Goodman V. Granger Case Research Paper

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Goodman v. Granger Case

Goodman v Granger Case was the case that revealed the problem of estate valuation for the tax purposes. The case reveals the examination of instances where the value of the property of the deceased is different from the value of the property during his life and the examination of the case are to ascertain whether the value of the property increased or decreased. The court of Appeal reversed the rule of the District Court on the ground that the contract right should be given its full value for the purpose of estate tax purpose.

The purpose of this paper is to explore the principal issues of the U.S. Court of Appeal based on the Goodman v. Granger case.

Principal Issues of the U.S. Court of Appeal

The principal issue in the case is to ascertain when the federal government estate tax attaches. "More specifically stated, when does such tax attach to a decedent-employee's contractual right to annual deferred compensation payments from his employer, payable to his estate after his death?" (United States Court of Appeal, 1957 p 1). The government presented this problem to the Court of Appeal in order to reverse the ruling of the District Court that favored the taxpayer. Thus, "determination of the time when that interest is to be valued is the crux of the dispute." (United States Court of Appeal, 1957 p 1).

The principal issues of U.S. Court of Appeal on Goodman v. Granger are as follows:

Principle of estate tax

Answer to the question on when the estate tax is attached after owner's death,

Imposition of estate tax should be transferred to the property after the owner's death.

Theory of contract that has marketable value needs to be assessed and determined for the estate tax purpose.

The issues of the U.S. Court of Appeal on the case of Goodman v.

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Granger provide a revelation of when the estate tax is attached. The Court of Appeal reversed the ruling of the District Court on the ground that the federal estate tax was to be imposed on transfer of property and not to be imposed on the property itself. The correctness of the instant case prevents the avenues for people to avoid the estate tax.

The instance case between Goodman v. Granger is based on the problem of taxation on the estate following the death of the owner. The decedent's widow received a monthly payment from former employer of her husband under a deferred compensation agreement. However, the court stated that the rights to the payments should be valued when the property rights vested in the widow were absolute. (Brandon, 1961). The decedent was entitled to receive $6,000 per annum for 15 years based on the contract of employment. However, the payment must start after the termination of employment for any reason. Thus, the decedent death eliminated the right to pay tax for the estate. However, the Commissioner determined that cumulative estate tax was valued to $90,000 and to be payable under the fixed agreement. The petitioner, who was seeking for a tax refund "successfully contend in the District Court that the contract right should be valued before death. Under this theory, it was found to have no market values" (Columbia Law Review, 1958 p 124). The District Court contention revealed that decedent's contractual right ought to be valued before the death and at such moment, the contractual right was deemed valueless.

However, the U.S. Court of Appeal reversed the case on the ground that "valuation for estate tax purpose is determined with reference to the fact of decedent's death. It is therefore based….....

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