{
  "id": 8525124,
  "name": "MARY R. (MATTHEWS) HOLT, EDGECOMBE BANKING AND TRUST COMPANY, Co-Executors of the Estate of D. G. Matthews, Jr. v. MARK G. LYNCH, Secretary of Revenue of the State of North Carolina",
  "name_abbreviation": "Holt v. Lynch",
  "decision_date": "1982-06-01",
  "docket_number": "No. 812SC1031",
  "first_page": "532",
  "last_page": "537",
  "citations": [
    {
      "type": "official",
      "cite": "57 N.C. App. 532"
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  "court": {
    "name_abbreviation": "N.C. Ct. App.",
    "id": 14983,
    "name": "North Carolina Court of Appeals"
  },
  "jurisdiction": {
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    "name_long": "North Carolina",
    "name": "N.C."
  },
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    {
      "cite": "N.C. Gen. Stat. \u00a7 105-9",
      "category": "laws:leg_statute",
      "reporter": "N.C. Gen. Stat.",
      "year": 1950,
      "pin_cites": [
        {
          "page": "(e)"
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    {
      "cite": "264 S.E. 2d 56",
      "category": "reporters:state_regional",
      "reporter": "S.E.2d",
      "year": 1980,
      "pin_cites": [
        {
          "page": "62"
        }
      ],
      "opinion_index": 0
    },
    {
      "cite": "299 N.C. 582",
      "category": "reporters:state",
      "reporter": "N.C.",
      "case_ids": [
        8575647
      ],
      "year": 1980,
      "pin_cites": [
        {
          "page": "590"
        }
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      "opinion_index": 0,
      "case_paths": [
        "/nc/299/0582-01"
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  "last_updated": "2023-07-14T20:31:38.946391+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
  },
  "casebody": {
    "judges": [
      "Judge HILL concurs.",
      "Judge BECTON concurs in part and dissents in part."
    ],
    "parties": [
      "MARY R. (MATTHEWS) HOLT, EDGECOMBE BANKING AND TRUST COMPANY, Co-Executors of the Estate of D. G. Matthews, Jr. v. MARK G. LYNCH, Secretary of Revenue of the State of North Carolina"
    ],
    "opinions": [
      {
        "text": "HEDRICK, Judge.\nWe note at the outset that plaintiffs are claiming as deductions, in calculating the State inheritance tax, the following interest expenditures: (1) interest paid on the estate\u2019s federal estate tax liability; (2) interest paid on the State inheritance tax liability; and (3) interest paid on money borrowed to pay the federal estate and State inheritance taxes; plaintiffs seek to deduct these expenditures as \u201ccosts of administration\u201d of the estate. At oral argument, both parties agreed that, for the purposes of their deductibility in calculating State inheritance tax liability, there is no distinction in the treatment of the three kinds of interest expenditures at issue. We agree with the \u201call or nothing at all\u201d theory of the parties, i.e. if any one of the kinds of interest at issue is deductible as a \u201ccost of administration,\u201d then they all are, but if any one is not, none is.\nWith respect to the interest paid on the estate and inheritance taxes, the following statutes, each appearing within the same Subchapter, are relevant:\nIn determining the clear market value of property taxed under this Article, or schedule [which is entitled \u201cInheritance Tax\u201d], the following deductions, and no others shall be allowed:\n(5) Estate and inheritance taxes paid to other states, and death duties paid to foreign countries.\n(8) Costs of administration, including reasonable attorneys\u2019 fees.\nG.S. \u00a7 105-9;\n\u201cTax\u201d ... for the purposes of this Subchapter . . . include[s] penalties and interest, as well as the principal amount of such tax ....\nG.S. \u00a7 105-241.101).\nUnder plaintiffs\u2019 argument, interest on late federal estate and North Carolina inheritance taxes would be deductible as costs of administration; by an extension of reasoning, interest on late estate and inheritance taxes paid to other states would also be deductible under the \u201ccosts of administration\u201d provision, since such interest expenses paid to other states are qualitatively similar to interest paid on federal estate and North Carolina inheritance taxes. Hence, plaintiffs\u2019 rationale leads to the conclusion that if the deductibility of \u201ccosts of administration\u201d were revoked by the legislature, interest on liability for other state\u2019s inheritance and estate taxes would be nondeductible. Upon such a revocation, however, such interest would still be deductible, since the deductibility of the estate\u2019s liability for other state\u2019s estate and inheritance taxes also includes, by virtue of G.S. \u00a7 105-241.l(il), the interest thereon. The deductibility of interest on estate and inheritance