delivered the opinion of the Court.
Thе question to be decided is whether the difference between the value of real estate at the death of a testator and the proceeds realized thereafter upon a sale by the trustees may be deducted as a lоss by the taxpayer, the beneficial owner of the proceeds, upon his return to the collector for the income of the year.
Richard T. Wilson, Sr., a resident of New York, died in November, 1910, the owner of a large estate. By the fourth artiсle of his will he directed his executors to sell and convert into personalty his entire residuary estate, and tó divide the proceeds thereof into'five equal parts. Out of the fifth part set aside for the use of his son, Richard T. Wilson, Jr., the sum of $500,000 was to.bе held for the use of the son during life with remainder to lineal descendants, and in default of such descendants to others. “ The balance of such part I give to my said son, Richard T. Wilson,- Jr., to be his absolutely.”
This gift, if it had stood alone, might have seemed to allоw to the executors no discretion as to the time of sale, and might have bred uncertainty as to their powers and duties-before the time for distribution. The next or fifth article clarifies the meaning. The testator there recalls the fact that аfter setting up the trust for $500,000 and *22 other special funds, a large part of his residuary estate will consist of real estate in New York and other states, and shares of manufacturing and business corporations, “ which should not be sold excepting under favorable conditions.” Accordingly he lays upon his executors the following command: “to hold and manage such remaining portion of my residuary estate until in their judgment it can from' time to time be advantageously sold and disposed of, not exceeding, however, a period longer than the lives of my sons Marshall Orme Wilson and Richard T. Wilson, Jr., and the survivor of them, and I hereby authorize and empower my said executors within said period to sell, convey, assign and transfer the same, or any part therеof, at such time or times as they may deem for the best interests of my estate, and upon such terms and conditions as they may deem proper, including the terms ,and mode of payment thereof.” Nor is this all. The executors are authorized in their disсretion to organize a corporation, to convey to it the whole or any part of the residuary estate in return for the capital stock, and to hold the stock “ until it can in their judgment be advantageously disposed of.” Finally there is а provision that upon the making of a sale, the executors'in their discretion may distribute the proceeds, “ or retain the same, or any part thereof for further conversion before distribution, not, however, beyond the period of the livеs of my said sons and the survivor of them.” Until the time of distribution the net income is to be paid semi-annually to those entitled to receive it.
Included in the real estate at the death, of the testator. was a building in the City of New York known as the “.Commercial Building,” of a value at that time of $290,000. This building the executors held till 1922, when they sold it for $165,000. After allowance for depreciation, the loss to the estate by reason of this sale was $113,300. The executors were at liberty to distribute the entire pro *23 ceeds ($165,000) amоng the residuary legatees if their judgment moved them to that course. They did not do so. They distributed only $50,000, and held the balance in the trust. One fifth of the part distributed belonged and was paid to Richard T. Wilson, Jr. One fifth of the part retained was held for his use as it had beеn before the sale.
The present controversy grows out of a tax return of income for 1922. Erom the gross income of that year the taxpayer, Richard T. Wilson, Jr., deducted $25,001.17, one-fifth, according to his computation, of the loss resulting from the sаle. It was afterwards agreed that one-fifth of the loss was not more than $22,660, and that the amount of the claimed deduction should be corrected accordingly. The Commissioner disallowed the loss altogether, and assessed an additional tax. The taxpayer upon payment%f the tax filed a claim for refund which the Commissioner rejected. This suit was then brought to recover the amount paid upon the additional assessment. During the pendency of the'suit the taxpayer died, and his exеcutors were substituted. The District Court gave judgment in their favor, holding that one-fifth of the loss upon the sale of the Commercial Building was a loss suffered by the taxpayer, the beneficiary of the trust, and was a proper deduction from his income for thе year of sale. Upon an appeal by the Government, the Court of Appeals for the Second Circuit sustained the representatives of the taxpayer in their claim for a deduction, but reduced the amount. In the view of that court the loss allowable to the beneficiary was not one-fifth of the entire loss that had been suffered by the trust estate, but only that part of one-fifth of the total loss represented by the ratio between the part of the proceeds presently distributed (not more than $50,000), and $165,000, the entire proceeds of the sale. The record left room for some uncertainty whether the payment of $50,000 had *24 been derived altogether from a sale of the Commercial Building, or in part from othеr sources. To the end that this uncertainty might be removed, the judgment of the District Court was reversed, and the cause remanded for retrial in 'accordance with the opinion. • 60 V. (2d) 52. Cross-petitions for certiorari, allowed by this court, have brought the сontroversy here. In No. 460, the Government complains that there was error in the refusal to disallow the deduction altogether. In No. 461, the representatives of the taxpayer complain that there was error to their prejudice in rеstricting the amount. '
To determine whether the loss was one suffered by the trust estate, 'or one suffered by the,taxpayer to whom the proceeds of the sale were payable, there is need at the outset to determine the meaning оf the will. The Government contends, and so the courts below have held, that title to the realty was given to the executors upon a valid trust, to sell and to apply the rents and profits in the interval. - The representatives of the taxpayer сontend that the executors had no title, but only a power in trust, and that subject to the execution of that power, the taxpayer was owner. <If that be so, the loss was his and no one else’s. A mere donee of ia power is not the owner of an estate, nor to be classed as a 'juristic entity to which a loss can be attributed. We think, however, that what passéd to the executors was ownership or title. True the will does not say in so many words that the residuary estate;'is given or devised tо them, but the absence of such words is of no controlling significance when a gift or devise is the áppropriate. and norma! medium for the attainment of purposes explicitly, declared.
Robert
v.
Corning,
Another, question of construction has yet to be considered. We have seen that the effect of the will .was to clothe the exеcutors with title to the land. We’have yet to determine whether the title that came to them was the fee or something less. If it was the fee, the whole estate was in them, and no one else had any ownership or interest in the land as distinguished from ownership, or interest in the proceeds of a sale,
Delafield
v.
Barlow,
Our answer tо the inquiry as to the meaning of the will comes close to being an answer to the inquiry as to the incidence of the loss. The taxpayer has received the only legacy bequeathed to him, and received it as it was given without the abatemеnt of a dollar. What was bequeathed was an interest in a fund to be. made up when the trustees were of opinion that it would be .advisable to sell. This alone was given, and this has been received. There has been no loss by the taxpayer of аnything that belonged to him before the hour of the sale, for nothing was ever his until the sale had been made and the fund thereby created. A shrinkage of values between the creation of the power of sale and its discretionary exercise is a loss to the trust, which may be allowable as a deduction upon a return by the trustees. It is not a loss to a legatee who has received his legacy in full. One might, as well say that a. legatee of shares of stock to be bought by executors out of the moneys of the estate would have an allowance of a loss upon a showing that the value would have been greater if the executors in the exercise of their .discretion had bought sooner than they did. The legatee must tаke the legacy as the testator has bequeathed it.
We hold that the trust, and not the taxpayer, has suffered the loss resulting from the sale of the Commercial
*27
Building,, and it follows that where loss has, not been suffered, there is none to be allowed. Whеther the result would be the same if the "beneficiaries had been the owner of future estates in remainder, ,we are not required to determine. Cf.
Francis
v.
Commissioner,
*28 The Circuit Court of Appeals did not err in reversing the judgment of the District Court. It did err in its instructions as to the relief upon a second trial.
The judgment of reversal is accordingly affirmed,, and the cause remanded to the District Court with instructions that a judgment should be entered dismissing the complaint. , Affirmed.