*2782 Where the Commissioner has determined a deficiency in estate tax under sections 308 and 318 of the Revenue Act of 1926, and where he has determined no personal liability of the executors for the deficiency under section 316 of the same Act and under section 3467 of the Revised Statutes, held, that the Board has jurisdiction to redetermine the deficiency but that it has no jurisdiction in such a proceeding to determine whether the executors have been released from personal liability under section 313 of the Revenue Act of 1924.
*839 This proceeding involves the redetermination of a deficiency in estate tax in the amount of $12,012.99. The errors alleged are, (1) that respondent erred in reopening this case and in asserting a deficiency when he had on November 10, 1925, closed the case by sending to petitioner a registered 60-day letter from which determination petitioners did not appeal, and that the period within which a deficiency could be legally asserted against petitioners had expired in view of their application for final determination*2783 and discharge; and (2) that respondent erred in including in the gross estate of decedent for estate-tax purposes the entire value of the community property, one-half of which belonged to his wife. The facts have been stipulated, and in accordance with the stipulation we make the following findings of fact.
FINDINGS OF FACT.
David Neustadter, a citizen and resident of the State of California, died testate on February 13, 1923, and Newton H. Neustadter, Walter W. Stettheimer and Julian Hart were, on the 8th day of March, 1923, duly appointed and qualified as executors of his estate, and have been since the date of their appointment and qualification and now are the duly qualified, bonded and acting executors of the estate of David H. Neustadter, deceased.
On December 31, 1923, the said Newton H. Neustadter, Walter W. Stettheimer and Julian Hart, as executors, duly filed with the Collector of Internal Revenue for the First District of California an estate-tax return for said estate of the said David Neustadter. In said return the tax shown to be due by said estate was $4,145.43, which was assessed and paid by said estate.
*840 On July 30, 1924, one of the executors*2784 of the estate of David Neustadter, to wit, Newton H. Neustadter, addressed a letter to the Commissioner of Internal Revenue at Washington, D.C., which letter was duly received, and which reads as follows:
JULY 30TH, 1924.
COMMISSIONER OF INTERNAL REVENUE,
Washington, D.C.
DEAR SIR: Will you kindly arrange at your earliest convenience for an examination of the Income Tax Returns of David Neustadter, Deceased, and for an examination of the returns of the Estate of David Neustadter, Deceased; also for an examination of the Federal Tax returns of the Estate of David Neustadter, Deceased.
The reason for this request is that the executors desire to take the necessary steps for their discharge.
Respectfully yours,
(Signed) NEWTON H. NEUSTADTER,
Executor, Est. of David Neustadter, deceased.
On August 25, 1924, C. B. Allen, Deputy Commissioner of Internal Revenue, addressed a letter to Newton H. Neustadter, Executor of the Estate of David Neustadter, in which he acknowledged the receipt of the letter of July 30, 1924. Said letter of August 25, 1924, reads:
MR. NEWTON H. NEUSTADTER,c/o Neustadter Brothers,
62 First Street, San Francisco, California.
*2785 SIR: Receipt is acknowledged of your letter dated July 30, 1924, requesting the early determination of the income tax liability of the Estate of David Neustadter.
If an application is filed in accordance with the provisions of Treasury Decision 3329, a copy of which is enclosed, it will be given careful consideration. A Court Certificate showing your authority to administer upon the estate of the decedent should accompany the application.
The determination of the estate tax liability will be made the subject of a separate communication from the Bureau.
In your reply please refer to IT:R:BGC:S.
Respectfully,
(Signed) C. B. ALLEN,
Deputy Commissioner.
Treasury Decision 3329 referred to in the above letter is as follows:
Expeditious disposition of tax cases in which an emergency has been found to exist.
TREASURY DEPARTMENT,
OFFICE OF THE COMMISSIONER OF INTERNAL REVENUE,
Washington, D.C.To Collectors of Internal Revenue and Others Concerned:
If, upon application of any taxpayer, it be shown to the satisfaction of the Commissioner (1) that the taxpayer is in the hands of a receiver and a reorganization is necessary; (2) that the taxpayer is*2786 in financial difficulties, either *841 actual or imminent, and refinancing is necessary; or (3) that the distribution of a fund in which a large number of people may be interested is held up pending the determination of the amount of income or profits taxes which must be paid out of the fund - then the Commissioner will declare an emergency to exist with reference to such case and will direct that the matter be given priority of consideration with a view to the expeditious determination of the particular tax liability.
