*930 1. Where the decedent possessed a power of appointment over certain property, provided he died without leaving issue, to such person or persons as he should by his last will and testament direct, and the power was duly exercised, the value of such property is a part of the decedent's gross estate, for Federal estate tax purposes, as property passing under a general power of appointment.
2. Where the appointor's estate was subject to state collateral inheritance tax by reason of the exercise of the power of appointment to collaterals, the estate tax due from the present decedent's estate is not entitled to be credited, under section 301(b) of the Revenue Act of 1926, as amended by section 802 of the Revenue Act of 1932, with any part of the collateral inheritance tax paid.
*503 This proceeding is for the redetermination of a deficiency in estate tax in the amount of $100,156,26. Certain allegations of error in the petition have been conceded by the respondent. The allegations of error not conceded are stated in the petition as:
(1) The Commissioner*931 has erred in determining the value of the gross estate of Joseph Riter by including therein the value of any part of the property of the trust estate of Thomas B. Riter, deceased, passing under the power of appointment given Joseph Riter by the will of Thomas B. Riter, and exercised by Joseph Riter by his last will, for the reason said power of appointment was a special or limited power of appointment and not a general power of appointment.
(2) If the Commissioner has properly determined the value of the gross estate of Joseph Riter by including therein the value of all or any part of the property of the trust estate of Thomas B. Riter, he has erred in disallowing the credit against the Federal estate tax of Joseph Riter (up to 80 per centum thereof), of $79,094.38 inheritance taxes paid to the Commonwealth of Pennsylvavia on the property of said trust estate.
*504 FINDINGS OF FACT.
1. The petitioner is the executor of the last will and testament and the estate of Joseph Riter, deceased.
2. Thomas B. Riter, the father of Joseph Riter, died a citizen and resident of the Commonwealth of Pennsylvania, April 23, 1907, and by his will bequeathed a large portion of his*932 estate to the trustees under the following trusts:
* * * IN TRUST, to hold the same, and to receive the dividends, profits and income thereof, and pay over the same from time to time, when and as received, first to my beloved wife, Sophie A. Riter, during her life; and from and after her death, to pay over, in the same manner, the dividends, profits and income thereof, to my son, Joseph Riter, during his life; and from and after the decease of my said son, then, as to all the said shares, IN TRUST for the use and benefit of the children of my said son, Joseph, and the lawful issue of any of them whom may be deceased, such issue of any deceased child taking, however, only their parent's share. And in case of the death of my said son Joseph, without leaving lawful issue living at the time of his decease, then IN TRUST, as to all the said shares to hold the same for such person or persons as my said son Joseph, by his last will and testament, may direct, limit and appoint. * * *
3. At the time of Thomas B. Riter's death no part of his estate was subjected to collateral inheritance taxes under the laws of the Commonwealth of Pennsylvania; no appraisement of the estate was then made*933 for the purpose of the collateral inheritance tax and no collateral inheritance tax was paid thereon at the time of his death.
4. Before the death of Joseph Riter, the testamentary trustees under the will of Thomas B. Riter sold the shares of stock bequeathed to them in trust and invested and reinvested the proceeds in securities, which they held as the principal or corpus of the trust estate at the time of the death of Joseph Riter.
5. Sophie A. Riter, the widow of Thomas B. Riter, and the mother of Joseph Riter, died September 20, 1913.
6. Joseph Riter died a citizen and a resident of Palm Beach, Florida, May 16, 1928, without leaving issue living at the time of his death, and by his last will and testament dated April 27, 1923, and by a codicil thereto dated December 10, 1924, directed, limited, and appointed the property in the hands of testamentary trustees of the estate of his father, Thomas B. Riter, to persons known and designated by the laws of the Commonwealth of Pennsylvania as collaterals or collateral heirs, and provided:
* * * If, however, the estate which I have from other sources [other than that held by the testamentary trustees], is not sufficient*934 to pay the cash legacies hereinbefore made or establish the trusts hereinbefore created, or if, in the opinion, of my Executor, it is not convenient or not advantageous to pay said legacies or establish said trusts out of the estate which I have from other sources, I direct that he pay out of the proceeds of the property *505 bequeathed in this paragraph of my will the various cash bequests hereinbefore made and that he establish, out of the proceeds of the property bequeathed in this paragraph the trusts hereinbefore created.
