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ESTATE EDNA M. WELSH. COMMONWEALTH PENNSYLVANIA (06/02/86)

decided: June 2, 1986.

IN RE: ESTATE OF EDNA M. WELSH. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF REVENUE, APPELLANT


Appeal from the Order of the Court of Common Pleas of Montgomery County in the case of Estate of Edna M. Welsh, Deceased, No. 83802, dated September 20, 1983.

COUNSEL

Vincent J. Dopko, Deputy Attorney General, with him, Catherine R. Barone, and LeRoy S. Zimmerman, Attorney General, for appellant.

John F. Meigs, with him, Martha R. Hurt and George C. McFarland, Jr. ; Of Counsel: Saul, Ewing, Remick & Saul, for appellee.

Judges MacPhail and Palladino, and Senior Judge Barbieri, sitting as a panel of three. Opinion by Judge MacPhail. Dissenting Opinion by Senior Judge Barbieri.

Author: Macphail

[ 97 Pa. Commw. Page 589]

The Commonwealth appeals from an order of the Orphans' Court of Montgomery County awarding a refund to Charles N. Welsh, Jr., executor of the estate of Edna M. Welsh, deceased, (Appellee) in the amount of $150,090.39 plus interest. We will affirm.

Edna M. Welsh died testate on October 5, 1981 and letters testamentary were granted to Appellee on October 14, 1981. On July 2, 1982, Appellee filed the Pennsylvania Inheritance Tax Return (Return) in which he listed a net value subject to tax of $2,302,202.95 (line 14) and the following assessment of tax:

[ 97 Pa. Commw. Page 590]

ASSESSMENT OF TAX:

15. Amount of line 14 taxable

     at 6% rate (15) 1,667,671.02 X .06 = 100,060.26

16. Amount of line 14 taxable

     at 15% rate (16) 17,817.00 X .15 = 2,672.55

17. Principal Tax Due (17) 102,732.81

Included with the Return was a letter which stated the following:

I also enclose a check drawn to the order of 'Register of Wills, Agent' in the amount of $252,823.20. The tax due as shown on the Return is $102,732.81, a figure that is based upon our understanding that the transfers in this Estate to step-grandchildren are taxed at the 'A' or lineal rate in accordance with the decision of the Federal District Court in Estate of Kunkel. However, we are paying the larger figure in order to have paid on the possibility that the transfers to step-grandchildren might be deemed to be class 'B' or collateral transfers. We will shortly be filing a Petition for Refund with the Board of Finance and Revenue in Harrisburg.

See also Schedule "J" Beneficiaries, enclosed with the Return, which fully disclosed the inheritance to the step-grandchildren. On July 7, 1982, Appellee filed a petition for refund in the amount of $150,090.39 plus interest.

On August 16, 1982, the Commonwealth, through its appraiser, appraised the estate as follows:

ASSESSMENT OF TAX:

15. Amount of line 14 taxable

     at 6% rate (15) 1,667,671.02 X .06 = 100,060.26

16. Amount of line 14 taxable

     at 15% rate (16) 17,817.00 X .15 = 2,672.55

17. Principal Tax Due (17) 102,732.81

[ 97 Pa. Commw. Page 591]

TAX CREDITS:

Payment Receipt Discount () Amount Paid

Date # Interest (-)

07-02-82 044171 .00 252,823.20

THIS ASSESSMENT IS BASED TOTAL TAX CREDIT

ON: ORIGINAL RETURN ...


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