A federal court has ruled, in a case of first impression, that a widow who committed suicide after her husband was killed in the 2001 World Trade Center attack does not qualify as a victim of terrorism and therefore her estate does not qualify for the reduced estate tax rates under Sec. 2201(c) (Estate of Kalahasthi, No. CV 07-05771 MMM (RCx) (C.D. Cal. 7/7/08)).
Pendyala Vamsikrishna was a passenger on American Airlines flight 11 when it was hijacked and crashed into the north tower of the World Trade Center on September 11, 2001. He was killed in the crash. On October 19, 2001, his grieving widow, Prasanna Kalahasthi, committed suicide, leaving two notes and an audio recording indicating that she could not live without her husband.
After the September 11 terrorist attacks, Congress enacted the Victims of Terrorism Tax Relief Act of 2001, P.L. 107-143, to afford some tax relief to the victims of the attacks. Included in this relief was a set of reduced estate tax rates that apply to the estates of qualified decedents (Sec. 2201(c)). Qualified decedents include decedents who die "as a result of wounds or injury incurred as a result of" the September 11 terrorist attacks (Sec. 692(d)(4)).
Until this case, no court had addressed the meaning of "as a result of" or "wounds or injury incurred" as used in this definition. Her estate argued that Kalahasthi need not have been present at the site of the attacks to be a victim of the attacks and that she died as a result of the attacks. The government, on the other hand, argued that the plain language of the statute excluded Kalahasthi because she was not "wounded" or "injured" in the attacks and she did not commit suicide "as a result of" the attacks.
The court held that nothing in the Victims of Terrorism Tax Relief Act required the victim to have been physically present at the scene of the attacks, so the fact that Kalahasthi was not physically present did not automatically preclude her from being a victim of the attacks. The question that faced the court was: How attenuated can the causal connection be between the terrorist attack and the decedent's death and still fall within the "as a result of" language of Sec. 692(d)(4)?
There was no dispute that Kalahasthi's death was caused by emotional suffering arising out of the September 11 terrorist attacks. The court examined whether emotional suffering constitutes a "wound" or "injury" for purposes of Sec. 692(d)(4). While the statute is not unambiguous, the court held that "injury" in this context means "physical injury." The court went on to hold that Kalahasthi's suicide was an intervening cause and that therefore she did not die "as a result of" the terrorist attacks.
Because the decedent did not suffer a physical injury in the attacks and did not die as a result of the attacks, the court held that her estate was ineligible for the reduced estate tax rates.
