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nonresident at the time of his death is a member of a partnership having assets in New York, his interest therein is considered personal property, rather than a mere chose in action, and is subject to the transfer tax of that state.10 106

Where it is admitted that all the property belonging to a commercial partnership has been regularly assessed, and all taxes thereon duly paid, the interest of a partner in the same property is not a distinct and separate taxable entity, within the Louisiana constitutional provision that the inheritance tax shall not be enforced against property which has borne its just proportion of taxes.107

The interest of a nonresident member of a limited. partnership association is liable to the inheritance tax, where real and personal property of the association is situated within the state.107

§ 71. Bequest in Discharge of Debt or Obligation. It may seem that a bequest in satisfaction of a debt is not a legacy within the meaning of the act taxing legacies, since a legacy implies only bounty or benevolence.108 Nevertheless it has been declared that all transfers made by will are subject to the transfer tax, irrespective of whether they are made as a gratuity or in discharge of some debt or other obligation.' Said the New York court of appeals in the Gould

109

106 Estate of King, 30 Misc. Rep. 575, 63 N. Y. Supp. 1100, order affirmed, 56 App. Div. 617, 67 N. Y. Supp. 766.

107 Succession of Stauffer, 119 La. 66, 43 South. 928.

107a Estate of Small, 151 Pa. 1, 25 Atl. 23.

108 Estate of Rogers, 2 Con. Sur. 198, 10 N. Y. Supp. 22. According to Matter of Underhill, 2 Con. Sur. 262, 20 N. Y. Supp. 134, when a bequest is made to a creditor on condition that he accept it in full satisfaction of all unsettled accounts and claims against the testator, it is not subject to the inheritance tax if the accounts exceed the sum bequeathed. 109 Estate of Rogers, 71 App. Div. 461, 75 N. Y. Supp. 835, affirmed, 172 N. Y. 617, 64 N. E. 1125.

case,110 where a son of the testator accepted payment for his services under a provision of the will: "It matters not what the motive of a transfer by will may be, whether to pay a debt, discharge some moral obligation, or to benefit a relative for whom the testator entertained a strong affection, if the devise or bequest be accepted by the beneficiary, the transfer is made by will and the state makes a tax to impinge upon that performance."

Accordingly, it has been decided that a bequest to a physician "in view and in consideration of his unremitting care and attention to me during my years of sickness without asking any reward for services rendered," is subject to the transfer tax; 111 and that a bequest to a priest or his successors to be used in saying low masses for the repose of the soul of the testatrix and three others, is not exempt from the transfer tax as funeral expenses.'

112

Referring to the Gould case above, where the testator's son consented to accept payment for his services under a provision in the will, the New York court, in Estate of Daniell,113 said: "It is only where the devise or bequest is accepted by the beneficiary that the transfer is made by the will, and the statute in question makes a tax to impinge upon that performance." This is in recognition of the well-established rule that a legatee may renounce his legacy, and that when he does so there is no transfer to him, so far as concerns that particular testamentary gift, to which the inheritance tax will attach.114

110 Estate of Gould, 156 N. Y. 423, 51 N. E. 287.

111 Estate of Doty, 7 Misc. Rep. 193, 27 N. Y. Supp. 653.

112 Estate of McAvoy, 112 App. Div. 377, 98 N. Y. Supp. 437. 113 Estate of Daniell, 40 Misc. Rep. 329, 81 N. Y. Supp. 1033. 114 See "Effect of Renunciation of Legacy," post, sec. 162.

A bequest of a promissory note to its maker has been held a transfer taxable at its fair market value.115 And when a bequest of the residue of the estate of the testator includes a note by the legatee, the amount of the note is subject to the legacy tax.116 Where the testator directed his executor to withdraw one-half of the claims he had presented to his brother's executor, and forgave that half, it was held that this did not relieve any part of the whole sum from taxation (it being a bequest of that half to the estate), and have the effect of making the tax on that half assessable to the executrix in her official capacity and not as an individual.117

In Pennsylvania a gift by a testator to his creditor, in satisfaction of a debt, of the precise sum due, is said to fall neither within the letter nor the spirit of the collateral inheritance tax; 118 and a debt released by a will, which was previously barred by the statute of limitation, passes nothing, and the amount of the debt is not liable to be assessed with a collateral inheritance tax.119

§ 72. Advancements and ordinary gifts inter vivos not in contemplation of death are not within the provisions of the inheritance tax statutes.120 However, it has been thought that sums loaned and advanced by the testator to his sons are not advancements within this rule, a distinction being made between the words "advance" and "advancement.'' 121 But a deed of 115 Morgan v. Warner, 45 App. Div. 424, 60 N. Y. Supp. 693, affirmed, 162 N. Y. 612, 57 N. E. 1118.

116 Matter of Tuigg, 15 N. Y. Supp. 548.

117 Estate of Wood, 40 Misc. Rep. 155, 81 N. Y. Supp. 511.

118 Forster v. Gillam, 13 Pa. 340.

119 Stinger v. Commonwealth, 26 Pa. 429.

120 Matter of Edgerton, 35 App. Div. 125, 54 N. Y. Supp. 700, affirmed, 158 N. Y. 671, 52 N. E. 1124; Matter of Spaulding, 49 App. Div. 541, 63 N. Y. Supp. 694.

121 Matter of Bartlett, 4 Misc. Rep. 380, 23 N. Y. Supp. 990.

gift to a son, made as an advancement and chargeable as such against his ultimate share of the estate of the father under a will existing at the time of the deed, was held a "succession," under the war revenue act of June 30, 1864, as a conveyance without "valuable and adequate consideration," and chargeable with a tax of one per

cent.1

122

122 United States v. Banks, 17 Fed. 322.

CHAPTER V.

POWERS OF APPOINTMENT.

§ 78. Creation of Power as Effecting Taxable Transfer.
§ 79. Exercise of Power as Effecting a Taxable Transfer.
Constitutionality of Tax on Exercise of Power.

§ 80.

§ 81.

Acts Constituting an Exercise of Power.

§ 82. Change of Realty to Personalty by Equitable Conversion.

§ 83. Nonresidents-Situs of Property.

§ 84. Probate Court Having Jurisdiction.

§ 85. Rate of Taxation-Relationship of Parties.

§ 86. Time for Assessment of Tax.

§ 78. Creation of Power as Effecting Taxable Transfer.-Inheritance taxation, in its application to powers of appointment, presents questions that do not lend themselves to an easy solution; and the first of these questions is, What act constitutes the taxable transfer or succession, the creation of the power by the donor, or the execution of the power by the donee? The idea has gained recognition in some jurisdictions that the transfer subject to the tax takes place upon the death of the creator of the power rather than at the time when the power is exercised and becomes operative by the death of the donee of the power; that the source of the title is the instrument creating the power, into which the names of the appointees must be read, and their right of succession vests, not when the power is executed and becomes operative by the death of the donee of the power, but at the time when the instrument which created it went into effect. Hence if a will creating a power of appointment became effective through the death of the testator prior to the enactment of a statute imposing an inheritance tax, bequests made in the exercise of the power after the enactment of such statute are not taxable; the

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1 Matter of Stewart, 131 N. Y. 274, 14 L. R. A. 836, 30 N. E. 184; Will of Harbeck, 161 N. Y. 211, 55 N. E. 850; Commonwealth v. Duffield,

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