Anderson v. Commissioner

*1376 The Commissioner determined a deficiency in income tax of $140.71 for the year 1925. This deficiency arose from the increase of income by the Commissioner in the amount of $4,600, profit from the sale of stock by the trustee, and disallowance of a deduction of $1,343.38 inheritance taxes paid by the estate to the State of New Jersey.

FINDINGS OF FACT.

Gustave E. Anderson is the trustee under the will of John Anderson, deceased. In the taxable year, the trustee sold 100 shares of stock of Horn & Hardaret Baking Co. and calculated the profit thereon to be the difference between the sales price and the value of the stock at the date of death of $23,600. The Commissioner in his determination held that the profit should be computed to be the difference between the sales price and the value of the stock of $19,000 at the date the same was acquired by the decedent. This determination of the Commissioner resulted in an increase in profit reported in the amount of $4,600.

In the income-tax return for the year 1925, inheritance taxes paid to the State*3899 of New Jersey from the estate of the decedent in the amount of $1,343.38 were deducted from gross income. The Commissioner disallowed this deduction upon the ground that the New Jersey inheritance tax is imposed upon the right of the beneficiary to receive property of the decedent and is therefore deductible by the beneficiary only.

OPINION.

LITTLETON: The first issue is governed by the decision of the Board in , and the decision of the District Court for the Southern District of New York in .

The Commissioner erred in refusing to allow as a deduction by the estate the inheritance tax paid to the State of New Jersey. ; .

Judgment will be entered on 15 days' notice, under Rule 50.