which would reduce the taxes levied by the states but would not reduce the federal tax.

In a curious case in Massachusetts, certain trustees of property organized a corporation in Maine with a nominal capital. In Maine at that time there was no inheritance tax. To this corporation they transferred certain valuable Massachusetts bank stocks. The Maine corporation issued certificates for the stock received and agreed to return a like amount on demand. The Maine corporation had the shares transferred on the books of the bank, and apparently the Maine corporation was the only owner. When the original owner died, the right of Massachusetts to tax the inheritance came into the courts, which swept away the whole device and imposed the tax as if the Maine corporation had never existed.3

§ 244. Situs of Property

The legal doctrine as to the "situs" or location of property is of much importance in the matter of its subjection to death duties. The broad general rule is that for purposes of taxation personal property is all assumed to be situated at the domicile of the decedent, and real property is to be taxed where it is situated. If this were all, the tax would be paid once for all in the state of decedent's domicile, and for land in the state where it was located, and there would be no double taxation. It is the following additions to the rules as to personal property that are confusing:

1. If any chattels or other personal property is situated in another state, that state may impose its own tax upon the goods.

2. If among the decedent's assets are shares of stock in a corporation organized under the laws of another state, that state also may impose its inheritance tax on the value of the stock.

3 Gardner v. Treasurer, 225 Mass. 355.

3. If money is owing to the decedent by a citizen of another state, it may be taxed by the state in which the debtor lives.

As these examples show, this entire branch of the law is in a process of evolution which leads to frequent amendment of statutes and to conflicting decisions of courts.

§ 245. Rule as to Real Estate

Real estate is usually taxed only in the state where it is situated, and not elsewhere. If it is mortgaged, the amount of the mortgage is deducted from the appraised value of the land and the remainder, termed "the equity of redemption," is taxed. Even where a non-resident testator has directed that real property be sold and the proceeds distributed, these proceeds are not taxed by the state in which they are distributed.

Pennsylvania is an exception to the general rule, and citi zens of Pennsylvania owning real estate in other states must pay the state of Pennsylvania and the state in which the land is situated as well. The same practice holds when real estate in another state is converted into cash for division among the heirs. If a citizen of Pennsylvania owned land in New Jersey and directed that it be sold and the proceeds divided among his heirs, the land would be taxed in New Jersey and the proceeds would be subject to another tax in Pennsylvania.

The location, or "situs," of a debt secured by a mortgage on real estate is in the state in which the creditor has his domicile. In Massachusetts, Michigan, and Maryland, the rule is otherwise. Where real property is held by trust associations, as is common in Massachusetts, the shares, even when owned outside the state, are subject to transfer taxes in Massachusetts. Shares in such trust associations are considered as interests in real estate and are taxed as such even when owned out of the state by non-residents.

McCurdy v. McCurdy, 197 Mass. 248; Kenney v. Stevens, 207 Mass. 368.

If the decedent had contracted to sell land that he owned in another state, this contract would not be taxable in the state where the land was situated. Nebraska is an exception to this rule. Money due on a contract to sell real estate is not considered taxable as real estate in the state where the real estate is, except in Nebraska.

A lease of real estate (when not a liability) is personal property and not real estate. A perpetual lease is realty.

§ 246. Personal Property-Tangible

The New York Statute 5 contains this definition:

"Tangible property" as used in this article shall be taken to mean corporeal property such as real estate and goods, wares and merchandise, and shall not be taken to mean money, deposits in banks, shares of stock, bonds, notes, credits or evidences of an interest in property and evidences of debt.

Personal property was once supposed to follow the domicile of its owner, but in enforcing the transfer tax the several states have adopted the rule of imposing a tax on everything in their jurisdiction, whether belonging to a resident or a nonresident; therefore, money in bank, notes and valuables in safe deposit, books, furniture in houses, merchandise in stores, and in fact any kind of tangible property in a state, is taxable by that state when the owner dies.

If the owner of the chattels was a non-resident, his executor will probably have to pay a transfer tax on the same property in his state of domicile. This is double taxation, but, as has been stated, there is no constitutional or other prohibition against double taxation.

§ 247. Personal Property-Intangible

1. Transfers of all intangible property are taxed at the place of domicile of the owner. Both the state in which a

Laws of 1910, Chapter 706, Art. X, 3 243.

corporation is domiciled and the state in which the corporation was organized and has its business office may tax all stock transfers resulting from the death of a former owner, no matter where he lived. Such transfers are taxable also at the former domicile of the deceased owner. Under some circumstances triple taxation would thus be possible.

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2. If intangible property is kept on deposit in another state, it may be taxed there. Such property of a non-resident in the hands of a trustee is not taxable in Pennsylvania. The bank account of a non-resident is subject to inheritance taxes by the state in which the bank is situated and by the state in which the owner lived. This is another of the cases in which double taxation occurs.10

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3. Bonds and notes and mortgages against persons or secured by real property in the state, if owned by non-residents and kept out of the state, are not taxable by the state where the debtor lives or where the real property is situated,1 except that mortgages, notes, and land contracts secured by or relating to Michigan land held in another state by a nonresident of Michigan, are nevertheless subject to an inheritance tax in Michigan, on the ground that the obligations so secured cannot be collected without the aid of the laws of Michigan.'

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§ 248. Rule as to Life Insurance

Generally, life insurance in favor of another than the decedent is not part of the estate and is not taxed under the inheritance laws. It was the one way of providing for one's dependents that was not taxed, but if the proceeds of a policy are payable to the estate they become part of the estate and

• McDougal v. Low, 164 Cal. 107; Greeves v. Shaw, 173 Mass: 205. Hawley v. City of Malden, 232 U. S. 1.

• Wheeler v. New York, 233 U. S. 434.

Re Helena, 46 L. R. A. (N. S.) 1167.

10 Blackstone v. Miller, 188 U. S. 189.

11 State Tax on Foreign Bondholders, 15 Wall. 300.

12 In re Rogers' Estate, 149 Mich. 305.

are taxable as are any other assets. The present federal in heritance tax law, however, taxes all insurance over $40,000, even when in favor of dependents. (See § 334.)

§ 249. Dower and Curtesy

A widow's dower or one-third life estate in her husband's real property is generally held not to be taxable as an inheritance. But in Illinois and North Carolina the law is different and dower estates are held taxable, and the federal law especially includes dower and curtesy interests.

If a bequest in lieu of dower is made and the widow elects to take it, the tax will be collected on the bequest. Special allowances to the widow are generally held to be tax-exempt.

The husband's right to tenancy by curtesy is taxable by the federal government but not by the states unless expressly so specified in the state transfer tax law, as is the case in New York. Under state laws the same rule applies to the husband's common law marital rights to inherit all the personal property of a wife who died without leaving a will or issue surviving. If a wife wills all her property to her husband, it is subject to the tax. In those states whose law is derived from the civil law of Rome, the wife has a one-half interest in the community estate; that is, one-half of the gains and profits of the marital partnership. This interest is not taxable under the inheritance tax laws of those states, as the survivor is held to own the one-half in his or her individual right.

§ 250. Property Held Jointly or by Tenants in the Entirety

A joint tenancy is "a tenure by two or more persons of estate by unity of interest, title, time, and possession, under which the survivor takes the whole." (Blackstone.)

A tenant in common is one holding real or personal prop erty in common with others having distinct but undivided in terests, and a survivor has no more than his own share.