and bequeath to THE VERONA CEMETERY, Oakmont, Pennsylvania, with the sum of Thirty Thousand Dollars ($30,000.00) thereof to be applied toward the erection of a new utility building and the balance thereof to be added to its Endowment Fund.

 On August 22, 1977, the plaintiffs timely filed a federal estate tax return for the Estate of A. Leon Davis and paid taxes owed in the amount of $96,808.16. A deficiency in the amount of $860.32 was subsequently paid on June 19, 1979.

 On September 11, 1979, the plaintiffs filed a claim for a refund in the amount of $97,557.15, plus interest, based on a claim for a charitable deduction of $370,901.74. The Internal Revenue Service disallowed the charitable deduction in full and denied the claim for a refund.

 The plaintiffs then filed the instant suit claiming that the denial of the deduction was improper and that the resulting Federal Estate Tax was erroneously assessed and collected.

 Before addressing the merits of the plaintiffs' claim we will briefly review the history and physical characteristics of the Verona Cemetery based upon the stipulation.

 History of the Verona Cemetery

 In 1881, residents of the Borough of Verona and several other communities drafted Articles of Association for a public cemetery. The Association's stated purpose was the maintenance, without profit, of a public cemetery for the burial of the dead, without distinction or regard to sect.

 Thereafter, the Court of Common Pleas of Allegheny County was petitioned by the Association's subscribers requesting that a corporation of the first class (non-profit) be established. A decree was entered on January 3, 1882, granting the Charter. The Charter and the rules and regulations have remained unchanged and are still in full force and effect.

 The corporation was organized on a non-stock basis and none of the assets and no part of the net earnings of the cemetery have or may inure to the benefit of any private individual, corporation or lot owner. Persons of different races and religions have been buried in the cemetery without any restrictions or distinction whatsoever. The cemetery is operated by a Board of Managers who serve without compensation.

 Description of the Cemetery

 The cemetery itself occupies approximately 8.5 acres with approximately 8,490 burial plots, all of which have ...


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