The will of Joseph Riter was duly admitted to probate in the county of Palm Beach, Florida, on June 11, 1928, and letters testamentary thereon were thereupon issued to J. Gilmore Fletcher, the executor appointed in the will and the petitioner herein.
7. The testamentary trustees under the will of Thomas B. Riter filed their account as such trustees on August 3, 1928, showing the balance for distribution as $1,637,801.37, which consisted of the corpus or principal of the trust estate, comprised of securities and cash, and was the same corpus or principal which was included in the gross estate of the decedent, Joseph Riter, by the respondent at a*935 value of $1,558,706.99, which latter amount was the value of the corpus of the testamentary trust at the time of the death of Joseph Riter, lessened by $79,094.38 collateral inheritance taxes imposed upon that property by and paid to the Commonwealth of Pennsylvania as such collateral inheritance taxes. Thereafter, the taxing authorities of the Commonwealth of Pennsylvania instituted proceedings for the appraisement of the property and for the imposition and assessment of a collateral inheritance tax on same. The account of the testamentary trustees came on for audit in the Orphans' Court of Allegheny County, Pennsylvania, on December 20, 1928, and at the audit it was determined that the property was subject to collateral inheritance tax, although at that time the appraisement of the property and the assessment of the tax had not been completed and the amount thereof had not been fixed or ascertained. On December 27, 1928, the appraisement was completed and filed and the collateral inheritance tax was assessed against the property in the amount of $79,094.38 and the trustees, in order to avoid the payment of interest thereon, on December 27, 1928, paid the collateral inherintance*936 tax to the Commonwealth of Pennsylvania in the amount of $79,094.38. Thereafter, on March 8, 1929, the Orphans' Court of Allegheny County entered its decree for the distribution of the balance in the hands of the testamentary trustees and in such decree of distribution awarded to the Commonwealth of Pennsylvania the collateral inheritance tax of $79,094.38. Thereafter, it appearing that the decree of distribution did not fully set forth the reason for the liability of the property for the tax and did not clearly indicate the time at which the liability arose and the property became subject to tax, the Orphans' Court of Allegheny County, on December 18, 1930, amended its decree of distribution as follows:
AMENDED DECREE
And now, to-wit, December 18th, 1930, it appearing that the decree of distribution of the principal of the trust estate created by the last will and *506 testament of Thomas B. Riter, deceased, and appointed by the last will and testament of his son, Joseph Riter, who died on May 16, 1928, which decree was heretofore filed at the above number and term on March 8, 1929, does not fully set forth the reasons for the liability of the estate of Thomas B. Riter*937 for the inheritance tax due the Commonwealth of Pennsylvania and does not clearly indicate the time at which said liability arose and the time at which said estate became subject to such tax, and it appearing that the said Thomas B. Riter, a resident of the County of Allegheny and the State of Pennsylvania, died on April 23, 1907, and by his last will, duly probated in said Allegheny County, created said trust estate to be held in trust during the lives of his widow, Sophie A. Riter, and his son, Joseph Riter, and provided that at the death of his son, Joseph Riter, the principal of trust estate should be held for the use of the children of his son, Joseph Riter, and the issue of any of them who might be deceased, and that in case of the death of his son, Joseph Riter, without leaving issue living at the time of his death then the principal of said trust estate should be held for such person or persons as his son, Joseph Riter, should by his last will appoint, and it appearing that Sophie A. Riter, the widow of the said Thomas B. Riter, died on September 20, 1913, and that his son, Joseph Riter, died on May 16, 1928, without leaving issue, and by his last will and testament duly probated*938 appointed the principal of said trust estate to collaterals, it is ordered, adjudged and decreed that the said trust estate was not subject to inheritance taxes by the State of Pennsylvania at the time of the death of Thomas B. Riter and that no such taxes were or could have been at that time imposed thereon, and that said estate would never have been subject to inheritance taxes nor would such taxes have been imposed thereon if Joseph Riter had left issue to survive him or had appointed said trust estate to others than collaterals, and that said trust estate did not become subject to or liable for any inheritance taxes to the State of Pennsylvania until May 16, 1928, and then only by virtue of the exercise of the said power of appointment in favor of collaterals by Joseph Riter by his last will, which did not become effective until May 16, 1928, the day of his death, and it is further ordered, adjudged and decreed that that portion of the decree of distribution heretofore entered at the above number and term of this court on March 8, 1929, and reading as follows:
| "Claim of Commonwealth of Pennsylvania for transfer inheritance | |
| tax paid by accountants | $79,094.38" |
| be and the same is hereby amended to read: "Claim of | |
| Commonwealth of Pennsylvania for collateral inheritance tax | |
| paid by accountants. This trust estate was not subject to any | |
| Pennsylvania inheritance taxes at the time of the death of | |
| Thomas B. Riter on April 23, 1907, and would never have become | |
| subject to any such taxes had his son, Joseph Riter, left issue | |
| to survive him or exercised the power of appointment given him | |
| by Thomas B. Riter in favor of direct heirs, as designated by | |
| the laws of Pennsylvania, but said estate did become subject to | |
| collateral inheritance taxes on, but not before May 16, 1928, | |
| by reason of the death of Joseph Riter on that date without | |
| leaving issue and his appointment of said estate to collaterals | |
| by his last will. Said will of Joseph Riter and the appointment | |
| therein made did not become effective until May 16, 1928, the | |
| date of his death | $79,094.38" |
| Per Curiam. |
*939 *507 8. On or about March 23, 1929, petitioner's return of Federal estate tax on the estate of Joseph Riter was filed in the office of the collector at Jacksonville, Florida. The property appointed was listed on the return but not included in the gross estate.
9. On June 23, 1929, the revenue agent in charge of the New York office of the respondent mailed to petitioner the 30-day notice respecting his examination of the estate tax return filed and advised petitioner that it was proposed to change and increase the value of the gross estate of Joseph Riter, as shown on the return, by including therein the value of the trust estate of Thomas B. Riter over which the decedent exercised the power of appointment. The petitioner, within 30 days thereafter, filed a protest against the proposed change and therein claimed that if the appointive estate was included as part of the gross estate of Joseph Riter, there should be credited against the Federal estate tax the $79,094.38 inheritance taxes paid on the appointive estate to the Commonwealth of Pennsylvania. A hearing was held on this protest during the month of August 1929, and at that time such list of the property of the*940 appointive estate and certificates and affidavits as were required with the claim for credit were filed in the office of the agent in charge. On October 24, 1929, the respondent advised the petitioner by letter of that date of the deficiency in respect of the Federal estate tax as tentatively determined and therein allowed credit against such deficiency of the $79,094.38 state inheritance tax paid. By letter mailed by the respondent on Nobember 13, 1930, the credit of $79,094.38 state inheritance tax paid was disallowed, upon the ground that:
* * * The credit of $79,094.38 claimed for inheritance taxes paid on the transfer of property of the estate of Thomas B. Riter, deceased, is disallowed, since this liability arose through the devolution of property of the estate of the said Thomas B. Riter at his death.
On December 30, 1930, petitioner made and renewed his claim for the credit and forwarded the same by mail to the respondent, together with such affidavits, certificates, and lists of property as are required by the rules and regulations of the respondent, and they were received by the respondent on December 22, 1930.
OPINION.
SMITH: The first question presented by*941 this proceeding is whether the property included in the testamentary trust over which the decedent, Joseph Riter, exercised the power of appointment is includable in the gross estate. The applicable provision of the statute *508 relating thereto is section 302 of the Revenue Act of 1926, which, so far as material, reads as follows:
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 -
* * *
(f) To the extent of any property passing under a general power of appointment exercised by the decedent (1) by will, or (2) by deed executed in contemplation of, or intended to take effect in possession or enjoyment at or after, his death, except in case of a bona fide sale for an adequate and full constideration in money or money's worth; and
* * *
(h) Except as otherwise specifically provided therein subdivisions (b), (c), (d), (e), (f), and (g) of this section shall apply to the transfers, trusts, estate, interests, rights, powers, and relinquishment of powers, as severally enumerated and described therein, whether made, created, arising, *942 existing, exercised, or relinquished before or after the enactment of this Act.