Application for such priority of consideration shall be in the form of a letter addressed to the Commissioner and shall be supported by statements under oath setting forth in detail the facts upon which the request for special consideration is based, and the particular reason why such person believes himself entitled to have the case expedited as provided herein.
On August 29, 1924, M. F. Snider, Acting Deputy Commissioner of Internal Revenue, addressed a letter to Newton H. Neustadter, Executor, acknowledging the receipt of said letter of July 30, 1924. Said letter of August 29, 1924, reads:
In reply to your letter of July 30th, wherein you request an*2787 early determination of the Federal Estate Tax due from the above-named estate, please be advised that this case is being assigned for audit and review, and you will be notified of the result thereof at an early date.
On October 14, 1925, the Commissioner of Internal Revenue mailed to Newton H. Neustadter, et al., Executors, Estate of David Neustadter, 62 First Street, San Francisco, California, a deficiency notice, as provided by Title III, Part I, of the Revenue Act of 1924, in which it was stated that the tax liability of the estate of David Neustadter had been finally determined and the deficiency found to be due was $801.89. The material parts of said notice are as follows:
OCTOBER 14, 1925.
NEWTON H. NEUSTADTER, ET AL., EX.,
Estate of David Neustadter,62 First St., San Francisco, Calif.
SIRS: The Bureau has examined the protest, filed by you as executors of the above-named estate, against the tentative findings as set out in its letter addressed to you under date of May 16, 1925.
No adjustment is made of funeral expenses, attorney's fees, miscellaneous administration expenses, and support of dependents, as one-half instead of the full amount of such*2788 charges are deductible under the provisions of the Federal Estate Tax Law.
| Deductions | Returned | Determined |
| Debts of decedent | $3,666.63 | $2,967.13 |
Debts of decedent are adjusted by allowing the additional sums of $500, being one-half the amount pledged to the Community Chest of San Francisco, and $650, being one-half the total for accountant's fees.
Pursuant to the above, the gross estate is determined to be $301,944.44, the deductions $74,022.35, and the net estate $227,922.09, the tax upon the transfer of which is $4,837.66. The tax shown by the return is $4,145.43 of which *842 amount, $4,035.77 has been paid. Accordingly, there is a balance due on the original tax of $109.66. The deficiency tax as herein determined is $801.89.
As the entire tax shown by the return was not paid within one year and six months after the date of decedent's death, as provided by Section 406 of the Revenue Act of 1921, the unpaid balance of $109.66, together with the deficiency tax, bears interest at the rate of six per centum per annum from one year after the date of death until payment is received by the Collector.
In accordance with the provisions of Title*2789 III, Part I, of the Revenue Act of 1924, you are allowed sixty days from the date of this letter within which to file an appeal to the Board of Tax Appeals, Contesting in whole, or in part, the correctness of this determination.
* * *
No appeal was taken to the Board from said notice of October 14, 1925.
On November 10, 1925, C. R. Nash, Acting Commissioner of Internal Revenue, mailed to Newton H. Neustadter, et al., Executors of the Estate of David Neustadter, a second deficiency notice for the purpose of correcting an "inadvertent typographical error in the letter of October 14, 1925." In said letter of November 10, 1925, the deficiency finally proposed was changed to $692.23 instead of $801.89. The material parts of said letter read:
The Bureau has considered the request of the executors to correct an inadvertent typographical error in its adjustment letter of October 14, 1925. Accordingly, this letter is in lieu of the Bureau's prior letter dated October 14, 1925.
No adjustment is made of funeral expenses, attorneys' fees, miscellaneous administration expenses and support of dependents as one-half instead of the full amount of such charges are deductible under the*2790 provisions of the Federal estate tax law.
| Returned | Determined | |
| Debts of decedent | $3,666.63 | 2,967.13 |
Debts of decedent are adjusted by allowing the additional sum of $500, being one-half the amount pledged to the community chest of San Francisco, and $650, being one-half of the total for accountants' fees.
Pursuant to the above, the gross estate is determined to be $301,944.44, the deductions $74,022.35, and the net estate $227,922.09, the tax upon the transfer of which is $4,837.66. The tax shown by the return is $4,145.43, of which amount $4,035.77 has been paid. Accordingly, there is a balance due on the original tax of $109.66, and the deficiency tax as herein determined is $692.23, making the total amount due $801.89.
