UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
November 27, 1963
Adele H. DODD and William A. Dodd, Executors of the Estate of John A. Dodd, Deceased, Plaintiffs,
UNITED STATES of America, Defendant
The opinion of the court was delivered by: WORTENDYKE
This Court has jurisdiction of the present action under 28 U.S.C. § 1346.
Plaintiff executors seek recovery of an alleged overpayment of Federal estate tax and interest assessed against the estate of a New Jersey resident testator who died on November 18, 1955. The will, dated May 6, 1948, was admitted to probate by the Surrogate of Essex County, New Jersey, and letters testamentary issued to plaintiffs on November 29, 1955. After directing payment of his debts and funeral expenses, testator devised his residences and bequeathed his household goods, automobiles and personal effects to his wife, Adele, whom he appointed one of his executors. Item V of the will provided as follows:
'I direct that all the rest, residue and remainder of the property, real and personal, of whatsoever nature and wheresoever situated, which at the time of my death shall belong to me or be subject to my disposal by will or otherwise, be divided into two equal parts. I give, devise and bequeath one of such two equal parts to my wife, ADELE H. DODD. I direct that the second equal part be divided into as many equal shares as I have children and issue of deceased children leaving issue me surviving and I give, devise and bequeath one of such equal shares to each child of mine, who shall survive me and one of such equal shares to the surviving issue of each deceased child of mine in equal parts, per stirpes and not per capita.'
Plaintiff executors timely filed a Federal estate tax return in which they reported a gross estate of $ 915,642.16, and deductions, exclusive of the specific ($ 60,000) exemption, of $ 454,217.49; leaving a net taxable estate of $ 401,424.67. The tax return reflected a total tax due of $ 113,455.89. After crediting against this tax New Jersey taxes of $ 8,765.59, there was reported a net tax of $ 104,690.30. This figure reflected an arithmetical error, and should have been $ 105,390.30, and the difference of $ 700.00 was paid by the executors.
After examination and audit of the estate tax return, the Internal Revenue Service determined that a tax deficiency of $ 17,351.79 existed. This claimed deficiency resulted from the following calculation:
Net estate $ 862,722.89
Bequests or devises to wife $ 49,650.00
Life insurance not qualified
for marital deduction 42,371.40 92,021.40
Value of residue $ 770,701.49
Tentative marital deduction
(one-half of $ 770,701.49) $ 385,350.75
Items passing to wife and qualified
for marital deduction 49,650.00 $ 435,000.75
New Jersey Tax on wife's share $ 16,200.00
Pro rata share of Federal tax 61,371.05 77,571.05
Value of marital deduction $ 357,429.70
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