Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 56-6

1956-1 C.B. 660

Section 6103 -- Tax Return Disclosure

IRS Headnote

Deficiencies in Federal income taxes assessed against the decedent resulting from nonrecognition of his minor son as a member of a partnership are deductible from decedent's gross estate in the full amount paid by decedent's estate.

Full Text

Rev. Rul. 56-6

Advice has been requested relative to the amount allowable as a deduction from the decedent's gross estate for deficiencies in Federal income taxes assessed against the decedent resulting from a determination by the Internal Revenue Service that the decedent's minor son may not be recognized as a member of an alleged family partnership.

The decedent made a purportedly absolute transfer of an interest in his business to his minor son. He filed a gift tax return for the year of the alleged transfer, reporting a gift to his son. Thereafter, the business was conducted in partnership form. However, for certain years decedent's minor son was not recognized as a member of a partnership for Federal income tax purposes, but no action was taken in a State court to declare the partnership invalid as to the son. Deficiencies in Federal income taxes were assessed against the decedent's estate and overassessments of tax were credited to the son. It appears that the deficiencies are collectible in full from the estate, the son's guardian not having consented to crediting the overassessments, which have been refunded to the guardian for the benefit of the son, and no part thereof was loaned or used for the benefit of the decedent's estate. No transferee liability of the son for the deficiencies was asserted.

Section 812(b) of the Internal Revenue Code of 1939 authorizes the allowance of deductions for claims against the estate, but such deductions do not include any income taxes upon income received after the death of the decedent. Section 81.37 of Estate Tax Regulations 105 provides that unpaid taxes upon income received during the decedent's lifetime are deductible but taxes upon income received after death are not deductible. The value of the gross estate includes the value of all property to the extent of the interest therein of the decedent at the time of his death and encompasses any valid claims against others, but in the circumstances of the present case it appears that no claim of the estate against the son or his guardian exists or is asserted.

Accordingly, it is held that the estate is entitled to a deduction under section 812(b) of the Internal Revenue Code of 1939 for the full amount of the income taxes of the decedent assessed against the estate and paid out of the assets of the estate.