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tation has been adopted in a number of other states besides New York.23

The question has naturally arisen, in fixing the inheritance tax, whether the amount of the exemption can be deducted from an estate or distributive share which exceeds in value the amount of the exemption, or whether the exemption is restricted to such estates or distributive shares as do not exceed the exemption in amount. This question comes near being encroached upon in the preceding paragraph. It will that part of it passing to persons not specifically exempted equals or exceeds five hundred dollars in value."

A legacy of less than five hundred dollars to a niece who has stood in the relation of child to the testator for twenty years or more, which legacy is exempt from the tax, can be added to legacies to nephews and their wives in order to make the aggregate estate exceed five hundred dollars. She is not a person "specifically exempt," as is a bishop: Estate of Murray, 96 App. Div. 128, 89 N. Y. Supp. 71.

For other cases construing the New York statutes, see Estate of Howe, 112 N. Y. 100, 2 L. R. A. 825, 19 N. E. 513; Estate of Sherwell, 125 N. Y. 376, 26 N. E. 464; Estate of Swift, 2 Con. 644, 16 N. Y. Supp. 193, affirmed, 64 Hun, 629, 19 N. Y. Supp. 292, modified in 137 N. Y. 77, 18 L. R. A. 709, 32 N. E. 1096; Estate of Peck, 24 Abb. N. C. 365, 9 N. Y. Supp. 465; Estate of Underhill, 2 Con. 262, 20 N. Y. Supp. 134; Estate of Bird, 2 Con. 376, 11 N. Y. Supp. 895; Estate of Bliss, 6 App. Div. 192, 39 N. Y. Supp. 875.

Under the New York statute of 1903, in ascertaining whether a sister is exempt as to real and personal property willed her by her brother, both the realty and the personalty should be added together to ascertain whether or not the value exceeds ten thousand dollars: Estate of Hallock, 42 Misc. Rep. 473, 87 N. Y. Supp. 255.

23 Commonwealth v. Boyle, 2 Del. Co. Rep. 335; Herriott v. Bacon, 110 Iowa, 342, 81 N. W. 701; Gilbertson v. McAuley, 117 Iowa, 522, 91 N. W. 788; Stelwagen v. Durfee, 130 Mich. 166, 89 N. W. 728; Estate of Howell, 147 Pa. 164, 23 Atl. 403; Dixon v. Rickerts, 26 Utah, 215, 72 Pac. 947.

Said the court in the above case of Estate of Howell, 147 Pa. 164, 23 Atl. 403: "The intention of the legislature is clear, that the liability to the tax is to be determined, not by the amount of the legacy, but by the clear value of the estate passing to persons or bodies corporate not exempt from taxation. If the net value of the estate to be distributed exceeds two hundred and fifty dollars, it follows, therefore, that legacies or distributive shares passing to collaterals, strangers in blood, etc., are liable to the tax."

be considered further in a subsequent chapter; so also will the deduction of the exemption in fixing progressive rates of taxation.23 In Iowa when an estate does not contain above one thousand dollars after payment of all debts, it is wholly exempt; if otherwise, all property passing to collateral distributees is subject to the tax. There is no exemption where the value of the estate, after the debts are paid, exceeds one thousand dollars.23b

§ 135. Property in Foreign Jurisdiction.-The Massachusetts statute, after providing that executors and administrators shall be liable for the taxes it imposes, continues: "But no bequest, devise or distributive share of an estate which shall so pass to or for the use of a husband, wife, father, mother, child or adopted child of the deceased, unless its value exceeds ten thousand dollars, and no other bequest, devise or distributive share of an estate unless its value exceeds one thousand dollars, shall be subject to the provisions of this act." Speaking of this provision, Justice Morton says: It is plain "that the 'bequest, devise or distributive share' referred to is of property within the jurisdiction of this commonwealth. The section deals with property in this commonwealth, and nowhere else. The word 'estate' in the connection in which it is used means, and can only mean, property in this commonwealth. It necessarily follows that in determining whether 'a bequest, devise or distributive share' is or is not exempt, the treasurer and receiver general have no right to take into account the amount received by the devisees or distributees from property situated in another state or country. To do so would

23a See sec. 225, post.

