Hetson v. United States
United States Court of Claims
209 Ct. Cl. 641 (1976)
- Written by Tom Squier, JD
Facts
Starting in 1955, Isidor Hetson and his two sons, Leonard and Harold, owned a corporation (the company) together. Isidor owned all of the voting stock, so that he had control over the company. To secure Leonard and Harold’s continued involvement in the company despite their lack of control, Isidor, his sons, his wife, Fannie, and the company entered into an agreement that guaranteed salaries for Isidor and his sons, and an annuity in the amount of $13,000 per year for Fannie, which would begin payments after Isidor died. The salary for Isidor was contracted to be paid so long as Isidor was alive, regardless of whether he was still contributing to the business in any way. After Isidor died in 1963, his estate (plaintiff) included the value of Fannie’s annuity in the gross estate but claimed a refund, which the Internal Revenue Service (IRS) (defendant) denied. Under § 2039(a) of the Internal Revenue Code, if a decedent was entitled to annuity payments at the time of his death, the value of the annuity must be counted in his gross estate. The estate sued in the United States Court of Claims.
Rule of Law
Issue
Holding and Reasoning (Bernhardt, J.)
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