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KAPLUN v. UNITED STATES

August 27, 1969

Else Kaplun, as Executrix of the Estate of Agnes S. Kaplun, Deceased, Plaintiff
v.
United States of America, Defendant


Tenney, District Judge.


The opinion of the court was delivered by: TENNEY

TENNEY, District Judge:

This is an action commenced by plaintiff on May 28, 1968, for the refund of Federal estate taxes in the amount of $22,337.89, plus interest as provided by law. This court has jurisdiction of this action under 28 U.S.C. § 1346.

 Both sides have moved herein for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.

 Briefly, the facts are not disputed and are as follows:

 Agnes S. Kaplun died testate on September 1, 1962. Her last will and testament was admitted to probate by the Surrogate's Court for New York County, State of New York, and letters testamentary were issued to Else Kaplun, as Executrix (the plaintiff herein) on December 13, 1962.

 Paragraph "SECOND" of decedent's will provided as follows:

 
"SECOND: I hereby give, devise and bequeath the entire collection of gold and platinum coins left me by my late beloved husband, to the State of Israel, upon condition that the same be kept and exhibited in the State of Israel, in an appropriate museum, that the same be marked and identified to the viewing public as 'The Collection of Dr. Aron A. Kaplun' and that the State of Israel will undertake to keep the said collection in perpetuity, never to be sold or otherwise disposed of. In the event it is found necessary, I hereby direct my executrix, hereinafter named, to appropriate whatever funds may be necessary from this estate for the purpose of effecting this bequest, having specifically in mind possible transportation and insurance charges for shipping to Israel."

 On November 27, 1964, the estate filed its Federal estate tax return showing a taxable estate of $196,685.50 and a tax due of $33,706.04, which was paid in full. In the estate tax return the estate took a deduction of $67,954.00 for a bequest to the State of Israel pursuant to paragraph "Second" of decedent's will. This deduction was taken pursuant to Section 2055 of the Internal Revenue Code of 1954, 26 U.S.C. § 2055, which provides for deductions for certain charitable bequests.

 After an audit, the Internal Revenue Service disallowed this deduction, increased the value of the coin collection, and made the resulting estate tax deficiency assessment on November 27, 1964, in the amount of $14,607.66 plus interest of $866.45, for a total of $15,484.11. That amount was paid by the estate, which now sues for its refund.

 It should be further noted that the Surrogate of New York County has held in a construction proceeding that the bequest in question constitutes a charitable trust (Estate of Agnes S. Kaplun, N.Y.L.J. 16 (April 6, 1965)), and that it accordingly qualifies as an allowable deduction in computing the New York State taxes under Sec. 249-s of the Tax Law of the State of New York, (McKinney's Consol. Laws, c. 60).

 Defendant no longer argues that the provisions of decedent's will referred to do not create a trust, nor is any claim made that the State of Israel, as a sovereign nation, could not qualify as a trustee. *fn1" Indeed, it appears that the coin collection was delivered to the State of Israel in December 1963, that the Minister of Education of the State of Israel has selected and designated the Kadman Numismatics Museum of the Museum Haaretz, Tel Aviv, Israel, as the repository where this collection is to be displayed, and that the above-named Museum is a public corporation organized under the laws of the State of Israel for educational and cultural purposes only. *fn2"

 Defendant does contend that, regardless of whether decedent created a trust for charitable purposes, Section 2055 of the Internal Revenue Code of 1954 does not provide for a charitable deduction for the decedent's bequest to the State of Israel.

 Section 2055(a) of the Internal Revenue Code of 1954 (26 U.S.C. § 2055(a)) provides as follows:

 
§ 2055. (a) In general - For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the ...

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