As the entire tax shown by the return was not paid within one year and six months after the date of decedent's death, as provided by Section 406 of the Revenue Act of 1921, the unpaid balance of $109.66, together with the deficiency tax, bears interest at the rate of six per centum per annum from one year after date of death until payment is received by the Collector.
In accordance with the provisions of Title III, Part I, of*2791 the Revenue Act of 1924, you are allowed sixty days from the date of this letter within which to file *843 an appeal to the Board of Tax Appeals, contesting in whole or in part, the correctness of this determination.
* * *
No appeal was taken to the Board from said notice of November 10, 1925.
On September 21, 1926, C. R. Nash, Acting Commissioner, mailed to Newton H. Neustadter, et al., Executors, Estate of David Neustadter, 62 First St., San Francisco, California, a deficiency notice under the provisions of section 308 of the Revenue Act of 1926, in which notice it was proposed to assess a deficiency in tax against the estate of David Neustadter in the amount of $12,012.99. Said letter reads:
Reference is made to the return on Form 706, filed in the above-named estate in the audit of which the value of the wife's community interest was excluded from the gross estate of this decedent and tax was paid on that basis.
In view of the decision of the United States Supreme Court in the case of United States v. Robbins, 269 U.S. 315">269 U.S. 315, rendered January 4, 1926, and an opinion of the Attorney General of the United States issued June 24, 1926 (Treasury Decision*2792 3891), the Bureau now holds that the entire value of the Community property should have been included in the gross estate of this decedent and the tax has been redetermined on that basis.
The following tabulation shows the unpaid deficiency:
| Gross estate | $603,888.88 | |
| Deductions | 98,044.70 | |
| Net estate | 505,844.18 | |
| Tax determined herein | 16,850.65 | |
| Tax paid on return | $4,035.77 | |
| Balance of returned tax paid | 109.66 | |
| Additional tax paid | 692.23 | |
| Total paid | 4,837.66 | |
| Deficiency tax | 12,012.99 |
Pursuant to Section 318 of the Revenue Act of 1926, notice of deficiency, amounting to $12,012.99, in estate tax with respect to the estate of David Neustadter is hereby given, with a view to the assessment and collection thereof. Any portion of the amount assessed, not paid within thirty days from the date of notice and demand from the Collector, will bear interest at the rate of one per centum a month from the date of such notice and demand, unless an extension of time for payment should be granted.
Within sixty days (not counting Sunday as the sixtieth day) after the mailing of this notice you may, in accordance with the provisions of Section 308 of the*2793 Revenue Act of 1926, file a petition with the Board of Tax Appeals for a redetermination of the deficiency. The address of the Board is: United States Board of Tax Appeals, Earle Building, Washington, D.C., 13th and E Streets, N.W.
No claim in abatement of any deficiency which may be assessed in this case will be entertained.
*844 If you acquiesce in this determination, either in whole or in part, you are requested to sign the enclosed waiver of restrictions on the assessment and collection of so much of the deficiency as results from the adjustments in which you acquiesce and forward it to the Commissioner of Internal Revenue, Washington, D.C., marked for the attention of the Estate Tax Division, Miscellaneous Tax Unit.
From the notice of September 21, 1926, the executors of the estate of David Neustadter filed a petition for appeal to the Board.
