*38 Decision will be entered for the petitioner.
Respondent has determined that the estate of a citizen of Puerto Rico who was also a citizen of the United States and who at the time of his death was domiciled in Puerto Rico should be taxed as that of a "nonresident not a citizen" pursuant to sections 860 to 865, I. R. C.Held, that the Federal estate tax is not applicable to a citizen of Puerto Rico who is also a citizen of the United States and who at the time of his death was domiciled in Puerto Rico, Estate of Albert DeCaen Smallwood, 11 T.C. 740">11 T. C. 740, followed, and the decedent was an American citizen who cannot be taxed as a nonresident alien.
*271 Respondent has determined a deficiency in the estate tax of $ 69,327.87 against the executors of the estate of Clotilde Santiago Rivera who died on January 9, 1949. Respondent explains the deficiency in his 30-day*40 letter dated April 19, 1951, which is incorporated in the deficiency notice as follows:
The deficiency here results principally from computing the tax liability on the estate of a citizen and resident of Puerto Rico as that of a nonresident not a citizen pursuant to Section 861 of the Internal Revenue Code.
Petitioner contests the deficiency as follows:
(a) The Commissioner erred in holding that petitioner is required to file an estate tax return under Part III of the Estate Tax Law as if the petitioner were the estate of a nonresident alien.
(b) The Commissioner erred in assessing an estate tax as if petitioner were the estate of a nonresident alien.
(c) The Commissioner erred in failing to hold that the Estate Tax Law is inapplicable to petitioner or, in the alternative, if the Estate Tax Law be in any *272 way applicable to petitioner, the Commissioner erred in failing to allow the petitioner the specific exemption, credits and other deductions provided for the estates of American citizens by the Estate Tax Law.
(d) The Commissioner erred in holding that the Estate Tax Law is applicable to petitioner.
(e) The Commissioner erred in failing to follow the established administrative*41 practice to the effect that the estates of American citizens domiciled in Puerto Rico at the date of death are not subject to the Estate Tax Law, which practice has been established by numerous decisions and rulings including those of January 25, 1945 and February 13, 1945, copies of which are annexed hereto as Exhibits B and C.
FINDINGS OF FACT.
Most of the facts have been stipulated and we adopt them as part of our findings. Clotilde Santiago Rivera, the decedent herein, died testate in New York, New York, on January 9, 1949. He was born in Puerto Rico on December 14, 1872, and was buried in Puerto Rico. Decedent was domiciled in Puerto Rico throughout all of his life up to and including the date of his death. Decedent was made a citizen of the United States by virtue of the provisions of the Jones Act of March 2, 1917, known as the Second Organic Act, 39 Stat. 951, and was such at the date of his death.
Decedent's will, executed December 10, 1948, was protocolized on January 13, 1949, and was thereafter recorded and registered in accordance with the laws of Puerto Rico in the Registry of Wills in the Supreme Court of Puerto Rico. Letters testamentary under the will were issued*42 by the District Court of San Juan, Puerto Rico, to Jose Hernandez Usera and Guillermo E. Gonzalez, the executors named therein, on January 31, 1949. No ancillary or other proceedings for the probate of the will or for the appointment of any executors or representatives of the deceased have ever been taken in the State of New York or any other State of the United States or in any place, except in San Juan, Puerto Rico, as aforesaid.
On June 27, 1950, the executors filed with the collector of internal revenue for the second New York District an estate tax return showing no tax to be due, which return disclosed property situated in the United States at the time of the decedent's death of a total value in excess of $ 300,000. Under schedule B of the estate tax return the following statement appears:
Note: Pursuant to Treasury Department letter dated March 30, 1950, * * * this return is being prepared and submitted on the theory, not assented to by taxpayer, that the estate of decedent should be taxed as the estate of a nonresident alien under Part III, Chapter 3 of the Internal Revenue Code. This return therefore includes only such property as would be returnable if the estate *43 were legally taxable as that of a non-resident alien.
Previous to the filing of the estate tax return, and on March 31, 1949, the executors filed with the appropriate authorities in Puerto Rico*273 an inventory of the assets and liabilities of the estate of the decedent as of the date of death, January 9, 1949.
Of the property shown by the estate tax return, the certificates representing the stocks and bonds listed under schedule B thereof were physically located within the United States at the date of the decedent's death, as were the items of miscellaneous property listed under schedule F. The value of the stocks and bonds included in schedule B of the estate tax return is agreed to be the sum of $ 307,338.23 and the value of the items included in schedule F is $ 10,278.85, making a total value of $ 317,617.08 for all property of the decedent which was reported as having been physically located within the United States at the time of his death.
