Moffett v. Commissioner of Internal Revenue. Commissioner of Internal Revenue v. Moffett
This text of 191 F.2d 149 (Moffett v. Commissioner of Internal Revenue. Commissioner of Internal Revenue v. Moffett) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
1. The taxpayer’s appeal
Section 23(c) (1) (D), 26 U.S.C.A., provides that, in computing a taxpayer’s net taxable income, there shall be no deduction of estate taxes paid by the taxpayer. Under § 827(b), 26 U.S.C.A., taxpayer, as a transferee, was “personally liable” for the estate tax. Accordingly, she could not, like a creditor, stand in the government’s shoes, and therefore we regard as untenable her contention, i. e., that, by her payment of that tax, she became subrogated to the government’s rights so *150 that the annuity payments . represented payment of a debt, not income.
2. The Commissioner’s ’appeal
When taxpayer paid the estate tax out of her own funds, in effect she made a purchase of annuity contracts to the extent of that payment. The .amounts received pursuant to the annuity contracts are, therefore, not, under,§ 22(b)(2)(A), 26 U.S.C.A., tax-free returns of capital, except as in that subsection provided. Consequently, we think the Tax C-outt erred in allowing taxpayer to amortize the amount of her payment of the estate tax.
Affirmed as to taxpayer’s appeal; reversed as to the Commissioner’s appeal.
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Cite This Page — Counsel Stack
191 F.2d 149, 40 A.F.T.R. (P-H) 1197, 1951 U.S. App. LEXIS 3902, Counsel Stack Legal Research, https://law.counselstack.com/opinion/moffett-v-commissioner-of-internal-revenue-commissioner-of-internal-ca2-1951.