B. As to Value - Continued. 6. Pledged Securities. a. As to the Pledgor. b. As to the Pledgee. 7. Partnerships. 8. Good Will. a. A Taxable Asset. b. Rules for Computation. c. Number of Years' Purchase. d. When the Profits are Speculative. C. Deductions. 1. Mortgages. 2. Debts. a. Liability on Mortgage Bond. c. Debts Paid by Will. d. Doubtful Claims. 3. Funeral and Burial Expenses. 4. Administration Expenses and Counsel Fees. 5. Discount on Legacy. 6. Expenses of Litigation. a. Where to Conserve the Estate. b. Disputes Among the Beneficiaries. 7. Taxes. a. Other Inheritance Taxes. b. General Taxes and Assessments. 8. Commissions. a. To Executors. b. To Trustees. c. On Sale of Real Estate. 9. Family Allowance. 10. Pro Rating Debts. a. When the Local Debts Exceed the Local Assets. b. When there are Local Assets and no Local Debts. c. When Local Debts are Paid with Foreign Assets. d. When there are both Local and Foreign Debts and Assets. e. As to Partnerships. 11. Marshaling Assets to Reduce Tax. a. When the Executor can do so. b. When he cannot. PART IV-THE PROPERTY This is not limited to such property as is defined as taxable under the general tax laws of the state but extends to all the assets of the decedent of whatsoever name or nature. Matter of Knoedler, 140 N. Y. 377; 35 N. E. 601. "The argument The court said in the Knoedler case: is made that it is only property which is liable to taxation under the General Tax Law of the State which can be taxed under the act relating to taxable transfers, The Taxable Transfer Law has no reference or relation to the general law. The two acts are not in pari materia. While the object of both is to raise revenue for the support of the government, they have nothing else in common. Nearly sixty years intervened between the passage of the earlier and the later statute, and the latter was enacted under different conditions from the former. It taxes the right of succession to property, and measures the tax in the method specifically prescribed. All property having an appraisable value must be considered, whether it is such as might be taxed under the general law or not. Many kinds of property might be enumerated which are not assessable under the general law, but which are appraisable under the Collateral Inheritance Act." "The word 'property' is broad enough to include everything which one person can own and transfer to another." Hamilton v. Rathbone, 175 U. S. 414. Inheritance taxes embrace every kind of interest in the estate of a decedent. Attorney-General v. Pierce, 59 N. C. 240. As we have seen, the law of Inheritance Taxation has been complicated by the conflicting theories as to the situs of personal property, the same state persisting in taxing the intangibles of resident decedents wherever located and, at the same time, the intangibles property of nonresidents when physically present within the state. Of course the very fact that it is "physically present" anywhere conflicts the notion that any property is "intangible." At all events the actual and theoretical situs of property subject to inheritance taxation presents some of the most perplexing questions in the entire scope of the subject. It is further complicated by the frequent amendment of the statutes so that one decision which apparently conflicts with another in fact construes a statute that has since been amended by the legislature. The New York and Massachusetts decisions are of high authority in other states though those jurisdictions no longer tax the intangibles of non-residents a fact that should constantly be borne in mind. 1. Real Estate. a. NOT TAXABLE IN FOREIGN JURISDICTION. The authorities are all agreed that the real estate of a resident decedent located in a foreign jurisdiction is not taxable and a fortiori as to a non-resident. Matter of Swift, 137 N. Y. 77; 32 N. E. 1096. The cases are also substantially unanimous in holding that even though the testator directs the sale of foreign real estate and the payment of money legacies out of the proceeds the doctrine of equitable conversion is not applicable in the law of inheritance taxation. Connell v. Crosby, 210 Ill. 380; 71 N. E. 350. Matter of Hallock, 42 Misc. 473; 87 Supp. 255. Matter of Sutton, 3 App. Div. 208; 38 Supp. 277; aff. 149 N. Y. 618; 44 N. E. 1128. In the Swift case, supra the court said: "Nor is the argument available that, by the power of sale conferred upon the executors, there was an equitable conversion worked of the lands in New Jersey, as of the time of the testator's death, and, hence, that the property sought to be reached by the tax, in the eye of the law, existed as cash in this state in the executor's hands, at the moment of the testator's death." The courts of Pennsylvania alone take a contrary view. In that state, where there is a direction to sell in the will, it is held that there is a conversion and therefore foreign real estate is subject to the tax. Handley's Estate, 181 Pa. St. 339; 37 A. 587. Miller v. Commonwealth, 111 Pa. St. 321; 2 A. 492. In re Vanuxem, 212 Pa. St. 315; 6 A. 876. In McCurdy v. McCurdy, 197 Mass. 248; 83 N. E. 881, the court stated the doctrine thus: "The Attorney-General, in behalf of the treasurer and receiver-general of the Commonwealth, contends that the doctrine of equitable conversion and exoneration should be applied to relieve the land from the encumbrance of the mortgage, and that the executors should bring the proceeds of personal estate from the place of domiciliary administration in New Jersey and apply it to the payment of the debt here, so as to leave the land, free from the encumbrance, within the jurisdiction of the Commonwealth. The answer to this contention is, first, that the rights and obligations of all parties in regard to the payment of a tax of this kind are to be determined as of the time of the death of the decedent. This has been settled by our decisions. Hooper v. Bradford, 178 Mass. 95; 59 N. E. 678; Howe v. Howe, 179 Mass. 546; 61 N. E. 225; Kingsbury v. Chapin, 196 Mass. 533; 82 N. E. 700. Secondly, the law of equitable conversion ought not to be invoked merely to subject property to taxation, especially when the question is one of jurisdiction between different States. In Custance v. Bradshaw, 4 Hare, 315, 325, it was said that "equity would not alter the nature of the property for the purpose only of subjecting it to fiscal claims to which at law it was not liable in its existing state." In Matter of Offerman, 25 App. Div. (N. Y.) 94; 48 Supp. 993, the court says that equitable conversion should not be invoked merely for the purpose of subjecting the property to taxation. To the same effect is Matter of Sutton, 3 App. Div. (N. Y.) 208; 38 Supp. 277; affirmed in 149 N. Y. 618. In Pennsylvania a different rule is established. Handley's Estate, 181 Penn. St. 339; 37 A. 587." c. LAND CONTRACTS. Money due on land contracts to pay a resident decedent's estate the purchase price of land in a foreign jurisdiction is not taxable. Matter of Wolcott, 94 Misc. 73; 157 Supp. 268. And, conversely, land contracts to sell lands in Michigan owned by a non-resident decedent, are taxable in Michigan. Re Stanton's Estate, 142 Mich. 491; 105 N. W. 1122. |