taxes, therefore, must arise out of the combined effect of G.S. \u00a7 105-9(5) and G.S. \u00a7 105-241.l(il). Furthermore, the principle that \u201cwords of a statute are not to be deemed merely redundant if they can reasonably be construed to add something to the statute which is in harmony with its purpose,\u201d see Schofield v. Great Atlantic & Pacific Tea Co., 299 N.C. 582, 590, 264 S.E. 2d 56, 62 (1980), would be violated if G.S. \u00a7 105-9(5) and G.S. \u00a7 105-241.1(il) provided for a deduction which already existed under G.S. \u00a7 105-9(8). Hence, the required non-redundant construction of G.S. \u00a7 105-9 is that the deductibility of interest on estate and inheritance taxes arises out of and only out of G.S. \u00a7 105-9(5) and G.S \u00a7 105-241.1(il), and not out of G.S. \u00a7 105-9(8). G.S. \u00a7 105-9(5), however, does not provide for the deductibility of federal estate or North Carolina inheritance taxes, and, hence, for the deductibility of the interest thereon. Federal estate taxes and presumably the interest thereon, were deductible under the former N.C. Gen. Stat. \u00a7 105-9(e) (1950), but such deductibility was repealed in 1957 N.C. Sess. Laws Ch. 1340, \u00a7 1 and is still not permitted under the present G.S. \u00a7 105-9(5). G.S. \u00a7 105-9(5) also does not allow the deductibility of North Carolina inheritance taxes, and, hence, of the interest thereon. The statutory scheme of G.S. \u00a7 105-9 does not permit the plaintiffs to deduct the interest on the federal estate and North Carolina inheritance tax liabilities.\nPlaintiffs have argued that it is stipulated that the interest on those liabilities was incurred in their execution of their duties under G.S. \u00a7 28A-13-2 to settle the decedent\u2019s estate with as little sacrifice of the estate\u2019s value as is reasonable under the circumstances, and, hence, that such interest should be deductible as \u201ccosts of administration\u201d under G.S. \u00a7 105-9(8). As discussed above, however, G.S. \u00a7 105-9(8) is unavailing for plaintiffs\u2019 interest owed on the federal estate and North Carolina inheritance taxes, because of the preemptive coverage of interest on estate and inheritance taxes under G.S. \u00a7 105-9(5) and G.S. \u00a7 105-241.1\u00dc1). This bar on deductibility based on statutory construction, however, is not applicable to interest which accrued on something other than estate and inheritance tax liability, to wit, on funds borrowed to pay such taxes. Plaintiffs could argue that such interest, which also was incurred as \u201cbeing reasonably necessary for the benefit of the estate,\u201d could hardly fail to be characterized, given ordinary understandings of language, as a \u201ccost of administration.\u201d The parties, however, have agreed that each kind of interest payment at issue should receive identical treatment in terms of their deductibility, and, hence, the interest on borrowed funds is also not deductible as a cost of administration.\nSince this case presented only a question of law arising on undisputed facts, and the law has been resolved in favor of defendant, the court\u2019s granting of summary judgment for defendant is\nAffirmed.\nJudge HILL concurs.\nJudge BECTON concurs in part and dissents in part.",
        "type": "majority",
        "author": "HEDRICK, Judge."
      },
      {
        "text": "Judge BECTON,\nconcurring in part and dissenting in part.\nI concur in the majority\u2019s analysis relating to interest paid on the federal estate tax liability and the State inheritance tax liability. From the majority\u2019s resolution of the issue relating to interest expense on funds borrowed to pay estate and inheritance taxes, I dissent.\nPlaintiff\u2019s assertion that it was \u201creasonably necessary for the benefit of the estate\u201d to borrow money to pay taxes and plaintiff\u2019s argument that the interest paid on money borrowed to pay the federal estate and State inheritance taxes are compelling. I do not agree with the \u201call or nothing at all\u201d theory (ante, p. 3); no statute cited by the majority mandates such a result. The fact that the parties \u201chave agreed that each kind of interest payment at issue should receive identical treatment . . . [and that] the interest on borrowed funds is also not deductible as a cost of administration\u201d (ante, p. 6) is not controlling. In my view, summary judgment should not have been granted on the issue of whether the interest expense on borrowed funds is deductible as a cost of administration.",
        "type": "concurring-in-part-and-dissenting-in-part",
        "author": "Judge BECTON,"
      }
    ],
    "attorneys": [
      "Auley M. Crouch, III, and Jeff D. Batts, for plaintiff appellants.",
      "Attorney General Rufus L. Edmisten, by Assistant Attorney General George W. Boylan, for the defendant appellee."
