*1089 1. The decedent at the time of his death was acting as coexecutor of two estates in process of administration, for which services he was entitled to executors' fees in amounts not at that time determined or allowed by the Probate Court. Held, that the decedent's right to receive such executors' fees was property which is includable in his gross estate at its fair market value at the time of his death.
2. The value of certain library and office equipment which, upon decedent's death, was to become the property of another under a contract previously entered into, is includable in decedent's gross estate at its fair market value at the time of decedent's death.
*1200 This proceeding is for the redetermination of a deficiency of $12,958.67 in the Federal estate tax of the estate of G. Percy McGlue, deceased. The questions in issue are whether there should be included in decedent's gross estate certain executors' fees from two estates in process of administration of which the decedent was acting as coexecutor at the time of his death, although*1090 such executors' fees were not allowed by the Probate Court of the District of Columbia and were not received by the decedent up to the time of his death.
A further issue is whether there should be included in the gross estate an item of $500 representing the value of certain office furniture and books; or, in the alternative, whether there should be allowed a deduction from the gross estate to offset such inclusion.
The facts are stipulated.
FINDINGS OF FACT.
On April 1, 1931, the decedent, G. Percy McGlue, and the American Security & Trust Co., of Washington, D.C., were appointed coexecutors of the estate of B. F. Saul, who died February 1, 1931.
In 1928 B. F. Saul entered into an agreement with the decedent that the latter would act as his, Saul's, coexecutor for a fee of 1 1/2 percent of the appraised value of Saul's entire estate. In his will Saul appointed the decedent and the American Security & Trust Co. coexecutors and trustees of his estate but did not make any reference therein to the contract previously entered into with the decedent or make any provision for executors' or trustees' fees.
A Federal estate tax return was filed on behalf of the estate of*1091 B. F. Saul on January 20, 1932, in which a deduction was claimed for executors' fees in the amount of $141,612.29 which, it is stipulated, was "estimated at 3% of the gross estate of $4,720,409.75, as shown on the said return." There was filed with the return an affidavit in support of the deduction claimed therein for executors' fees stating that the commissions would be taken by the executors upon the filing of their final account as such executors and would be shown in their income tax returns for the year in which they should be so taken. In auditing the return the respondent allowed the deduction claimed on account of executors' fees.
The decedent, G. Percy McGlue, died October 31, 1935, and since his death the coexecutor, the American Security & Trust Co., has carried on the administration of the B. F. Saul estate.
Up to the time of the decedent's death no final accounting of the B. F. Saul estate had been filed with the Probate Court, nor had such accounting been prepared, and the executors' fees or commissions here in controversy had not been claimed by either executor or determined or allowed by the Probate Court, nor had any of those things been done up to the time*1092 of the hearing of this proceeding.
*1201 The contract between the decedent and B. F. Saul regarding the decedent's executorship of Saul's estate was not filed with the Probate Court by the decedent and no proof of claim for executors' fees under the contract had been submitted to the court up to the time of the hearing of this proceeding.
Neither in the will of B. F. Saul nor in the contract between him and the decedent was there any provision for an adjustment of executors' fees between the coexecutors in the event of the death or withdrawal of either of them before completion of the administration of the estate.
The decedent, G. Percy McGlue, kept his accounts on the cash receipts and disbursements basis.
The value of McGlue's right to receive executors' commissions from the Saul estate at the date of McGlue's death was $70,806.14.
On October 3, 1934, the decedent, G. Percy McGlue, and George I. Borger were appointed coexecutors of the estate of James F. Shea, who died September 24, 1934. The decedent and Borger were named as coexecutors of his estate by James F. Shea in his will.
On June 27, 1935, a Federal estate tax return was filed on behalf of the James*1093 F. Shea estate, in which a deduction was claimed for "estimated executors' commissions, in the sum of $37,000." The amount claimed was not finally allowed.
Up to October 31, 1935, the date of decedent's death, no report had been filed with the Probate Court by the executors of the James F. Shea estate and no executors' fees or commissions had been claimed or allowed by the court. The first accounting for the estate was filed in February 1936, by the surviving executor, George I. Borger, after approval by the residuary legatee, Michael J. Curley. In this report executors' fees in the amount of $9,926.75 were claimed on behalf of the estate of the decedent, G. Percy McGlue. The report was approved and the executors' commissions as claimed were allowed by the Probate Court on February 20, 1936.
Audit of the Federal estate tax return filed on behalf of the James F. Shea estate was not made until after the allowance of the executors' commissions by the Probate Court, and such commissions were allowed as a deduction in the return.
The value of McGlue's right to receive executors' commissions from Shea's estate at the date of McGlue's death was $9,926.75.
