.   .




                        E   ATTORNEY          GENERAI.
                               OF    TEXAS




                             September 7, 1961

    Honorable Robert S. Calvert         Opinion No. WW-1134
    Comptroller of Public Accounts
    Capitol Station                     Re:   Deductibility for inheri-
    Austin, Texas                             tance tax purposes of
                                              administration expenses
                                              incurred in connection
                                              with the administration
                                              of the entire general
    Dear Mr. Calvert:                         community estate.
           You have requested,that we advise you as to whether fees
    of the executor, administrator, accountant, appraiser and probate
    court costs should be allowed in full as a deduction for inheri-
    tance tax purposes upon the death of the first spouse in those
    cases in which there is an administration of all of the general
    community estate.
           All of the fees enumerated by you and the probate court
    costs may properly ‘bereferred to as expenses of administration
    and, except in certain circumstances which we will specifically
    note, the same rules as to deductibility for inheritance tax pur-
    poses will apply.
           In many instances,    with certain  exceptions not pertinent
    to your question, lthe entire community estate, and net merely
    the decedent’s interest   therein,   is subject to administration
    upon the death of either member of the community. 14-B Tex.Jur.
    185, Decedent’s Estates, Sec. 1126. It ,sohappens that the cases
    we will hereafter discuss were concerned with fact situations in
    which thehusband predeceased the wife; however, the conclusions
    we draw from these cases would be same if the wife dies first
    and if the entire community estate is subjected to administration
    at her death.
           It has been held that the community oronertv 1~sgenerally
    regarded as belonging to the estate of the deceased husband, subject
    to administration by his executor and tne payment of his or the
    community debts. Therefore, there can be nq,dismemberment of the
                                                   ::,
    ’ For a discussion of various types of administration under the
    Probate Code see "Community Property in the Administration of
    Estates", 33 T.L.R. 1012 and "Probate Code Changes in Administra-
    tion of Community Property", 34 T.L.R. 1012.
Honorable Robert S. Calvert, Page 2    Opinion No. WW-1134


estate for administration purposes. Lovejoy v. Cockrell, 63 S.W.2d
1009 (Comm.App., 1933); Tracy v. Lion Oil Co., 312 S.W.2d 562,
(Civ.App. 1958, no writ history); Goggans v. Simmons, 319 S.W.2d
442 (Civ.App. 1959, error ref.,n.r.e.).

       Under Article 3630, V.C.S., as that article stood prior to
the adoption of the Probate Code, it was provided that until parti-
tion of community property is applied for by the surviving spouse
and made, "the executor or administrator of the deceased shall re-
cover possession of all such common property and hold the same in
trust2for the benefit of the creditors and others entitled there-
to."
       It has been stated that the fact that the community pro-
perty is subject to the debts of the deceased husband and to
administration by his executor may be regarded as an elementary
principle under the laws of Texas. Nesbitt v. First National Bank
of San Angelo, 108 S.W.2d 318, 320 (Civ.App., 1937, no writ history).
See also Speer's Law of Marital Rights in Texas, 3rd Ed. 820, Sec.
657. Under the decision in Jenkins v. First National Bank of
Coleman, 101 S.W.2d 845 (Civ.App. 1937, no writ history), the
rule would be applicable not only to estates administered under
the jurisdiction of probate courts but also to estates administered
by independent executors.
       In view of these principles, it has been held that where
the entire community estate has been subjected to administration
by the executor of a deceased husband, only one-half of the admin-
istration expenses was attributable to the decedent's portion of
the estate and that, therefore, only one-half could be deducted in
computing the Federal estate tax. Lang's Estate v. Commissioner
of Internal Revenue, 97 F.2d 867, 872 (C.C.A. gth, 1938); Estate
of Oscar Leavy, 42 B.T.A. 991 (1940); Schumacher v. Commissioner,
8 T.Ct. 453 (1947). In the case last cited, only one-half of the
attorney's fees paid for assistance in probate work were allowed
as a deduction in determining the estate tax on his portion of
the community property. Also allowed as a deduction were one-half
of the payments for accounting services and one-half of the exe-
cutor's fees.
       We are in accord with the results reached in these decisions
and think them applicable in determining allowable deductions for
Texas inheritance taxes. However, in certain instances, even
though the entire community estate is subject to administration,
with the result that only one-half of the general expenses of the

