Hirschmann v. United States , 309 F.2d 104 ( 1962 )

CLARK, Circuit Judge.

These are consolidated appeals from the denial on summary judgment below of plaintiffs’ claims for income tax refund. Mrs. Hirschmann and her now deceased husband executed a reciprocal testament in Germany in 1903 bequeathing each other, in effect, a life estate with unrestricted power to invade principal, remainder to their two sons. During 1952, capital gains were realized on the principal and which she reported on her individual income tax return. She paid the tax and filed a timely claim for a refund, which was disallowed. In the first case before us, she is suing for the refund. In 1953, the Surrogate’s Court in New York appointed one of the sons as administrator c.t.a. He reported capital gains during 1953 and 1954 on fiduciary returns, then paid the taxes with funds from the corpus, and made timely claims for refunds, which were rejected. In the second case he is suing for these refunds.

In both actions Judge Cooper dismissed the claims with prejudice. D.C.S.D.N.Y., 202 F.Supp. 722; 202 F.Supp. 725. The court rejected the taxpayers’ contention that a legal life estate is not a taxable entity. Consequently it had no trouble, nor do we, in upholding the 1953 and 1954 taxes. The 1952 tax, paid by Mrs. Hirschmann individually, presents the additional problem whether the tax was properly levied against her in her individual, rather than fiduciary, capacity. The court noted the unfettered control which Mrs. Hirschmann possessed over the corpus and felt compelled by the reasoning of Helvering v. Clifford, 309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788; Richardson v. C. I. R., 2 Cir., 121 F.2d 1, cert. denied 314 U.S. 684, 62 S.Ct. 188, 86 L.Ed. 548; and Mallinckrodt v. Nunan, 8 Cir., 146 F.2d 1, cert. denied 324 U.S. 871, 65 S.Ct. 1017, 89 L.Ed. 1426, to hold her individually liable. We are in accord with this conclusion.

Affirmed.