23b Herriott v. Bacon, 110 Iowa, 342, 81 N. W. 701; Gilbertson v. McAuley, 117 Iowa, 522, 91 N. W. 788; Morrow v. Durant, 140 Iowa, 437, 17 Ann. Cas. 850, 23 L. R. A., N. S., 474, 118 N. W. 781.

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be to tax the devisee or distributee indirectly for such property to an amount equal to the amount of the exemption here, and would be contrary to the principle on which the legacy and succession tax is based, which is that it is an excise tax upon the privilege of passing title to property on the death of its owner. In order to be valid the tax must be levied by the authority that confers the privilege upon property which passes by virtue of the privilege."

99 230

§ 136. Exemption Based on Relationship of Parties.-Exemptions are sometimes made because of the relationship between the decedent and the heir or legatee. Exemptions of this kind were more numerous under the former statutes than under the recent ones, the tendency having been to bring all persons, if the valuation of the property exceeds a specified amount, within the operation of the law. The earlier statutes reached only collateral relatives and strangers, and exempted lineal descendants, father and mother, husband or wife." This species of exemption

23c Attorney General v. Barney (Mass.), 97 N. E. 750.

24 In re Smith, 5 Dem. Sur. (N. Y.) 90; Estate of Cobb, 14 Misc. Rep. 409, 36 N. Y. Supp. 448; Estate of Farley, 15 N. Y. St. Rep. 727; Will v. Seaver, 63 App. Div. 283, 71 N. Y. Supp. 544. Under the collateral inheritance tax law of 1885, it has been held in New York that "lineal descendants" include only the direct descendants of the testator or intestate, and do not embrace children of his brothers and sisters: In re Miller, 5 Dem. Sur. (N. Y.) 132, 45 Hun, 244.

In Ohio, bequests to nephews and nieces are exempt from the collateral inheritance tax, but this exemption does not extend to grand nieces or to nephews of the husband or wife of the decedent: Estate of Bates, 7 Ohio N. P. 625, 5 Ohio S. & C. P. Dec. 547. Bequests to half-brothers are exempt: Estate of Ormsby, 7 Ohio N. P. 542, 5 Ohio S. & C. P. Dec. 553.

In Pennsylvania, a grandmother is subject to the collateral inheritance tax: McDowell v. Addams, 45 Pac. 430; but step-children are not: Commonwealth v. Randall, 225 Pa. 197, 73 Atl. 1109.

Where a son made a devise to his mother and she died first, leaving as heirs his brother and sister, it has been decided, under the statutes of Iowa, that the property passes directly from the testator to his

is not open to objection on constitutional grounds because of the discrimination which it works.25

§ 137. Adopted Children.-Under some of the inheritance tax statutes adopted children are not entitled to the same favor or exemption that is accorded natural children of the decedent. Although an adopted

brother and sister and is subject to the collateral inheritance tax: Estate of Hulett, 121 Iowa, 423, 96 N. W. 952.

That real estate devised by a man to his widow is not subject to the inheritance tax in Montana, see Hinds v. Wilcox, 22 Mont. 4, 55 Pac. 355. The statute of Illinois exempting a life estate in property which a man wills to his wife does not apply if she renounces the will and elects to take what the law gives her: Connell v. Crosby, 210 Ill. 380, 71 N. E. 350. But under the Tennessee statute, exempting property passing to the widow, it has been held that when a nonresident died possessed of property in that state which was a part of the residue of his estate, one-half of which he willed to his widow, who elected to take one-half of such property in kind, such half was not subject to taxation: Memphis Trust Co. v. Speed, 114 Tenn. 677, 88 S. W. 321, citing Matter of James, 144 N. Y. 6, 38 N. E. 961.