On or about the 25th day of February, 1924, the Superior Court of the State of California, in and for the City and County of San Francisco, entered its final decree settling accounts and distributing the estate of said David Neustadter in accordance with the terms of his will. The pertinent parts of said decree read:
*2794 NEWTON H. NEUSTADTER, WALTER W. STETTHEIMER and JULIAN HART, as executors of the last will and testament of DAVID NEUSTADTER, deceased, having filed in this Court their first and final account of their administration of the estate of said deceased, and their report as executors of the last will and testament of said deceased, and their petition praying for a settlement of said first and final account, and their petition praying for a final distribution of said estate;
And it duly appearing that due and legal notice of the hearing of said accounts, report and petition for distribution has been given in the manner and form required by law; and it duly appearing that the special notice as prescribed by Section 1380 of the Code of Civil Procedure of the State of California was duly and regularly given to all persons interested in said proceeding and in said estate, and to their said attorneys, who were entitled to or had requested notice thereof; and said matter coming on duly and regularly to be heard this day;
And it duly appearing that said account and report are in all respects true and correct and supported by proper vouchers, and that since the rendition of said account there*2795 have been no receipts in the matter of said estate;
And it further appearing that due and legal notice has been given to the creditors of and all persons having claims against said decedent and said estate, for the time required by law and the order of this Court, and that heretofore the above-entitled Court duly made and entered and filed its order, adjudging and decreeing that due and legal notice had been given to the creditors of and all persons having claims against said decedent and said estate;
And it further appearing that all state, county and municipal taxes upon the property of said estate have been duly paid, and that the inheritance tax due from said estate and from the heirs, legatees and devisees of said estate to the State of California, and the estate tax due from said estate to the United States of America, and all other taxes of every kind and character have been duly paid and discharged;
And it further appearing that all the debts of said decedent and of said estate, and all expenses of administration thereon thus far incurred have been paid, and that no claims have been presented, allowed or filed against said estate;
And it further appearing that said*2796 David Neustadter died, testate, at the City and County of San Francisco, State of California, on the 13th day of February, 1923, being at the time of his death a resident of said City, County *845 and State, leaving estate therein, and leaving him surviving as his sole next of kin and heirs at law, and who under the terms of the last will and testament of said decedent are his sole and only legatees and devisees, the following named persons, to-wit:
JOSEPHINE D. NEUSTADTER, surviving widow of said decedent, of adult age, and a resident of the City and County of San Francisco, State of California;
NEWTON H. NEUSTADTER, surviving son of said decedent, of adult age, and a resident of the City and County of San Francisco, State of California;
FLORENCE N. STETTHEIMER, surviving daughter of said decedent, of adult age, and a resident of San Mateo County, State of California:
ELLEN KATHLEEN HART, surviving granddaughter of said decedent, of minor age, and a resident of the City and County of San Francisco, State of California; and
JAMES DAVID HART, surviving grandson of said decedent, of minor age, and a resident of the City and County of San Francisco, State of California;
*2797 And it further appearing that the estate of said decedent was the community property of said decedent and said Josephine D. Neustadter, his wife, and consists entirely of real and personal property more particularly described hereinafter;
And it further appearing that the name of said executor Julian Hart has been variously spelled in the above-entitled proceeding, both as Julian Hart and as Julien Hart, but said name applies to one and the same person, one of the executors of said last will and testament;
And it further appearing that all matters and things in said first and final account and in said report accompanying the same and in said petition for final distribution filed therewith are true and correct and supported by evidence introduced and considered;
And it further appearing that said Newton H. Neustadter and Florence N. Stettheimer, surviving children of said decendent, have received their full share and portion of said estate to which they are entitled under the last will and testament of said decedent by virtue of a certain decree of partial distribution heretofore made, entered and filed in the above entitled proceeding on or about the 17th day of November, 1923;
*2798 And it further appearing that all the balance of said estate, with the certain exceptions hereinafter distributed unto Ellen Kathleen Hart and James David Hart, should be distributed unto the surviving widow of said decedent, to-wit: Josephine D. Neustadter.
And it appearing that the decree of partial distribution made in favor of Ellen Kathleen Hart on or about the 8th day of January, 1924, and the decree of partial distribution made in favor of James David Hart on or about the 30th day of January, 1924, in the above-entitled estate, were never executed, and that the distribution in this decree of final distribution is in full of said respective decrees of partial distribution, as well as in full of distribution under this decree, and in full of all the interests and rights and title and claims of said Ellen Kathleen Hart and James David Hart, as heirs, legatees and devisees under the last will and testament of said decedent;
NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED, that the first and final account of said executors be and the same is hereby settled, allowed and approved.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that due and legal notice of the hearing*2799 of said accounts and of said petition for distribution was given in the manner and form required by law, and to all persons entitled thereto.
*846 IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that due and legal notice to the creditors of said decedent and to all persons having claims against said decedent or against said estate has been given in the manner and form required by law and by the order of this Court heretofore duly given, made and filed.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that the inheritance tax due from said estate and from the respective heirs, devisees and legatees under the last will and testament of said decedent to the State of California, and the estate tax due from said estate to the United States of America, and all other taxes of every kind and character chargeable against said estate or the persons in interest therein, have been duly paid, satisfied and discharged.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that the estate of said decedent in the hands of said executors be and the same is hereby distributed as follows:
UNTO ELLEN KATHLEEN HART, granddaughter of said decedent, and unto JAMES DAVID HART, grandson of said decedent, *2800 equally, share and share alike, the following personal property, to-wit: (Here follows description of property.)