Since filing the estate tax return it has been ascertained by the executors that the decedent owned 23 shares of common stock of Texas Company and a claim for refund of 1946 Federal income tax, allowed in the sum of $ 3,931.27 with*44 interest to date of death, amounting to $ 468.47, which stocks and claim for refund were not included in the return. The 23 shares of stock had a value of $ 1,250.63 on January 9, 1949, and this amount plus the claim for refund and interest as above, totaling $ 5,650.37, should be added to the sum of $ 317,617.08 as property located in the United States referred to in the previous paragraph. It was stipulated that, "The respondent hereby asserts a claim for an increased deficiency resulting from the inclusion in the decedent's gross estate of the said sum of $ 5,650.37, and it is agreed by the parties that this may be done without the filing of an amended answer and a reply thereto."
The succession tax due to Puerto Rico was paid in the sum of $ 53,067.16 on February 8, 1952.
OPINION.
This case involves the applicability of the Federal estate tax to a Puerto Rican citizen and resident at the time of his death. Respondent maintains that the decedent's estate should be taxed in the same manner as an estate of a nonresident alien not a citizen of the United States. Accordingly, pursuant to sections 860 to 865, Part III, I. R. C., respondent has attempted to tax only that portion *45 of this decedent's property located within the United States at the time of death, excluding property located in Puerto Rico. Petitioners contend that the estate of the decedent, who was a citizen and a resident of Puerto Rico is not subject to Federal estate tax, and the decedent was an American citizen who cannot be taxed as a nonresident alien.
In Estate of Albert DeCaen Smallwood, 11 T. C. 740, decedent, a citizen of continental United States by reason of birth in St. Louis, *274 Missouri, acquired a domicile in Puerto Rico which he had at the time of his death. He was, therefore, also a citizen of Puerto Rico, exactly as was the decedent herein, i. e., both decedents were, in the language of the Tax Court in that case "citizens of the United States, who are also citizens of Puerto Rico." This Court held that Part II of the estate tax law (sections 810 to 851, I. R. C.) is not applicable because:
The careful omission of American citizens who are residents and citizens of Puerto Rico negatives any intention on the part of Congress to regard such persons as subject to the Federal estate tax.
Both the language of this opinion and the rationale*46 of the decision apply to this case, the only difference being in the time and manner of acquisition of American citizenship.
The Smallwood case, supra, goes into the background of the fiscal independence of Puerto Rico and the paternalistic position of the United States, and we shall not repeat a detailed discussion here. The Congress has specifically provided since 1900 that the statutory laws of the United States not locally inapplicable shall apply to Puerto Rico "except the internal revenue laws." See the Organic Act of 1900, known as the Foraker Act, 31 Stat. 77; the Second Organic Act, 39 Stat. 951 (1917), as amended 48 U. S. C. sec. 734 (1946). Congress has twice amended the exception to the Second Organic Act relating to the internal revenue laws without making the Federal estate tax applicable, 49 Stat. 1947 (1936) and 60 Stat. 158 (1946).
The respondent attempts to distinguish the Smallwood case because of a difference between a tax asserted under Part II of the estate tax law, sections 810 to 851, I. R. C., relating to estates of a "citizen or resident," and a tax asserted under Part III, sections 860 to 865, I. R. C., relating*47 to a "nonresident not a citizen." Respondent is seeking to tax the decedent's estate under the law applying to "a nonresident not a citizen of the United States." However, Puerto Ricans, including the decedent herein, are full American citizens by virtue of the Jones Act, supra. The policy behind this enactment was "the desire to put them [Puerto Ricans] as individuals on an exact equality with citizens from the American homeland." See Balzac v. Porto Rico, 258 U.S. 298">258 U.S. 298, 311. Moreover, since the Nationality Act of 1940, full United States citizenship may be obtained by birth in Puerto Rico just as much as by birth in continental United States. 8 U. S. C. 602. Puerto Ricans may, therefore, not be treated or described in ways which make distinctions as to the time or means of acquisition of citizenship.
We hold that the Federal estate tax is not applicable to a citizen of the United States who was domiciled in Puerto Rico and the decedent *275 was an American citizen who cannot be taxed as a nonresident alien. Having decided the main issue in petitioner's favor, it becomes unnecessary to pass upon its *48 alternative contention.
Decision will be entered for the petitioner.