    ],
    "corrections": "",
    "head_matter": "MARY R. (MATTHEWS) HOLT, EDGECOMBE BANKING AND TRUST COMPANY, Co-Executors of the Estate of D. G. Matthews, Jr. v. MARK G. LYNCH, Secretary of Revenue of the State of North Carolina\nNo. 812SC1031\n(Filed 1 June 1982)\nTaxation \u00a7 27\u2014 interest on estate and inheritance taxes \u2014 not deductible as \u201ccost oi administration\u201d\nInterest on late federal estate and North Carolina inheritance taxes are not deductible as \u201ccosts of administration\u201d under G.S. \u00a7 105-9(8) since the preemptive coverage of interest on estate and inheritance taxes is under G.S. \u00a7 105-9(5) and G.S. \u00a7 105-241.H\u00cd1), and the combined effect of those statutes does not provide for the deductibility of federal estate or North Carolina inheritance taxes.\nJudge Becton concurring in part and dissenting in part.\nAppeal by plaintiffs from Reid, Judge. Judgment entered 26 June 1981 in Superior Court, MARTIN County. Heard in the Court of Appeals on 6 May 1982.\nThis appeal arises out of the plaintiff co-executors\u2019 action to recover a refund of State inheritance tax paid by the estate of D. G. Matthews, Jr., who died testate on 26 March 1976. The relevant facts, the truth of which was stipulated by all parties, are as follows:\nThe taxpayer, the estate of D. G. Matthews, Jr., was liable on the federal estate tax in the total principal amount of $1,016,981.05, and, according to returns filed in 1977 and 1979, was liable on the North Carolina inheritance tax in the principal amount of $406,206.61 (such amount including a late payment penalty). With respect to the federal estate tax, the taxpayer incurred in fiscal year 1979 an additional liability for interest in the total amount of $64,272.95; this interest was the sum of (1) the interest which accrued on a late payment of that portion of the taxpayer\u2019s principal estate tax liability which was not payable in installments, and (2) the interest which accrued in 1979 on the unpaid balance of the taxpayer\u2019s federal estate tax liability, such balance being payable at the taxpayer\u2019s election in ten annual installments pursuant to I.R.C. \u00a7 6166. With respect to the North Carolina inheritance tax, the taxpayer incurred an additional liability in 1979 for interest which accrued in fiscal year 1979 in the total amount of $16,726.20; this interest represents an amount incurred by the taxpayer\u2019s late payment of a portion of his principal State inheritance tax liability. The taxpayer also paid to D. G. Matthews & Son, Inc., in fiscal year 1979, interest in the amount of $13,728.04; this interest arose on certain loans made to the taxpayer by D. G. Matthews & Son, Inc., such funds being borrowed by the taxpayer to pay some of the outstanding estate and inheritance tax liability.\nThe total amount of interest paid by the taxpayer in 1979 was $94,879.65. Plaintiffs now seek to reduce the taxable value of the Matthews estate by the aforementioned amount of interest paid in 1979, claiming that such amount was a deductible cost of administration of the estate; plaintiffs further claim that upon such reduction, they will be entitled to a refund of inheritance tax previously overpaid, in the amount of $6,710.94. Finally, the parties have stipulated the following with respect to the interest payments at issue:\nFor purposes of accepting the annual and final accounts of the Estate of D. G. Matthews, Jr., pursuant to N.C.G.S. \u00a7\u00a7 28A-21-1 and 28A-21-2, the Clerk of Superior Court of Martin County, acting in her capacity as Judge of the Probate Court, has audited and approved the distribution and expenditure of the taxpayer\u2019s (estate\u2019s) assets, including the interest expense incurred by the taxpayer in deferring payment of estate and inheritance taxes as stated herein and in borrowing funds from D. G. Matthews & Son, Inc. during 1979. By such audit and approval, the Clerk has accepted such expenses as being reasonably necessary for the benefit of the estate.\nFrom summary judgment for defendant dismissing plaintiffs\u2019 claim, plaintiffs appealed.\nAuley M. Crouch, III, and Jeff D. Batts, for plaintiff appellants.\nAttorney General Rufus L. Edmisten, by Assistant Attorney General George W. Boylan, for the defendant appellee."
  },
  "file_name": "0532-01",
  "first_page_order": 562,
  "last_page_order": 567
}