Estate of Bahen v. United States
United States Court of Claims
305 F.2d 827 (1962)
J. William Bahen worked as an executive for the Chesapeake and Ohio Railway Company (railway company). While Bahen was employed, the railway company introduced two benefit plans, the Death Benefit Plan and the Deferred Compensation Plan. The Death Benefit Plan entitled spouses of employees to receive a payment equal to three months of the employee’s salary if the employee died before becoming eligible for retirement. The Deferred Compensation Plan provided for payments in one of two situations. In the first, the railway company would pay a fixed amount, in installments, to the spouse of an executive if the executive died before his sixtieth birthday. Alternatively, the railway company would pay an executive himself the fixed amount, in installments, if the executive became incapacitated before retirement. The railway company implemented both plans unilaterally, and Bahen continued to work there well after both were introduced. Bahen died, and his wife received payments from the railway company under both benefit plans. Bahen’s estate (plaintiff) did not include the amounts payable under the plans in his gross estate. The Internal Revenue Service (IRS) (defendant) determined on audit that such amounts should have been included. The parties brought the issue to the United States Court of Claims.
Rule of Law
Holding and Reasoning (Davis, J.)
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