THEATTORNEY GENERAL
OF TElxAs
November 25, 1964
Honorable Robert S. Calvert Opinion No. (C-353)
Comptroller of Public Accounts
Capitol Station Re: Allowance of deduction
Austin, Texas at wife's death of value
of life estate received
at husband's prior death
as a result of wife's
election to take under
husband's will disposing
of entire community
Dear Mr. Calvert: estate.
We quote the following excerpt from your letter reques~ting
the opinion of this office on the above captioned matter:
"We desire the opinion of your office as to
whether any consideration was received by a wife
when she transferred her community half interest
to a trust in exchange for a life estate in her
husband's half of the community upon the husband's
prior death and, if so, is her estate now entitled
to a deduction for said consideration for inheri-
tance tax purposes.
"William Arthur Crumley died a resident of
Ellis County on January 9, 1956, testate, survived
by his wife, Ida C. Crumley, who is now deceased,
having died a resident of Dallas County on March
15, 1963.
"1. All property of Mr. and Mrs. Crumley was
community property and his Will set up a trust in
favor of his wife on $165 386.03 of stocks (husband's
community one-half $82,6&l.@.) limited to a fifteen
year term with the whole to pass to her in fee if she
lived fifteen years but to pass to his daughter,
Frances, if she died prior to the end of the fifteen
year period. Mrs. Crumley was 76 years old on January
9, 1956, and had only a life expectancy of 8 years,
so it was agreed at that time that Mrs. Crumley should
be construed as having taken only a life estate.
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Honorable Robert S. Calvert, Page 2 Opinion No. (C-353)
"2. The First National Hank in Dallas was
appointed and qualified as Independent Executor
of the estate and Trustee of the trust.
"3. Mr; Crumley left his community one-half
of the real estate,in the amount of $5,950.00 and
his community one-half of the chattels in the sum
of $1,625.00 to his wife, for life.
"4. Mrs. Crumley was put to an election and
elected to take,under the Will and received the
dividends on the trust stocks until her death.
"5 . The tax liability was calculated on only
the one-half community interest of Mr. Crumley.
'6. Mrs. Crumley is now dead and her comm-
unity one-half interest is now passing in possession
and enjoyment to the daughter and. . ./-the7 attorney
for her estate, has made an inheritancF tay report
to this office and under Schedule D, Deductions,
has claimed $l4,425.60 as a deduction for consideration
received by wife upon transfer of her community half
interest to trust for a life estate only in husband's
community half."
The federal cases do allow a deduction in computing the federal
estate tax on the theory that the wife has received consideration
for her transfer of her one-half of the community estate. The
cases reason that a denial of a deduction would result in double
taxation. VardellflsEstate v. C.I,R, 307 F.2d 688 (5th Cir.
1962); Wiliteleyv. United States, 214 F.Supp. 489 ( U.S. Dist.Ct.,
W.D. Wash N.D 1963). Th federal estate tax is a tax upon
the priviiige of'transmissio: of property at death and is im-
posed upon the net value of the estate of the decedent. 28 Am.
Jur. 19, Inheritance, Estate and Gift Taxes, Sec. 5. Moreover,
the provisions of the 1954 Revenue Code specifically provide
for such credit or deduction. 26 U.S.C.A. i% 2036, 2043(a).
It is settled that the Texas Inheritance Tax levied
under the provision of Article 14.01, Taxation-General, Vernon's
Civil Statutes, is levied u on the privile e of succession.
Cahn v. Calvert, 159 Tex. 38 5, 321 S.W.2d 869 (19%); Jones v.
State, 5 S.W.26 973 (Comm.App. 1928); State v. Hog@;,123 Tex.568,
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Honorable Robert S. Calvert, Page 3 Opinion No. (C-353)
70 S.W.2d 6g 72 S.W.2d 593, 594 (1934); Norton v. Jones, 210
S.w.2d 820, 321 (Tex.Civ.App. 1948 error ref ) As stated by
the court in Bethea v. Sheppard, 143 S.W.2d 947, (Tex.Civ.App.
1940, error ref.) at page lOOr :
(1
. . .the thing burdened with the tax is the
right to receive,,&distinguished from the right
of transfer. . ~
There is no pr,oblemof double taxation under the Texas
Inheritance Tax statutes since no inheritance tax was levied
on the wife's community one-half at the husband's death.
Calvert v. Fort Worth National Bank, 163 Tex. 405, 356 S.W.2d
'918‘(19b2) Furthermore, Article 14.10, Tax. Gen., Vernon's
Civil StatLes, sets out the only deductions which are per-
mgsible in ascertaining the amount of inheritance taxes due
the State. Article 14.10 reads, in part, as follows:
"The only deduction permissible under this
law are the debts due by the estate, funeral expenses,
expenses incident to the last illness of the deceased,
which shall be due and unpaid at the time of death,
all Federal, State, County and Municipal taxes due
at the time of the death of the decedent, attorney's
fees and Court costs accruing in connection with the
assessing and collecting of the taxes provided for
under this Chapter, and an amount equal to the value
of any property forming a part of the gross estate
situated in the United States received from any
person who dies within five (5) years prior to the
death of the decedent, thisdeduction, however,
to be only in the amount of the value of the
property upon which an inheritance tax was
actually paid and shall not include any legal ex-
emptions claimed by and allowed the heirs or legatees
of the estate of the prior decedent. . .'
None of the provisions of this Article cover the
deduction here claimed. It has been held that the
federal estate tax may not be deducted from the net
value of the estate upon which a state inheritance tax
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Honorable Robert S. Calvert, page 4 Opinion No. (C- 353)
is levied and further that Article 14.10 (formerly
Article 7125) listing the permissible deductions in
determining the amount due the State as inheritance
taxes is one of limitation. Walker v. Mann, 143 S.W.2d
152 (Tex.Civ.App.,l$+O, error ref.)
SUMMARY
-------
In computing inheritance taxes no deduction
may be allowed for the value of the life estate of
the decedent received at her husband's prior death
as a result of her election to take under the
hu;;;;d's will disposing of the entire community
.
Yours very truly,
WAGGONER CARR
Attorney General of Texas
By:fl&/CCfifbH~~&~,
Marietta McGreg
Assistant Attor
MMcGP:sjl
APPROVED BY OPINION COMMITTEE
W. V. Geppert, Chairman
John Reeves
George Black
Malcolm Quick
Cecil C. Rotsch
APPROVED FOR THE ATTORNEY GENERAL
BY: Roger Tyler
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