* * *
The petitioner contends that the power of appointment in this case is a "special or limited power" and not a "general power" and therefore that the Commissioner erred in including in the gross estate the value of the appointive property. It is the respondent's contention that the value of the appointive estate passed under a general power of appointment within the contemplation of the statute and therefore that its value was properly included in the gross estate.
A power of appointment is general when it is exercisable in favor of any person the donee may select, and special or limited when it is exercisable only in favor of persons or a class of persons designated in the instrument creating the power. ; certiorari denied, ; .
Under the will of his father, the decedent had a power to appoint the trust estate left by his father "for such person or persons as my said son Joseph, by his last will and testament, may*943 direct, limit and appoint." It is to be noted that there is no provision that the decedent, Joseph Riter, could appoint the estate to a corporation. But the phrase "person or persons" is usually held to include corporations unless there is a provision in the power that appointment may not be made to a corporation. It was held in ; , that an appointment may be made to a corporation under a power to appoint in any person. This decision was affirmed, ; .
The petitioner makes the contention that inasmuch as under the will of Thomas B. Riter the decedent could not have exercised a *509 power of appointment except by will, that the power was "special" and not "general." We are of the opinion that the point is not well taken. As stated by the court in :
* * * The power which the Congress had in mind, and which it called "general", was a power which could be exercised by either will or deed, and did not have to*944 include both. A decedent could select either method, by will or deed, by which a power could be exercised by a donee. Either method, if the donee of the power is not restricted as to appointees, complied with the statute, and the power is general.
The petitioner further argues that inasmuch as the decedent, Joseph Riter, could not have exercised the power if he had left issue surviving, the power is limited and not general.
The petitioner's contention upon this point is not well founded. There was a contingency to the exercise of the power. The power could not have been exercised by the decedent except upon the condition that he died without issue surviving. But a contingency or condition of this character does not change a general power into a special power. Conditional powers or powers upon condition similar to that in this proceeding have been before the Pennsylvania courts on a number of occasions and the courts have consistently held that the condition did not change a general power into a special power. ; *945 , dealt with a testamentary power similar to the one in the present instance. There, as to a share of his estate, the donor of the power created a testamentary trust with a life estate to his daughter:
* * * and after the death of the daughter he bequeathed the same to her child or children, but, should she die without leaving child or children, then said share to be paid to such person or persons as the daughter so dying should * * * by any last will and testament, or instrument in the nature thereof, direct, limit, and appoint * * *
Having so died, the daughter exercised the power in favor of her sister, but since in so doing she made the property a part of her own estate for all purposes, it was held that her exercise of the power was subject to inheritance tax. The later case of ; , characterizes the power involved in , as a "general power."
In ; *946 , the donor of the power gave his wife a life estate, a succeeding life estate to his daughter, and a remainder to the daughter's issue, "but should she however die without issue living at the time of her death then and in that event one-half part thereof, my trust estate, * * * I give, devise and bequeath to such person or persons or body corporate * * * as she may by her last will and testament designate *510 or appoint." The daughter died without issue, and by her will made disposition of the property over which she had power of appointment. The court held this was a general power of appointment. The court stated:
* * * It was a general power, presently given to a designated person, and the contingency upon which it was to arise could not be finally ascertained until the donee's death, and, necessarily, the will by which the power was to be exercised had to be executed during the lifetime of the donee, and so before the contingency upon which the power depended could be made certain.
* * *
It seems settled law that, where the authority to execute a power is dependent upon a contingent event, it may be exercised before the happening of the*947 contingency, and the execution will be valid when the contingent event subsequently occurs; and this is unquestionably true from the necessity of the case, when the happening of the event cannot be ascertained until the moment of the donee's death, as when the event is the dying of the donee without issue living at his death. * * * [Citing numerous cases.]