And it appearing that the said executors are holding ten thousand dollars ($10,000.00) to apply to any Federal taxes which may hereafter be levied in adjusting returns for taxes to the United States Government;
NOW, THEREFORE, IT IS HEREBY ORDERED, that said executors hold said ten thousand dollars ($10,000.00) until they receive a full clearance and acquittance from the United States Government with respect to all Federal and United States taxes claimed or to be claimed against said estate.
IT IS FURTHER ORDERED, that, upon said executors receiving such clearance, acquittance and receipts in full from said United States Government, then said ten thousand dollars ($10,000.00) or as much thereof as may remain after any payment which may be made to said United States Government, be and the same is hereby distributed as follows: to wit:
One-half of said money, or balance thereof, unto JOSEPHINE D. NEUSTADTER, surviving widow of said decedent.
Three-sixteenths of said money, or balance thereof, unto NEWTON H. NEUSTADTER, surviving son of said decedent.
Three-sixteenths*2801 of said money, or balance thereof, unto FLORENCE N. STETTHEIMER, surviving daughter of said decedent.
One-sixteenth of said money, or balance thereof, unto ELLEN KATHLEEN HART, surviving granddaughter of said decedent.
One-sixteenth of said money, or balance thereof, unto JAMES DAVID HART, surviving grandson of said decedent.
All the rest, residue and remainder of said estate, of every kind and character be the same real, personal or mixed and wheresoever situate, IT IS HEREBY ORDERED, ADJUDGED AND DECREED, shall be and the same is hereby distributed unto JOSEPHINE D. NEUSTADTER, surviving widow of said decedent.
The rest, residue and remainder of said estate distributed unto said Josephine D. Neustadter as aforesaid is all that certain property described as follows, to-wit: (Here follows description of the property.)
IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that all other property belonging to said estate, or in which said estate may have any interest, right, title or claim, not now known or discovered, or not mentioned herein, and wheresoever situate, and be the same real, personal or mixed, be and the same is hereby distributed unto said JOSEPHINE D. NEUSTADTER, *2802 surviving widow of said David Neustadter, deceased.
Done in open Court this 25th day of February, 1924.
*847 After the executors of said estate of David Neustadter received the deficiency notice of November 10, 1925, they paid on behalf of the estate of David Neustadter, deceased, the deficiency in tax of $692.23 shown to be due and the deficiency in payment of $109.66 on the original tax assessed.
OPINION.
MILLIKEN: Petitioners do not now contend that respondent erred in including for estate-tax purposes the entire value of the community property in the gross estate of David Neustadter, deceased. Neither do they now raise any question as to the amount of the deficiency. See Estate of Isidore Rosenberg,14 B.T.A. 1340">14 B.T.A. 1340, and cases therein cited. They admit that the determination of such a deficiency would be unobjectionable in a proper case. They, however, vigorously contend that since, as they assert, they have distributed the whole of the estate to the various devisees and legatees, they and each of them would have incurred a personal liability for the deficiency but for the fact that they have been, as they contend, relieved from such liability*2803 by reason of the letter of July 30, 1924 (written by Newton H. Neustadter, as executor) to respondent and the subsequent correspondence between them, and by reason of the payment by them prior to the receipt of the deficiency letter upon which this proceeding is based of the whole tax then determined against them. They assert that since said deficiency letter was addressed to them as executors, respondent has determined they are personally liable for the deficiency, and further assert that, since they have been released from all personal liability and since as they now have in their hands no assets of the estate from which payment can be made, the Board should determine that there is no deficiency as against them.
The contention that they have been released of personal liability is based upon section 313 of the Revenue Act of 1924. That section reads:
SEC. 313. (a) The collector shall grant to the person paying the tax duplicate receipts, either of which shall be sufficient evidence of such payment, and shall entitle the executor to be credited and allowed the amount thereof by any court having jurisdiction to audit or settle his accounts.
(b) If the executor makes written*2804 application to the Commissioner for determination of the amount of the tax and discharge from personal liability therefor, the Commissioner (as soon as possible, and in any event within one year after the making of such application, or, if the application is made before the return is filed, then within one year after the return is filed, but not after the expiration of the period prescribed for the assessment of the tax in section 310) shall notify the executor of the amount of the tax. The executor, upon payment of the amount of which he is notified, shall be discharged from personal liability for any deficiency in tax thereafter found to be due and shall be entitled to a receipt or writing showing such discharge.
