Opinion
Docket No. 6144.
1946-02-20
ESTATE OF KARL WEISS, DECEASED, IRMA NORMAN, ADMINISTRATRIX, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
Harold Manheim, Esq., for the petitioner. Laurence F. Casey, Esq., for the respondent.
ESTATE TAX— PROPERTY WITHIN THE UNITED STATES— BANK DEPOSITS— SECTION 863(b).— Money which belonged to a czechoslovakian held in a German concentration camp and was deposited by a friend in a New York bank in the name of the friend and his son, was deposited ‘for‘ the owner within the meaning of section 863(b), I.R.C. Harold Manheim, Esq., for the petitioner. Laurence F. Casey, Esq., for the respondent.
The Commissioner determined a deficiency of $2,510.05 in estate tax. The only question for decision is whether the decedent had any property situated in the United States at the time of his death. Most of the facts have been stipulated.
FINDINGS OF FACT.
Irma Norman is the duly constituted administratrix of the estate of Karl Weiss. The estate tax return was filed with the collector of internal revenue for the second district of New York.
The decedent, Karl Weiss, was a citizen of the Republic of Czechoslovakia when he died, on June 5, 1941, in a German concentration camp in Europe. He was not engaged in business in the United States.
Leo Kroner was formerly a partner in business with Weiss in Czechoslovakia. He never saw or heard from Weiss after September 1938. Kroner was admitted to the United States as an immigrant in 1939. He had some money belonging to Weiss which he had succeeded in bringing here. He deposited this money in the Guaranty Trust Co. of New York in the names of himself and his son. The bank was not told that the money upon deposit belonged to Weiss, but one or two business associates of Weiss kn:. the facts of the situation. It was deposited solely for the benefit of Weiss.
The credit balance in the account at the date of the decedent's death was $39,996.70.
The Guaranty Trust Co. was a corporation carrying on the banking business in the United States.
The following amounts had been withdrawn from the account prior to the death of the decedent:
$572 was paid to American Jewish Joint Distribution Committee of New York on April 25, 1941, and was applied to purchase tickets and to pay traveling expenses of the decedent on his proposed immigration to Cuba.
$2,000 was used on April 4, 1941, to purchase a letter of credit at the First National Bank of Boston, Havana, Cuba, for use by the decedent upon his arrival there.
$637.40 was deposited on April 4, 1941, in Cuba to the account of the Cuban Immigration Department to secure the decedent's immigration to Cuba and his passage from Cuba.
The above amounts were refunded and restored to the Guaranty Trust Co. account after the decedent's death. Thereafter, all funds in the account, $42,743.59, were transferred to a new account in the name of estate of Karl Weiss, deceased. Kroner also restored to the estate $75 which he had previously withdrawn from the account.
The Commissioner, in determining the deficiency, held that the taxable estate should include $42,818.59 representing amounts due from the Kroners and actually received by the administratrix.
All stipulated facts are incorporated herein by this reference.
OPINION.
MURDOCK, Judge:
The decedent was a victim of the German invasion of his country. His partner succeeded in immigrating to this country and in bringing to this country funds belonging to his less fortunate friend. He deposited those funds in a New York bank under his own name and that of a younger man, his son. The petitioner contends that the account was put in the names of others for convenience in aiding the decedent and for safety against German pressure upon him. There is no doubt that the funds in the account belonged to the decedent and were put there solely for his benefit. They were not commingled with any other funds. This was an account for a principal undisclosed to the bank. The arrangement was known to and understood by other persons in addition to the Kroners. A friend made the deposit upon behalf of and solely for the use and benefit of the decedent. The only attempted use of the funds was to aid the decedent to get out of Europe. His death terminated that effort and the entire account was turned over to his administratrix.
The estate tax in the case of a nonresident alien not engaged in business in the United States is imposed only upon property situated in the United States at the date of his death. ‘moneys deposited with any person (corporation) carrying on the banking business, by or for‘ such a decedent, are not deemed property within the United States for this purpose. Sec. 863(b), I.R.C. The question of whether a deposit such as the one involved herein is ‘for‘ the decedent within the meaning of section 863(b) seems to be one of first impression. No authorities on that precise point have been cited.
The respondent contends that moneys are not deposited ‘for‘ such a decedent within the meaning of the code ‘if the funds were not deposited to his credit or in his name,‘ i.e., unless there is some direct contractual relationship between the decedent and the bank.
The words used must be given their usual meaning, since no reason appears for giving them any special or restricted meaning. Congress did not describe the deposit as one in the name of the decedent or one made directly by him, nor did it mention a direct contractual relationship between him and the bank. If it had intended to limit the application of the section, as contended for by the respondent, it could have found better words to convey that thought. Incidentally, the respondent does not challenge the petitioner's argument, based upon a number of cited cases, that the decedent could have recovered the deposit by a direct suit against the bank.
The use of the words ‘by or for‘ indicates that the deposit may be made by someone other than the decedent. A usual meaning of ‘for‘ when thus coupled with ‘by‘ is ‘for the use and benefit of‘ or ‘upon behalf of.‘ Kroner did not deposit the money for himself as a regularly constituted fiduciary or trustee, as a partner, or as a principal. He held the money only as a friend, it belonged exclusively to the decedent, and was deposited solely for the use and benefit and upon behalf of the decedent. The deposit was for the decedent within the meaning and intendment of section 863(b), even granting, as the respondent contends, that that section was intended to exclude only straight bank accounts of decedents and not accounts of others.
The petitioner's case is even stronger in so far as funds were actually withdrawn from the bank account and placed physically outside the United States in the unsuccessful effort to aid him. The respondent has not advanced any sound theory for holding that such property was within the United States. The petitioner concedes that $75 held by Kroner was subject to tax.
Reviewed by the Court.
Decision will be entered under Rule 50.