Mott v. United States

Walter Teagle died in 1962, leaving a gross estate of over $36 million. His will indicated that after payment of bequests, debts, and expenses, two-thirds of his estate was to be paid to the Teagle Foundation, which was a 501(c)(3) tax-exempt organization. The residue of the estate, including income earned during the period of administration, was left in trust to Walter’s widow, Jane Teagle. His executor, Frank Mott (plaintiff), made payments to the Teagle Foundation of nearly $14 million for the years 1963 to 1965, with most of the payments made in 1963. Mott also paid Jane Teagle sums of income during this period, including $100,000 in 1963. When Mott filed the estate’s estate tax return, he claimed a deduction of roughly $14.1 million for the charitable bequest to the Teagle Foundation. However, in filing the estate’s income-tax returns, Mott wanted to claim a deduction for the payments made to the Foundation. His argument was that these were payments to beneficiaries of the estate and were not otherwise claimed as charitable deductions. The payments to the foundation were made from the corpus of the estate, not from income, and thus were not subject to the income tax’s charitable exemption for payments made from income. The government (defendant) argued that this was essentially a double deduction, as the estate had already subtracted these amounts from its taxable estate and should not then be allowed a deduction against income. Mott then filed suit against the government in order to claim the income-tax deduction. Mott and the government filed cross-motions for summary judgment.