Estate of Charles W. Smith, Deceased. The Northern Trust Company, Trustee v. Commissioner of Internal Revenue

The Commissioner of Internal Revenue has appealed from an adverse decision of the Tax Court. The Commissioner determined a deficiency in the estate tax of Charles W. Smith’s estate in the amount of $646,700.50. The deficiency resulted from a disallowance of $1,330,101.62 of a claimed marital deduction of $1,521,245.86. After contesting the assessed amount, Smith’s estate sued for a refund on the ground that the marital deduction should have been allowed.

Decedent’s 1967 inter vivos trust contained an “equalization clause” under which his surviving spouse would take nothing if the values of…