        THEATTORNEY                 GENERAL
                      OF   TElxAs


                      November 25, 1964


Honorable Robert S. Calvert            Opinion No. (C-353)
Comptroller of Public Accounts
Capitol Station                        Re:   Allowance of deduction
Austin, Texas                                at wife's death of value
                                             of life estate received
                                             at husband's prior death
                                             as a result of wife's
                                             election to take under
                                             husband's will disposing
                                             of entire community
Dear Mr. Calvert:                            estate.
     We quote the following excerpt from your letter reques~ting
the opinion of this office on the above captioned matter:
          "We desire the opinion of your office as to
     whether any consideration was received by a wife
     when she transferred her community half interest
     to a trust in exchange for a life estate in her
     husband's half of the community upon the husband's
     prior death and, if so, is her estate now entitled
     to a deduction for said consideration for inheri-
     tance tax purposes.
          "William Arthur Crumley died a resident of
     Ellis County on January 9, 1956, testate, survived
     by his wife, Ida C. Crumley, who is now deceased,
     having died a resident of Dallas County on March
     15, 1963.
          "1. All property of Mr. and Mrs. Crumley was
     community property and his Will set up a trust in
     favor of his wife on $165 386.03 of stocks (husband's
     community one-half $82,6&l.@.) limited to a fifteen
     year term with the whole to pass to her in fee if she
     lived fifteen years but to pass to his daughter,
     Frances, if she died prior to the end of the fifteen
     year period. Mrs. Crumley was 76 years old on January
     9, 1956, and had only a life expectancy of 8 years,
     so it was agreed at that time that Mrs. Crumley should
     be construed as having taken only a life estate.


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Honorable Robert S. Calvert, Page 2      Opinion No. (C-353)


         "2. The First National Hank in Dallas was
    appointed and qualified as Independent Executor
    of the estate and Trustee of the trust.
          "3. Mr; Crumley left his community one-half
     of the real estate,in the amount of $5,950.00 and
     his community one-half of the chattels in the sum
     of $1,625.00 to his wife, for life.
          "4. Mrs. Crumley was put to an election and
     elected to take,under the Will and received the
     dividends on the trust stocks until her death.
          "5 . The tax liability was calculated on only
     the one-half community interest of Mr. Crumley.
          '6. Mrs. Crumley is now dead and her comm-
     unity one-half interest is now passing in possession
     and enjoyment to the daughter and. . ./-the7 attorney
     for her estate, has made an inheritancF tay report
     to this office and under Schedule D, Deductions,
     has claimed $l4,425.60 as a deduction for consideration
     received by wife upon transfer of her community half
     interest to trust for a life estate only in husband's
     community half."
The federal cases do allow a deduction in computing the federal
estate tax on the theory that the wife has received consideration
for her transfer of her one-half of the community estate. The
cases reason that a denial of a deduction would result in double
taxation. VardellflsEstate v. C.I,R, 307 F.2d 688 (5th Cir.
1962); Wiliteleyv. United States, 214 F.Supp. 489 ( U.S. Dist.Ct.,
W.D. Wash   N.D   1963). Th federal estate tax is a tax upon
the priviiige of'transmissio: of property at death and is im-
posed upon the net value of the estate of the decedent. 28 Am.
Jur. 19, Inheritance, Estate and Gift Taxes, Sec. 5. Moreover,
the provisions of the 1954 Revenue Code specifically provide
for such credit or deduction. 26 U.S.C.A. i% 2036, 2043(a).
     It is settled that the Texas Inheritance Tax levied
under the provision of Article 14.01, Taxation-General, Vernon's
Civil Statutes, is levied u on the privile e of succession.
Cahn v. Calvert, 159 Tex. 38 5, 321 S.W.2d 869 (19%); Jones v.
State, 5 S.W.26 973 (Comm.App. 1928); State v. Hog@;,123 Tex.568,




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          Honorable Robert S. Calvert, Page 3       Opinion No. (C-353)


          70 S.W.2d 6g   72 S.W.2d 593, 594 (1934); Norton v. Jones, 210
          S.w.2d 820, 321 (Tex.Civ.App. 1948 error ref ) As stated by
          the court in Bethea v. Sheppard, 143 S.W.2d 947, (Tex.Civ.App.
          1940, error ref.) at page lOOr :
                    (1
                     . . .the thing burdened with the tax is the
               right to receive,,&distinguished from the right
               of transfer. . ~
               There is no pr,oblemof double taxation under the Texas
          Inheritance Tax statutes since no inheritance tax was levied
          on the wife's community one-half at the husband's death.
          Calvert v. Fort Worth National Bank, 163 Tex. 405, 356 S.W.2d
          '918‘(19b2)   Furthermore, Article 14.10, Tax. Gen., Vernon's
          Civil StatLes, sets out the only deductions which are per-
          mgsible in ascertaining the amount of inheritance taxes due
          the State. Article 14.10 reads, in part, as follows:
                    "The only deduction permissible under this
               law are the debts due by the estate, funeral expenses,
               expenses incident to the last illness of the deceased,
               which shall be due and unpaid at the time of death,
               all Federal, State, County and Municipal taxes due
               at the time of the death of the decedent, attorney's
               fees and Court costs accruing in connection with the
               assessing and collecting of the taxes provided for
               under this Chapter, and an amount equal to the value
               of any property forming a part of the gross estate
               situated in the United States received from any
               person who dies within five (5) years prior to the
               death of the decedent, thisdeduction, however,
               to be only in the amount of the value of the
               property upon which an inheritance tax was
               actually paid and shall not include any legal ex-
               emptions claimed by and allowed the heirs or legatees
               of the estate of the prior decedent. . .'
               None of the provisions of this Article cover the
          deduction here claimed. It has been held that the
          federal estate tax may not be deducted from the net
          value of the estate upon which a state inheritance tax




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Honorable Robert S. Calvert, page 4            Opinion No. (C- 353)


is levied and further that Article 14.10 (formerly
Article 7125) listing the permissible deductions in
determining the amount due the State as inheritance
taxes is one of limitation. Walker v. Mann, 143 S.W.2d
152 (Tex.Civ.App.,l$+O, error ref.)
                      SUMMARY
                      -------
         In computing inheritance taxes no deduction
    may be allowed for the value of the life estate of
    the decedent received at her husband's prior death
    as a result of her election to take under the
    hu;;;;d's will disposing of the entire community
          .
                                      Yours very truly,
                                      WAGGONER CARR
                                      Attorney General of Texas


                                      By:fl&/CCfifbH~~&~,
                                         Marietta McGreg
                                         Assistant Attor

MMcGP:sjl
APPROVED BY OPINION COMMITTEE
W. V. Geppert, Chairman
John Reeves
George Black
Malcolm Quick
Cecil C. Rotsch
APPROVED FOR THE ATTORNEY GENERAL
BY: Roger Tyler




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