Estate of Howard v. Moore v. Cir ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS NOV 8 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ESTATE OF HOWARD V. MOORE, No. 20-73013
Deceased; et al.,
Tax Ct. Nos. 21209-09
Petitioners-Appellants, 22082-09
v.
MEMORANDUM*
COMMISSIONER OF INTERNAL
REVENUE,
Respondent-Appellee.
Appeal from a Decision of the
United States Tax Court
Argued and Submitted October 18, 2021
San Francisco, California
Before: WATFORD and HURWITZ, Circuit Judges, and BAKER,** International
Trade Judge.
Prior to Howard V. Moore’s death, the Howard V. Moore Family Limited
Partnership sold Moore Farms to a third party. The Howard V. Moore Living Trust
then sold its interest in the Partnership to the Howard V. Moore Irrevocable Trust
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable M. Miller Baker, Judge for the United States Court of
International Trade, sitting by designation.
No. 1. After Moore’s death, the Partnership transferred the proceeds from the sale
of the Farm to the Irrevocable Trust; the proceeds were then transferred to the Living
Trust and to the Howard V. Moore Charitable Lead Annuity Trust. In its federal
estate tax return, the Estate claimed charitable deductions for the funds transferred
to the Charitable Trust.
The Commissioner of Internal Revenue found that the proceeds from the sale
of the Farm should have been included in the taxable estate. The Commissioner also
denied the Estate’s claimed charitable deductions for transfers of funds to the
Charitable Trust after Moore’s death. The Tax Court upheld the Commissioner’s
decision. On appeal, the Estate does not challenge the inclusion of the proceeds
from the sale of the Farm in the taxable estate, arguing only that it is entitled to
charitable deductions. We affirm.
A deduction can be taken for “the value of property included in the decedent’s
gross estate and transferred by the decedent during his lifetime or by will” or trust
upon his death to a charitable entity. 26 C.F.R. § 20.2055-1(a). The issue for
decision is whether donations to the Charitable Trust were required by the Moore
trust documents. Answering this question requires analysis of the express language
of those documents. See State ex rel. Goddard v. Coerver, 412 P.2d 259, 262 (Ariz.
1966).
The Estate relies upon Article 5, Section 2 of the Irrevocable Trust, which
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required the Trustee to make distributions on Moore’s death to minimize federal
estate tax liability. But this provision is triggered only by a determination that “any
asset of this trust” is also an asset of the gross estate. The proceeds of the Farm sale
were not assets of the Irrevocable Trust, or for that matter any Moore Trust,
notwithstanding that the Irrevocable Trust owned 98% of the Partnership at the time
of Moore’s death. Rather, the proceeds were the asset of the Partnership, and Article
II, Section 1, Paragraph “u” of the Partnership Agreement expressly provided that
“no Partner shall have any interest in any of the assets of the Partnership.”
The Estate argues in the alternative that “asset of this trust” is ambiguous, and
that we should therefore construe it to encompass the assets of the Partnership to
effectuate the purposes of Moore’s estate plan. We disagree; the relevant language
of both the Irrevocable Trust and Limited Partnership documents is unambiguous:
the Irrevocable Trust, as a limited partner, had no “interest in any of the assets of the
Partnership.”
The Trustee of the Irrevocable Trust was therefore not required to transfer the
Farm’s proceeds to the Living Trust and eventually to the Charitable Trust upon
Moore’s death and the Commissioner therefore correctly denied the Estate’s claimed
charitable deductions.
AFFIRMED.
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