Fillman v. United States

355 F.2d 632 (1966)

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Fillman v. United States

United States Court of Claims
355 F.2d 632 (1966)

  • Written by Eric Miller, JD

Facts

Charles Wehrli, a resident and citizen of Switzerland, owned and operated a bank in Zurich from 1937 to his death in 1948. In 1939, fearing a German invasion, Wehrli caused the creation of two corporations in Argentina—Stella S.A. Argentine Commercial Industrial y Financiera (Stella) and San Juan Sociedad Anonima Commercial Financiera and Industrial (San Juan)—to hold his assets. Stella and San Juan opened accounts with the Guaranty Trust Company of New York (Guaranty Trust) to buy and sell securities on Wehrli’s behalf. Wehrli’s son was designated to provide instructions to Guaranty Trust, and in correspondence, the son made it clear that he and his father were the sole owners of all securities in the accounts. Upon Wehrli’s death, the assets held in the Guaranty Trust accounts—including various stocks in United States corporations and bonds issued by the government of Uruguay—were distributed to Wehrli’s heirs. After Wehrli’s son filed an estate tax return as a nonresident noncitizen, the United States Internal Revenue Service (IRS) (defendant) assessed a deficiency on the ground that the taxes paid failed to reflect Wehrli’s ownership of all assets contained in the Guaranty Trust accounts. Wehrli estate executor Henry Fillman (plaintiff) brought suit for a refund in the United States Court of Claims.

Rule of Law

Issue

Holding and Reasoning (Cowen, C.J.)

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Casebooks

Estate, Trust, and Gift Taxation

Key Terms

  • Estate TaxA tax imposed when an estate’s net assets exceed an exclusion limit and the assets are to be distributed to beneficiaries other than a spouse. Estate tax is subject to an unlimited marital deduction that allows all of the estate to pass to a spouse free of estate tax.
  • SecuritiesFinancial instruments sold in financial markets, including stocks, bonds, debentures, and other interests representing shares of ownership of companies.
  • Alter-Ego DoctrineA theory under which a plaintiff may pierce the corporate veil and hold individual or corporate shareholders or a corporate affiliate personally liable for corporate debts. A claim under the alter-ego theory alleges that a shareholder or affiliated entity used the corporation as a mere tool, business conduit, or façade to cover the shareholder's personal dealings. In the context of labor law, the doctrine is invoked when a unionized employer seeks to evade collective-bargaining responsibilities through the formation of an open shop that is substantially the same company.
  • Court of Federal ClaimsThe successor court to the old Court of Claims, with jurisdiction over monetary claims against the United States government.
  • Gross EstateThe portion of a decedent’s estate, both probate and non-probate, that is subject to estate tax. The gross estate may also be referenced as the “taxable estate.”
  • Nonresident Alien Individuals (Internal Revenue Code)Codified at §§ 871–879, describes the obligations of nonresident alien individuals to pay income tax on earnings from sources within the United States.

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