The opinion of the court was delivered by: INCH
In this action plaintiff seeks to recover estate taxes amounting to $ 64,515.89, with interest, alleged to have been illegally, wrongfully and erroneously assessed and collected from plaintiff as Executor of the Last Will and Testament of Kate R. Simons, deceased.
The decedent had a general power of appointment under an inter vivos trust created by one Sidney R. Kirkman on April 22, 1931, which had a value at decedent's death of $ 274,140.33.
On May 17, 1940 decedent executed her last will and testament in which she exercised her power of appointment in favor of certain of her relatives. Decedent died on August 21, 1949 and her will was duly admitted to probate on March 9, 1950.
Plaintiff filed an estate tax return claiming that the property subject to the said power of appointment was not subject to tax, but, in order to avoid the running of interest, paid the tax of $ 64,515.89 on the property and now brings this action for a refund.
The statute involved herein provides as follows:
Internal Revenue Code of 1939
'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 of the United States --
'(a) Decedent's interest. To the extent of the interest therein of the decedent at the time of his death;
'(f) (as amended by Sec. 2 of Powers of Appointment Act of 1951, c. 165, 65 Stat. 91) Powers of Appointment
'(1) Property with respect to which decedent exercises a general power of appointment created on or before October 21, 1942. To the extent of any property with respect to which a general power of appointment created on or before October 21, 1942, is exercised by the decedent (1) by will or (2) by a disposition which is of such nature that if it were a transfer of property owned by the decedent, such property would be includible in the decedent's gross estate under subsection (c) or (d); but the failure to exercise such a power or the complete release of such a power shall not be deemed an exercise thereof.
'If before November 1, 1951, or within the time limited by paragraph (2) of section 403(d) of the Revenue Act of 1942, as amended, in cases to which such paragraph is applicable, a general power of appointment created on or before October 21, 1942, shall have been partially released so that it is no longer a general power of appointment, the subsequent exercise of such power shall not be deemed to be the exercise of a general power of appointment.
'(3) Definition of general power of appointment. For the purposes of this subsection the term 'general power of appointment' means a power which is exercisable in favor of the decedent, is estate, his creditors, or the creditors of his estate; except that -- .' 26 U.S.C.A. § 811. (Emphasis supplied.)
It is the Government's contention that the decedent had a general power of appointment created prior to October 21, 1942, which she never released in any manner, and which she fully exercised in her will, so that under the above statute the value of the ...