In support of his contention that the power exercised by the decedent was a special power and not a general power, the petitioner urges upon the Board the decision of the District Court for the Eastern District of Pennsylvania in . There the donee of the power was given power to appoint by her will to whomsoever she chose over the time she "remains unmarried." The donee remained unmarried and by her will exercised the power. The court held that the power exercised was a special power and not a general power inasmuch as the power of disposition denied to the donee control over what should become of the property during her lifetime; that since the duration of time or possession of the power was limited it could not be held to be a general power. *948 This decision appears to the Board to be out of line with the great weight of legal authority. In any event, the Board is of the opinion that a condition which may exist with respect to the exercise of a power of appointment has no bearing upon the question of whether it is a general power of appointment or a special power of appointment. The contentions of the respondent upon this point are sustained.
The second question for our consideration is whether the amount of the estate tax should be credited with the amount of the collateral inheritance tax paid to the Commonwealth of Pennsylvania. The respondent contends that it should not be by virtue of section 301(b) of the Revenue Act of 1926, as amended by section 802 of the Revenue Act of 1932. Section 301(b) of the Revenue Act of 1926 provides:
The tax imposed by this section shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any State or Territory or the District of Columbia, in respect of any property included in *511 the gross estate. The credit allowed by this subdivision shall not exceed 80 per centum of the tax imposed by this section, and shall include*949 only such taxes as were actually paid and credit therefor claimed within three years after the filing of the return required by section 304.
Section 802 of the Revenue Act of 1932 provides, so far as material, as follows:
(a) Section 301(b) of the Revenue Act of 1926 is amended to read as follows:
"(c) The tax imposed by subdivision (a) of this section shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any State or Territory or the District of Columbia, in respect of any property included in the gross estate (not including any such taxes paid with respect to the estate of a person other than the decedent). The credit allowed by this subdivision shall not exceed 80 per centum of the tax imposed by subdivision (a) (after deducting from such tax the credits provided by subdivision (b)), and shall include only such taxes as were actually paid and credit therefor for claimed within four years after the filing of the return required by section 304, * * *"
The reason for amending section 301(b) of the Revenue Act of 1926 by incorporating therein the parenthetical clause "not including any such taxes paid with respect to the*950 estate of a person other than the decedent" is stated in the Ways and Means Committee Report on the Revenue Bill of 1932 (Rept. No. 708, 72d Cong., 1st sess., p. 46), as follows:
Subsection (a) of this section amends subdivision (b) of section 301 of the Revenue Act of 1926. The changes are:
(1) A clarifying provision to remove any basis of a claim for credit for State death taxes paid with respect to another person's estate, where the property is included in the decedent's estate.
Upon this point the petitioner submits, that at the time of the death of Thomas B. Riter there was no inheritance tax imposed by the laws of the Commonwealth of Pennsylvania on assets or property passing from any person dying seized or possessed thereof to or for the use of a father, mother, husband, wife, children, and lineal descendants born in lawful wedlock, children of a former husband or wife, or a widow of the son of the person dying seized or possessed thereof where such persons were or are commonly known and designated as direct heirs in the laws and decisions of the Commonwealth of Pennsylvania; but that there was at the time of the death of Thomas B. Riter an inheritance tax, known as*951 a collateral inheritance tax, imposed on assets or property passing from any person dying seized or possessed thereof to any person or persons or to bodies corporate or politic, other than persons designated as direct heirs, and that such person or persons or bodies corporate or politic, other than direct heirs, were and are commonly known or designated by the laws and decisions of the courts of Pennsylvania as collaterals *512 or collateral heirs; further, that under the laws of the Commonwealth of Pennsylvania and the State of Florida the will of Joseph Riter speaks as of the date of his death and that under these laws the will did not become operative or effective until the date of his death, and that under these laws no part of the property of the testamentary trust created by the will of Thomas B. Riter passed under the power of appointment exercised by Joseph Riter until May 16, 1928, the date of the death of Joseph Riter. These propositions of law are not denied by the respondent and the Board finds them to be sound.