*848 (c) The provisions of subdivision (b) shall not operate as a release of any part of the gross estate from the lien for any deficiency that may thereafter be determined to be due, unless the title to such part of the gross estate has passed to a bona fide purchaser for value, in which case such part shall not be subject to a lien or to any claim or demand for any such deficiency, but the lien shall attach to the consideration received from such purchaser by*2805 the heirs, legatees, devisees, or distributees.
See also section 407 of the Revenue Act of 1921.
Respondent asserts that petitioners have not complied with the above sections and for the reason these provisions have no application. Respondent further contends that the question of personal liability on the part of the executors is not involved in this proceeding. This latter contention, we think, is the controlling issue. In this connection, it is to be noted that the decree of the Superior Court entered in February, 1924, recites that petitioners had in their hands the sum of $10,000, which they were to hold until they had received a full acquittance from the United States Government with respect to all United States taxes claimed or to be claimed against the estate of David Neustadter, deceased. Petitioner contends that since it is shown that they had paid the deficiency determined by the letter of October 14, 1925, as redetermined by the letter of November 10, 1925, we must assume that petitioners have distributed the said amount to the persons entitled as required by the decree. Respondent does not assent to this contention. It is also pertinent to note that petitioners*2806 have not been discharged from their office and are now proceeding in this appeal in their executorial capacity and not as individuals.
Whether the issue of personal liability is before us depends on what respondent has determined in his letter of September 21, 1926, which is the basis of this proceeding. That letter is addressed to "Newton H. Neustadter, et al., Executors, Estate of David Neustadter." A careful reading of the letter of September 21, 1926, discloses that there is nothing in that letter which refers to any personal liability on the part of the executors. It asserts only a "deficiency" in estate tax. It is further most important to note that the letter was written pursuant to section 318 of the Revenue Act of 1926, and informs petitioners of their right under section 308 to appeal to the Board. The pertinent part of section 318 reads:
If after the enactment of this Act the Commissioner determines that any assessment should be made in respect of any estate or gift tax imposed by the Revenue Act of 1917, the Revenue Act of 1918, the Revenue Act of 1921, or the Revenue Act of 1924, or by any such Act as amended, the Commissioner is authorized to send by registered*2807 mail to the person liable for such tax notice of the amount proposed to be assessed, which notice shall, for the purposes of this Act, be considered a notice under subdivision (a) of section 308 of this Act. * * *.
As shown by the above excerpt, this section applies to both estate and gift taxes and the requirement is that the registered letter be *849 mailed "to the person liable for such tax * * *." By section 406 of the Revenue Act of 1921 it is provided: "The executor shall pay the tax to the collector or deputy collector * * *." By section 400 of the same Act it is provided:
The term "executor" means the executor or administrator of the decedent, or, if there is no executor or administrator, any person in actual or constructive possession of any property of the decedent; * * *
Since the executors were then (and now are) in office, the plain requirement of the statute is that the deficiency letter be addressed to them. It is only where "there is no executor or administrator" that the letter may be addressed to "any person in actual or constructive possession of any property of the decedent." It is a further requirement of section 318 of the Revenue Act of 1926 that*2808 said notice "shall for the purpose of this Act be considered a notice under subdivision (a) of section 308 of this Act." Turning to subdivision (a) of section 308, we find that it contains the following:
If the Commissioner determines that there is a deficiency in respect of the tax imposed by this title, the Commissioner is authorized to send notice of such deficiency to the executor by registered mail. Within 60 days after such notice is mailed (not counting Sunday as the sixtieth day), the executor may file a petition with the Board of Tax Appeals for a redetermination of the deficiency. * * *
The definition of the term "executor" in section 300 of the Revenue Act of 1926 is the same as that in section 400 of the Revenue Act of 1921. It thus appears that respondent could have determined a deficiency in estate tax under section 308 against the estate of David Neustadter, deceased, in no way other than by addressing his letter to the executors then in office. If petitioners' contention be followed to its logical conclusion, it would result that it matters not that the estate was liable for the tax, whether in the hands of the executors or in the hands of the devisees or legatees, *2809 no deficiency under section 308 could be determined in a case like this where the executors are still in office. We do not concur in such a contention.