On January 1, 1935, the*1094 decedent entered into an agreement with Thomas F. Burke in which he expressed his desire to turn over his law practice to Burke and stated that as part consideration for the agreement he had requested his principal clients to continue doing business with Burke, and that he would leave with Burke:
* * * who may have the use thereof without charge, all office furniture, equipment, files and library, which are, however, to remain the property of the *1202 party of the first part. If the party of the first part has not otherwise disposed of the same at the time of his death they are to become the property of the party of the second part. * * *
On his part Burke agreed, as part consideration for the agreement "to represent G. Percy McGlue in any personal legal matters, when requested including the probate of his will and administration of his estate, without charge." Burke further agreed "to give the party of the first part desk room in the present offices, or in any other offices which he may use, free of charge."
The value of "all office furniture, equipment, files and library" of McGlue at the date of his death was $500.
OPINION.
SMITH: Our first question is whether*1095 the executors' fees in the amounts of $70,806.14 from the estate of B. F. Saul and $9,926.75 from the estate of James F. Shea are includable in decedent's gross estate. The item of $70,806.14 was not reported as an asset of the decedent's estate in the estate tax return filed by his executors, but was added to the gross estate by the respondent in his deficiency notice. The item of $9,926.75 was reported in decedent's gross estate, but the petitioner in this proceeding alleges that this was error and that the respondent erred in not eliminating the item from the value of the gross estate.
Section 302 of the Revenue Act of 1926, as amended by section 404 of the Revenue Act of 1934, provides in part:
The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated, except real property situated outside the United States -
(a) to the extent of the interest therein of the decedent at the time of his death.
The term "property" as used in the quoted section of the statute embraces all choses in action, including claims for compensation for services performed. *1096 ; .
It has been held that the right of a deceased partner, under a partnership agreement, to share in the profits of the partnership for a period following his death is a property right, or asset of the estate, which should be included in his gross estate at its present worth. .
In , it was held that the executors of an estate in process of administration were taxable on the income received from a partnership of which the decedent was a member only to the extent that the amount received exceeded the value at which the chose in action, that is, the right to the income, was included in decedent's gross estate for estate tax purposes.
*1203 In , we held that certain amounts representing salary and bonus which were due a decedent at the date of his death were not income to his estate when collected by the administrators, but were assets which should have been included*1097 in the gross estate for estate tax purposes.
Although we have held in a companion case, Docket No. 98446, , involving the income tax liability of this decedent for the taxable year in which his death occurred, that the executors' fees here under consideration did not constitute income "accrued" at the date of decedent's death, because they had not been allowed by the Probate Court and because the amount that would eventually be allowed was uncertain, it does not follow that the decedent's claim for such fees was not of value and was not an asset which should be included in decedent's gross estate for estate tax purposes.
As a duly appointed executor of both of the estates, the decedent up to the time of his death had performed services for which he was entitled to compensation in some undetermined amounts. The right to such compensation was a claim or a chose in action which constituted an asset of the estate and must be included in the gross estate at its value at the time of decedent's death.
The amount of $70,806.14 included in the gross estate by the respondent as representing the executors' fees due the decedent*1098 from the B. F. Saul estate is one-half of the amount claimed as a deduction for executors' fees in the estate tax return filed on behalf of the estate, the decedent being one of the two executors of the estate. The amount of $9,926.75 which the respondent included in decedent's gross estate as the executors' fees due from the estate of James F. Shea is the amount which was allowed as executors' fees by the Probate Court in a report filed by the surviving executor of the James F. Shea estate in February 1936. The amount of $37,000 was claimed for "estimated executors' commissions" in the Federal estate tax return filed on behalf of the James F. Shea estate by the executors in June 1935, but this amount was not finally allowed.
The evidence before us does not show that the value of the decedent's claims for executors' fees from either the estate of B. F. Saul or the estate of James F. Shea was any less than the amounts at which the respondent has included them in decedent's gross estate. The inclusion of the amounts of $70,806.14 and $9,926.75 in the value of decedent's gross estate is therefore sustained.
The remaining issue relates to the office furniture and books which the*1099 respondent included in the decedent's gross estate at a value of $500. Petitioner contends that this property is not includable in the gross estate, and, in the alternative, that if included there should be allowed an offsetting deduction of a like amount.
*1204 It is plain that the property in question was the property of the decedent at the time of his death. Under the contract between the decedent and Burke it was to become Burke's property at the time of decedent's death, if not otherwise disposed of by the decedent before that time. The Federal estate tax is imposed generally upon all property passing from the decedent at the date of his death. The value of the office furniture and books, as to which no question is raised, must be included in the decedent's gross estate.
By her alternative plea the petitioner claims the deduction of a like amount, that is, the value of the property at the date of decedent's death, as a claim against the estate for legal services performed by Burke, or for other consideration passing to the decedent under his contract with Burke.
The evidence before us on this issue consists of nothing more than the mere statement in the stipulation*1100 of facts that the decedent and Burke entered into the agreement and a copy of the agreement itself. We do not know whether Burke ever performed any legal services for the decedent or for his estate or whether the decedent or his estate actually received anything of value under the contract. In these circumstances it must be held that the evidence of record affords no basis for the allowance of the claimed deduction.
Reviewed by the Board.
Decision will be entered for the respondent.