The question remains, however, as to whether the collateral inheritance taxes paid to the Commonwealth of Pennsylvania on December 27, 1928, in the amount*952 of $79,094.38, were taxes paid with respect to the estate of a person other than the decedent.
The collateral inheritance tax law of the Commonwealth of Pennsylvania as it existed at the date of the death of Thomas B. Riter in 1907, had, with slight modifications, long been in effect. There have been many decisions of the courts of Pennsylvania bearing upon the nature of the tax. The fundamental thought in enacting the Collateral Inheritance Tax Act of 1887, which with slight modification was in effect in 1907, was to levy a toll against the passing of property of citizens going by reason of death to collaterals in whatever light the taking might be viewed. . In that case it was stated that "the tax springs into life on the death of property owners; eo instanti it becomes seated on their estates." The court further stated, referring to ; :
* * * We held that under the will these persons could only be determined after the termination of the life estate through the death of the widow. The tax under the act did not become due*953 and payable until the specified contingency happened; at that time the value of the property as it then existed was to be used as the basis of assessment on which the tax must be declared. * * *
From the above decisions of the Supreme Court of Pennsylvania it is apparent that the collateral inheritance tax paid on December 27, 1928, to the Commonwealth of Pennsylvania was an excise tax, which attached to the trust estate created by the will of Thomas B. Riter in respect of that estate passing to collaterals. The appointee of property under a general power of appointment receives that property from the donor under Pennsylvania law. ; ; ; ; ;; ; ;; . It is true that the tax attached to that estate by reason of the fact that it passed to collaterals *513 by virtue of the exercise of*954 the power of appointment by Joseph Riter. But the tax attached not by virtue of his exercise of appointment, but by the fact that the property passed to collaterals. If the property had passed to collaterals by reason of the nonexercise of the power of appointment by Joseph Riter, the tax would nevertheless have attached. With these facts in mind we think that it is clear that the collateral inheritance tax paid to the Commonwealth of Pennsylvania was not paid with respect to the estate of Joseph Riter.
The petitioner argues that this interpretation of the statute defeats the intention of Congress with respect to crediting the amount of the Federal estate tax with the amount of the inheritance tax paid to a state. But this is not necessarily so. By section 303(b)(2) of the Revenue Acts of 1924 and 1926, the Congress has permitted the deduction from the gross estate of -
An amount equal to the value of any property (A) forming a part of the gross estate situated in the United States of any person who died within five years prior to the death of the decedent, or (B) transferred to the decedent by gift within five years prior to his death, where such property can be identified*955 as having been received by the decedent from such donor by gift or from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property so received. * * *
This provision was designed to exempt from the incidence of the estate tax property included in the gross estate which had been subject to estate tax within a period of five years. Clearly, if Thomas B. Riter's estate had been subjected to the payment of an inheritance tax to the Commonwealth of Pennsylvania upon his death in 1907, it could not be argued that the Federal estate tax payable upon the death of Joseph Riter is entitled to be credited with the amount of the tax paid on the estate of Thomas B. Riter of many years before.
It is not the province of this Board to speculate as to what the intention of Congress was with respect to the allowance of a credit against the Federal estate tax of the amount of inheritance tax paid to a state. Where the language of the statute is unambiguous, resort may not be had to principles of interpretation applying to ambiguous language. The only question which we have to decide is whether the collateral inheritance*956 tax paid to the Commonwealth of Pennsylvania on December 27, 1928, was paid with respect to the estate of the decedent. We are of opinion that it was not. The action of the respondent in refusing to credit the amount of the Federal estate tax with the collateral inheritance tax paid is sustained.
Reviewed by the Board.
Judgment will be entered under Rule 50.
*514 SEAWELL, dissenting: The estate of Joseph Riter, by reason of the exercise by him of a power under Thomas Riter's will, paid to the State of Pennsylvania the succession tax in controversy and should, in my opinion, be credited with the proper amount thereof in computing the estate tax of Joseph Riter.