Bahr v. Commissioner of Internal Revenue‪.‬

Two brothers, Frank V. and Eugene L. Bender, were universal partners, having no individual property or debts. Frank died March 18, 1934, leaving a will of which Eugene was executor, and which required all his debts to be paid and then gave Eugene all his property of every sort. Eugene qualified as executor but before completing the administration died December 1, 1934, leaving a will of which the petitioners are executors. A return for federal estate taxes on Franks estate had been made by Eugene as executor, but the taxes had not been paid when Eugene died. There was no controversy over them, and they have been paid by petitioners. The estate taxes of Eugenes estate are in dispute, the Commissioner having assessed a deficiency, which the Board of Tax Appeals, In re Benders Estate, 41 B.T.A. 80, confirmed. The errors assigned in the petition to the Board and elaborated here are: (1) The Commissioner in his computation of the deduction for property previously taxed erred in using the net estate of the prior decedent (Frank) as a basis instead of the gross estate. (2) He erred in reducing the deduction for debts evidenced by notes on partnership property from three-fourths of $406,000 to one-half of $406,000. (3) He erred in disallowing deductions of $61,464 and $44,902 for federal estate tax and State inheritance tax respectively on the estate of Frank, which became debts of Eugenes estate.