14 B.T.A. 488 | B.T.A. | 1928
Lead Opinion
Several errors were assigned in the petition and urged in the brief filed by petitioner. It is the contention of the petitioner that under the will of Jacob Haller, construed in the light of the surrounding circumstances at the time of his death, one-seventh of the income is distributable to her and one-seventh to each of the children who were living during the taxable years. With this contention we can not agree. The courts of Pennsylvania, in construing similar language in other wills, have held that there was created a life estate in the person designated to receive the income for the benefit of himself and others. In re Paisley's Appeal, 70 Pa. St. 153; Appeal of Mazurie, 132 Pa. St. 157; 19 Atl. 29; In re Cressler's Estate, 29 Atl. 90. Under these decisions of the Supreme Court of Pennsylvania the children would not have been in any position, by reason of the provisions of the will of the decedent, to require any accounting from their mother.
It is urged that the circumstances surrounding the decedent at the time he executed the codicil and at the time of his death indicate that he intended his wife and his children to share equally in the profits of the business. With this we can not agree. We find nothing which would indicate that he intended the mother to be accountable to the children for a seven-eighths or a six-sevenths interest in
The petitioner also alleges that error was committed in failing to allow as a deduction certain contributions made to charitable organizations. The amount of the contributions and the character of the organizations to which the contributions were made are not in question, the deduction having been disallowed solely on the ground that the contributions were made by the estate and not by the petitioner. The evidence discloses, however, that they were made with her knowledge and consent and charged against her income. Inasmuch as she is entitled to the entire income of the business, it makes little difference whether the amounts are paid directly from income by the estate or distributed to her by the estate and then
The petitioner claims that assessment and collection of the taxes here in controversy are barred by the period of limitations set out in the statutes. There is no evidence that this petitioner ever filed any income-tax returns for any of the taxable years here involved, although it does appear that for some of such years the executors of the estate filed returns showing the income of the estate. Under the law the estate is a separate and distinct taxable entity from the beneficiary or beneficiaries. It must account for capital gains and losses which are not distributable to or borne by the beneficiary and for net income which is not distributable under the terms of the will, while the beneficiary is charged with the duty of returning distributable income. Section 219, Revenue Acts of 1918 and 1921; Baltzell v. Mitchell, 3 Fed. (2d) 428; Willcuts v. Ordway, 19 Fed. (2d) 917; Mary P. Eno Steffanson, 1 B. T. A. 979; Louise P. V. Whitcomb, 4 B. T. A. 80; Elizabeth S. Sprague, 8 B. T. A. 173, and cases there cited. Returns filed by the executors of the estate of this decedent can not serve to start running the period in which assessments of tax may be made against this petitioner.
The petitioner claims that in computing the net income of the estate for 1917 the Commissioner erred in refusing to allow as a deduction $5,737.71 expended to secure title to an alley way which had been used as such for some 30 years by the owners of the property abutting on it but which had been sold under the lien of an assessment for paving. Immediately upon acquisition the alley way was conveyed to the city as a public thoroughfare, apparently for the purpose of making certain that it should always be available. The question then presented is whether when an owner of property conveys a portion of such property to the city for the purpose of a public thoroughfare which will be of benefit to his remaining property, he has incurred a loss or expense to the extent of the cost of. the property so conveyed. We do not conceive that he has. We are rather of the opinion that in such circumstances the cost of the property so conveyed is to be added as a part of the cost of the property benefited by such conveyance. Upon this assignment of error the determination of the Commissioner is approved.
The petitioner alleges that the Commissioner committed error in determining that the estate realized a gain of $716.52 from the receipt of $780 from one Rafolowski in 1917, the details of which are set forth in the findings of fact. Inasmuch as Rafolowski went into
The petitioner further alleges that the Commissioner erroneously computed her income from the estate of Jacob Haller for 1917 in determining that such estate was subject to excess-profits taxes or, in the alternative, that if such estate is subject to such taxes, error was committed in determining the amount thereof and the allocation thereof between the estate and petitioner. In his brief the respondent admits that he was in error in determining that there was any excess-profits tax due from the estate or from Mary Haller. See also Reinecke v. Gardner, 277 U. S. 239; 48 Sup. Ct. 472; 6 Am. Fed. Tax. Rep. 7794. The deficiency for 1917 should be computed accordingly.
Decisions will be entered under Rule 50.