Boykin v. Commissioner ( 1929 )

ELIZABETH W. BOYKIN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Boykin v. Commissioner

Docket No. 29784.

United States Board of Tax Appeals

16 B.T.A. 477; 1929 BTA LEXIS 2580;

May 10, 1929, Promulgated

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">*2580 Petitioner and her husband acquired property as tenants by the entireties. The busband died and the value of the entire property was included in determining his taxable estate for estate-tax purposes. Petitioner thereafter sold such property. Held that for the purpose of determining taxable gain or loss to her the cost was the purchase price plus additional expenditures for improvement.

John Hinkley, Esq., for the petitioner.

Bruce A. Low, Esq., for the respondent.

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PHILLIPS

">*477 The Commissioner determined a deficiency of $848.01 in income tax for 1923. The petitioner duly instituted this proceeding for a redetermination of such liability. It is alleged that the Commissioner erred in several respects in determining the taxable income from the sale of a residence.

FINDINGS OF FACT.

On June 24, 1909, William A. Boykin, the husband of the petitioner, acquired a residence in Baltimore County at a cost of $10,000. This property was conveyed to William A. Boykin and the petitioner as tenants by the entireties. Subsequent to such purchase more than $6,000 was expended for improvements upon said dwelling. William A. Boykin died May 14, 1918. ">*2581 In the return for Federal estate tax of his estate his half interest in such residence was returned at one-half of the Baltimore County tax valuation of $9,515, such one-half amounting to $4,757.50. This valuation was not accepted by the Bureau of Internal Revenue, which held that the entire interest was subject to estate tax as the property of William A. Boykin at the time of his death, and it was valued at $18,000. An additional estate tax was thereupon assessed upon that ">*478 theory and was paid under protest by Elizabeth W. Boykin as executrix.

In 1923 petitioner sold said residence property for $22,738 net, after commissions and expenses. Upon her income-tax return for 1923 petitioner returned $4,738 as taxable gain, being the difference between the sales price and the valuation placed upon such property for the purposes of the Federal estate tax upon the estate of William A. Boykin. Upon audit of such return the Bureau of Internal Revenue discovered certain mathematical errors in the computation of the amount of the tax and notified petitioner of a deficiency of $262.73. The petitioner on May 30, 1925, consented to the immediate assessment of such deficiency. Thereafter">*2582 the Commissioner determined that the gain to the petitioner from the sale of said residence property was the difference between the selling price and the original cost or March 1, 1913, value. He determined the March 1, 1913, value to be the same as cost, $10,000, computed a gain of $12,738, and determined the deficiency here in question upon that basis.

OPINION.

PHILLIPS: In 1909 William A. Boykin purchased a residence at a cost of $10,000, which was conveyed to him and his wife, the petitioner herein, as tenants by the entirety. William A. Boykin died in 1918 and, in determining his net estate subject to the Federal estate tax, the Commissioner included this residence at its full value. The petitioner sold this property in 1922 and the question before us is the basis to be used as cost in determining her gain.

It has heretofore been determined that where a husband or wife, holding property as tenants by the entirety, dies and the other survives, such property forms no part of the estate of the decedent and is not subject to estate tax. ">*2583 ; ; . The same reasoning which leads to the conclusion reached in those cases would require that upon a sale by the surviving tenant by the entirety the basis for determining gain or loss should be the original cost. Counsel for the petitioner contends, however, that the Commissioner is estopped from asserting such basis, inasmuch as he collected an estate tax from the estate of William A. Boykin upon a contrary theory. In , we said:

It is another element of equitable estoppel that the party claiming the estoppel should have had the right to rely upon the position taken by his adversary. Here there was no misrepresentation of facts; the ruling was solely one of law.

">*479 * * * Each was in a similar position with respect to ability to determine what was the law. * * * We see no ground upon which petitioner could be said to have been justified in relying upon the ruling of the Commissioner upon a question of law">*2584 to the extent necessary to constitute an estoppel. We are of the opinion that if there are circumstances under which the United States may be estopped from collecting taxes legally due except for such estoppel, they do not exist in the instant case.

In this same connection it may be pertinent to point out that the additional tax collected under the erroneous ruling was not paid by this petitioner, but by the estate of William A. Boykin, a separate entity for tax purposes. It is our opinion that the Commissioner is not estopped to assert the tax here in question. See .

It is also claimed that since the Bureau of Internal Revenue had previously mailed notice of a deficiency for the taxable year to the petitioner and she had consented to the assessment thereof, the present assessment can not stand. This contention must be decided adversely to the petitioner upon the authority of . See also ; affd. ">*2585 .

It appears, however, that the Commissioner was in error in computing the amount of the gain, in that no account was taken of the very substantial sum expended in improvements upon this property. The cost of the property and of the improvements totaled $16,000 and this amount should be used as the basis in computing the taxable gain. .

Reviewed by the Board.

Decision will be entered under Rule 50.