## Facts

- Rodolfo Ogarrio died on January 17, 1957, a nonresident alien not engaged in business in the United States.
- Ogarrio maintained a brokerage “cash account” with Bache & Co. in New York.
- Bache held 3,936 shares of The Texas Co. stock for Ogarrio and sold the shares on January 10, 1957.
- On the date of death, Bache delivered in New York a check (drawn on a New York bank) payable to Ogarrio representing the sale proceeds.
- Ogarrio also had rights to receive stock and money from The Texas Co. (Texaco) related to his former employment; these amounts were paid to the estate after death.
- Texaco withheld 30% U.S. income tax from certain payments under I.R.C. § 1441.
- The Commissioner determined a U.S. estate tax deficiency, treating the Bache sale proceeds and the Texaco obligations as includible in the U.S. gross estate.

## Issues

1. Whether the amount owed by a New York stockbroker for securities-sale proceeds at the moment of a nonresident alien’s death is excluded from the U.S. gross estate as “moneys deposited” under I.R.C. § 2105(b).
2. Whether stock and money owed by a U.S. corporation to a nonresident alien decedent are includible in the gross estate at full value, without reduction for mandatory 30% income tax withholding under I.R.C. § 1441.

## Decision

- The Tax Court sustained the deficiency determination.
- The brokerage obligation for the stock-sale proceeds was not excluded under § 2105(b) and was includible as U.S.-situated property.
- The Texaco stock and money were includible at full value, without reduction for § 1441 withholding.
- The court of appeals affirmed per curiam for the reasons stated by the Tax Court.

## Legal Principles

- The § 2105(b) exclusion for “moneys deposited” applies to true bank deposits made by or for the decedent with a person carrying on the banking business; it does not extend to a stockbroker’s ordinary indebtedness for sale proceeds in a brokerage cash account.
- A broker’s use of a bank check or the broker’s maintenance of its own bank funds does not convert the customer’s claim against the broker into a deposit “by or for” the customer with a bank.
- For estate tax valuation, property includible in the gross estate is measured by the decedent’s full enforceable right at death; required income tax withholding under § 1441 is a collection mechanism for income tax and does not reduce the includible value of the underlying obligation.
- Deductions and computation rules applicable to nonresident decedents (including I.R.C. §§ 2053(c)(1)(B) and 2106) do not authorize reducing gross-estate inclusion by amounts withheld for income tax.

## Conclusion

A nonresident alien’s claim against a U.S. stockbroker for securities-sale proceeds is not a § 2105(b) bank deposit, and amounts owed by a U.S. corporation are included in the U.S. gross estate at full value even when part of the payment is withheld under § 1441 for U.S. income tax.


Estate of Ogarrio v. Commissioner, 40 T.C. 242 (1963)