2 Article 3630 was omitted in the Probate Code, but partition may
still be had. See 33 T.L.R. 1012, 1025.
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            Honorable Robert S. Calvert, Page 3      Opinion No. W-1134


            administration are deductible from the decedent's one-half of the
            community property for inheritance tax purposes, where an attorney's
            fee is paid by the estate for services in connection with Federal
            and State3 death taxes, we are of the opinion that such amount
            should be deductible in full since it is attributable entirely to
            the decedent's share of the community property. This was the re-
            sult reached in Lang's Estate, supra.
                   Our holding on this point as to the ded,Actibilityof only one-
            half of the expenses of administration is limited to those instances
            in which the administration of both shares was necessary for the
            settlement of the affairs of the entire community, as for example
            where it was necessary to determine the amounts of community debts
            and liquidate assets to pay them. If the administration of the
            community is totally unnecessary except for the purpose of facili-
            tating the computation and payment of Federal and State death
            taxes due by the estate of the decedent, we are of the opinion that
            the entire expenses of the administration should be allowed as a
            deduction. Succession of Helis, 75 So.2d 221 (La.Sup., 19%).       _
                   In those instances in which the decedent possessed separate
            property as well as community property, the expenses of administra-
            tion should be apportioned between the separate and community pro-
            perty in accordance with the value of the decedent's estate in
            computing inheritance taxes. Re Coffee's Estate, 120 P.2d 661
            (Cal.Sup. 1.941). The Goggans case, supra, is a Texas case which
            has reached the same result as to apportioning administration
            expenses. We quote the following excerpt from page 446:
                         "The other points relate to charging
                      the community estate with the funeral
                      expenses of the testator, and to charging
                      the expenses of administration propor-
                      tionately to the separate estate of the
                      testator and community estate.
                         "It seems to be the law that funeral
                      expenses of a deceased spouse in a reason-
                      able amount are primarily chargeable to
                      the community estate. Goldberg v. Zellner,
                      Tex.Com.App., 235 S.W. 870; Norwood v.
                      Farmers & Merchants Nat. Bank of Abilene,
                      Tex.Civ.App., 145 S.W.2d 1100, error
                      refused; Richardson v. McCloskey, Tex.
                      Com.App., 276 S.W. 680; Hacker v. Piper,
                      Tex.Civ.App., 2 S.W.2d 997.

            3 Article 14.10, Ch. 14, Title 122A, 20-A Tax.-Gen , V.A.T.S.; ex-
            pressly provides that "attorney's fees and Court costs accruing
            in connection with the assessing and collecting of taxes provided
            for under this chapter. . ." shall be deductible.
                                                                -   -.




Honorable Robert S. Calvert, Page 4   Opinion No. WW-1134



            "Nor do we perceive any error in
         the action of the court in charging
         expenses of administration propor-
         tionately to the separate estate of
         the deceased and the community es-
         tate. Appellant inveighs against
         the practice of administering on
         the estates of living persons and
         charging them with administration
         expenses. The decisions, however,
         seem to authorize what was done in
         this case. 14-B Tex.Jur., p. 185,
         sec. 11~6; Huth v. Huth, Tex.Civ.
         APP., 187 S.W.523; Norwood v.
         Farmers & Merchants Nat. Bank of
         Abilene, supra; Lovejoy v. Cockrell,
         Tex.Com.App., 63 S.W.2d 1009."
       Article 14.10, supra, allows the full deduction of funeral
expenses. Other than this, the above stated rules of apportioning
expenses of administration would be determiniative of the amount
of allowable deductions for inheritance tax purposes.

                       SUMMARY

         Where the entire community estate is
      subjected to administration, only one-half
      of the general administration expenses are
      attributable to the decedent's portion of
      the estate. Therefore only one-half of
      such expenses are deductible for inheri-
      tance tax purposes. However, if adminis-
      tration of the community is unnecessary
      except for the purpose of facilitating
      the computation and payment of Federal
      and State death taxes, the entire ex-
      penses of administration are deductible.
      Attorney's fee paid by the estate for
      services solely in connection with
      Federal and State taxes are deductible
      in full. If the decedent's estate is
      composed of both separate and community
      property, the expenses of administration
      should be apportioned between the de-
      cedent's separate and community property
Honorable Robert S. Calvert, Page 5     Opinion No. WW-1134


       in accordance with the value thereof
       and the allowable deduction for inheri-
       tance tax purposes computed In accordance
       with such apportionment. a
                               Very truly yours,
                               WILL WILSON
                               Attorney General of Texas




MMcGP:jp
APPROVED:
OPINION COMMITTEE:
W. V. Geppert, Chairman
W. E. Allen
Gordon C. Cass
Robert T. Lewis
F. C. Jack Goodman
REVIEWED FOR THE ATTORNEY GENERAL
By: Howard W. Mays