A legacy to the husband of the daughter of the testator was exempt under the New York statutes of 1885, although the daughter died before the testator: In re Woolsey, 19 Abb. N. C. 232; In re McGarvey, 6 Dem. Sur. (N. Y.) 145. And the statutes of 1892, exempting a legacy to the husband of the daughter of a testator, applies to a husband of a deceased daughter, even though he has again married: Estate of Ray, 13 Misc. Rep. 480, 35 N. Y. Supp. 481. But in Pennsylvania it has been decided that where, under a statute exempting property passing by will to the wife or widow of the son of the person dying possessed thereof, a woman bequeathed the residue of her estate to her daughter in law, who was the widow of her son, and the widow remarried in the lifetime of the testatrix and was still married at the death of the testatrix, the legacy was taxable: Commonwealth v. Powell, 51 Pa. 438.

The term "stranger," within the meaning of a statute imposing a tax on inheritances falling to "ascendants, descendants, collateral relations, and strangers, is intended to exhaust the whole category of persons who might be called to the inheritance, whether by will or ab intestato, and applies to all who have not in fact (or by law) the status of legitimate ascendants, descendants, or collateral relations": Succession of Baker, 129 La. 74, 55 South. 714.

A son in law is a "stranger," and hence subject to the tax imposed by the United States war revenue act of 1898: King v. Eidman, 128 Fed. 815.

25 See sec. 21, ante.

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child has the right to inherit, he has been held not a child in fact," or "lineal issue," "7 so as to be exempt from the collateral inheritance tax. In New York the word "children," in the collateral inheritance act of 1885, did not include adopted children, and, prior to the amendment of that act in 1887, a devise or bequest to an adopted child of the testator was subject to taxation.28 The amendment of 1887, exempting adopted children from the collateral inheritance tax," applies to children adopted under proceedings taken in another state.30 But the amendment is not retrospective in operation, and hence does not exempt the adopted child of one who died before its enactment."

The widow of an adopted son of a testator is a "widow of a son" of the testator; 32 and a son of an adopted daughter of a testator is a "lineal descendant." In California, under the act of 1893, legacies

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26 Commonwealth v. Nancrede, 32 Pa. 389; Tharp v. Commonwealth, 58 Pa. 500; Estate of Wayne, 2 Pa. Co. Ct. Rep. 93, 18 Wkly. Notes Cas. 10; Estate of Province, 4 Pa. Dist. Rep. 591. This rule was varied, by special statute, in favor of Matthias H. Henderson: See Commonwealth v. Henderson, 172 Pa. 135, 38 Atl. 368.

27 Kerr v. Goldsborough, 150 Fed. 289, 80 C. C. A. 177, construing the United States statute, and holding that an adopted child, entitled to all rights of heirship of a child born in wedlock, is a stranger within the fifth class, not "lineal issue" within the first class.

28 Estate of Miller, 110 N. Y. 216, 18 N. E. 139.

29 In re Surrogate of Cayuga County, 46 Hun, 657.

30 Estate of Butler, 58 Hun, 400, 12 N. Y. Supp. 201.

31 Warrimer v. People, 6 Dem. Sur. (N. Y.) 211; Estate of Thompson, 14 N. Y. St. Rep. 487; Estate of Miller, 110 N. Y. 216, 18 N. E. 139, holding that where, prior to the passage of the amendatory act, the surrogate affirmed an appraisement of the estate of a testatrix and assessed the tax chargeable to the devisees and legatees under the act of 1885, among whom was an adopted child, which tax was not paid until the amendment of 1887 went into effect, the amendatory act did not release from liability for the tax.

32 Estate of Duryea, 128 App. Div. 205, 112 N. Y. Supp. 611.

88 Estate of Cook, 187 N. Y. 253, 79 N. E. 991. In construing the New York statutes, the court, in this case, observes: "In the eye of the law, therefore, adopted children are lineal descendants of their foster parent. They are in the line of descent from him through the command

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