Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 69-8

1969-1 C.B. 219

IRS Headnote

Damages recoverable for wrongful death in an action brought under the Federal Death on the High Seas Act are not includible in the decedent's gross estate; but damages recoverable for the pain and suffering of the decedent are includible.

Full Text

Rev. Rul. 69-8

Advice has been requested whether the value of an amount recoverable as damages in an action brought under the Federal Death on the High Seas Act is includible in the decedent's gross estate for Federal estate tax purposes.

The decedent lost his life while a passenger in a commercial aircraft that crashed into the Atlantic Ocean more than a marine league from the shore of the State of New York. Decedent was survived by his widow and four children. Subsequently, an action was brought by the executor of decedent's estate under the Federal Death on the High Seas Act, Public Law 165, Sixty-sixth Congress, 46 U.S.C. 761-768, to recover damages for the wrongful death of the decedent. Damages were asked in the amount of 25x dollars, representing the pecuniary benefits the widow and children of the decedent might have expected had he lived. Damages were also asked in the amount 1x dollars, representing the value placed on the pain and suffering of the decedent.

Section 2033 of the Internal Revenue Code of 1954 provides that the value of the gross estate shall include the value of all property to the extent of the interest therein of the decedent at the time of his death.

The Death on the High Seas Act provides:

"Sec. 761. Whenever the death of a person shall be caused by wrongful act, neglect, or default occurring on the high seas beyond a marine league from the shore of any State, or the District of Columbia, or the Territories or dependencies of the United States, the personal representative of the decedent may maintain a suit for damages in the District Courts of the United States, in admiralty, for the exclusive benefit of the decedent's wife, husband, parent, child, or dependent relative against the vessel, person, or corporation which would have been liable if death had not ensued.

"Sec. 762. The recovery in such suit shall be a fair and just compensation for the pecuniary loss sustained by the persons for whose benefit the suit is brought and shall be apportioned among them by the court in proportion to the loss they may severally have suffered by reason of the death of the person by whose representative the suit is brought."

In Lawson v. United States, 88 F. Supp. 706 (1950), modified on other grounds, 192 F. 2d 479 (1951), certiorari denied, 343 U.S. 904 (1952), the court held that the purpose of the statute is to compensate those who actually lose substantial rights of support by reason of wrongful death. In assessing damages consideration must be given to the deceased's age, earning capacity, health, prospects of advancement, and surviving beneficiaries. The measure of damages is the amount of pecuniary benefits which the beneficiary might reasonably expect had the deceased lived. The City of Rome, 48 F. 2d 333 (1930).

The personal representative of the decedent, while not given any right of action on behalf of the estate, is invested as trustee for the designated survivors with the right to recover for their benefit such damages as will compensate them for the pecuniary loss they sustained by reason of the decedent's death. This right of action arose with the decedent's death by virtue of the statute, which also governs the distribution of the proceeds. The decedent in his lifetime never had an interest in either the right of action or the proceeds. Therefore, with respect to damages recoverable under the Act, nothing passed from the decedent to the beneficiaries which would be includible in his gross estate for Federal estate tax purposes. See Rev. Rul. 54-19, C.B. 1954-1, 179, wherein it is held that amounts receivable under the New Jersey "Death by Wrongful Act" statute, for the exclusive benefit of the persons entitled to take any intestate personal property of the decedent, are not includible in the decedent's gross estate.

With respect to the damages asked on account of the pain and suffering of the decedent, the Death on the High Seas Act itself does not provide for survival of a right of action belonging to the deceased. Decker v. Moore-McCormack Lines, Inc., 91 F. Supp. 560 (1950); Noble v. Moore-McCormack Lines, Inc., 96 F. Supp. 369 (1951). But neither does the Act preclude recovery of such damages where the survival of a cause of action is provided by applicable state law. Petition of Gulf Oil Corp., 172 F. Supp. 911 (1959); Montgomery v. Goodyear Tire & Rubber Co., 231 F.Supp. 447 (1964). To the contrary, the Act provides in section 767:

"The provisions of any state statute giving or regulating rights of action or remedies for death shall not be affected by this chapter * * *"

The Death on the High Seas Act, consequently, does not provide the exclusive measure of damages. In the Gulf Oil case the court pointed out that the maritime law is not a complete and perfect system so admiralty courts draw upon several sources, including state laws. This includes the application of state survival statutes by admiralty courts.

In view of the foregoing, it is concluded that although the Death on the High Seas Act makes no provision for recovery for decedent's pain and suffering, it in no way abrogates such right of recovery where there is a pertinent state statute to effect survival of the liability for the benefit of the estate. Accordingly, to the extent that any recoverable damages are for the pain and suffering of the decedent, the value thereof is includible in his gross estate.