Plaintiff, in 1935, purported to set up a trust of $300,000 for the benefit of her infant daughter; and thereafter in 1936 paid the gift tax thereon. She then borrowed from the trustee; (herself and husband) $298,000 of the trust corpus. In 1938 she paid $35,760 interest to the trustees and attempted to deduct it as an expense. This deduction was disallowed and the plaintiff then filed in the Tax Court a petition for redetermination on the ground that the gift tax of 1936 had been erroneously paid and should now be allowed as a credit against the assessed deficiency which arose because the commissioner had denied deductibility of the alleged interest payment. The Tax Court held that it lacked jurisdiction to allow the erroneous tax payment as a credit. Thereafter, the plaintiff paid the deficiency and brought suit in the federal district court to recover it. The district court held for the defendant. On appeal, held, affirmed. Elbert v. Johnson, (C.C.A. 2d, 1947) 164 F. (2d) 421.
Samuel N. Greenspoon S.Ed.,
TAXATION - FEDERAL INCOME TAX - CHOICE OF REMEDIES-TAX COURT OR DISTRICT COURT,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol46/iss8/23