Upon an appeal under section 308 of the Revenue Act of 1926, the jurisdiction of the Board is limited to a redetermination of a deficiency in estate tax due from the executors in their representative capacities. However, in redetermining such a deficiency, the Board is not limited to a mere recomputation, but may determine that there is no deficiency on the ground that the deficiency is barred by the statute of limitations (section 906(e)), or because it is illegal in that it violates the provisions of any of the revenue acts or for any other reason. National Refining Co. of Ohio,1 B.T.A. 236">1 B.T.A. 236. We have approved the deficiency asserted by respondent against the executors in their representative capacities, and in so doing, we are *850 of opinion that we have exhausted our jurisdiction in so far as this proceeding is concerned. In approving the deficiency we have not decided whether the additional tax shall be paid by the executors as their personal liability. This view is in accord with the decision of*2810 the United States District Court for the Eastern District of Pennsylvania in United States v. Rodenbough, 21 Fed.(2d) 781, where the court said:
One other matter remains to be disposed of. The defendant argued that, under the limitation provision of section 407 of the Revenue Act of 1921 (Comp. St. § 6336 3/4 h), this action against the defendant is barred. The discharge from liability provided for by that statute, however, is a discharge from personal liability. This action is not against the executor personally, but against him in his representative capacity as executor of the estate. A judgment rendered in this action would not subject him directly to any personal liability. If for any reason, as a result of the judgment in this case, recourse against the executor in his personal capacity should be attempted, the question could then be raised. As the record stands at present, it is not involved.
This portion of the opinion of the District Court was affirmed by the Circuit Court of Appeals in Rodenbough v. United States, 25 Fed.(2d) 13.
Respondent can determine the personal liability of an executor only under section 316 of*2811 the Revenue Act of 1926, the pertinent parts of which read:
SEC. 316. (a) The amounts of the following liabilities shall, except as hereinafter in this section provided, be assessed, collected and paid in the same manner and subject to the same provisions and limitations as in the case of a deficiency in a tax imposed by this title (including the provisions in case of delinquency in payment after notice and demand, the provisions authorizing distraint and proceedings in court for collection, and the provisions prohibiting claims for suits for refunds):
(1) The liability, at law or in equity, of a transferee of property of a decedent or donor, in respect of the tax (including interest, additional amounts, and additions to the tax provided by law) imposed by this title or by any prior estate tax Act or by any gift tax Act.
(2) The liability of a fiduciary under section 3467 of the Revised Statutes in respect of the payment of any such tax from the estate of the decedent or donor.
Any such liability may be either as to the amount of tax shown on the return or as to any deficiency in tax.
Thus we find that the Revenue Act of 1926 contains a distinctively separate provision*2812 for the redetermination of "The liability of a fiduciary under Section 3467 of the Revised Statutes * * *." Section 3467 of the Revised Statutes reads:
Every executor, administrator, or assignee, or other person, who pays any debt due by the person or estate from whom or for which he acts, before he satisfies and pays the debts due to the United States from such person or estate, shall become answerable in his own person and estate for the debts so due to the United States, or for so much thereof as may remain due and unpaid.
*851 Three things are to be noted at this juncture: First, petitioners are asserting their release from the personal liability created by section 3467 of the Revised Statutes; second, that the liability under this section can be asserted by respondent only under section 316 of the Revenue Act of 1926; and, third, that section 316 is distinct from and exclusive of sections 308 and 318 of the Revenue Act of 1926.
We are of opinion that we can not under a proceeding based on a deficiency letter issued under sections 308 and 318 determine a "liability" under section 316. All we determine is that the executors in their representative capacities are*2813 liable for the deficiency determined by respondent. We hold that where our jurisdiction is based upon a deficiency letter written pursuant to sections 308 and 318, and which determines only a "deficiency" in estate tax, we have no jurisdiction to decide the question of the "liability" of a fiduciary under section 3467 of the Revised Statutes. Since respondent has proceeded under sections 308 and 318; since he has determined only a deficiency in estate tax against the executors in their representative capacities, and since he has determined no personal liability on the part of the executors under section 3467 of the Revised Statutes, we are of opinion that we exhaust our jurisdiction as concerns this proceeding when we approve the deficiency as determined by respondent.
Reviewed by the Board.
Judgment will be entered for respondent.
STERNHAGEN concurs in the result.