289 U.S. 20 (1933), 460, Anderson v. Wilson

Docket Nº:No. 460
Citation:289 U.S. 20, 53 S.Ct. 417, 77 L.Ed. 1004
Party Name:Anderson v. Wilson
Case Date:March 13, 1933
Court:United States Supreme Court
 
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289 U.S. 20 (1933)

53 S.Ct. 417, 77 L.Ed. 1004

Anderson

v.

Wilson

No. 460

United States Supreme Court

March 13, 1933

Argued February 8, 9, 1933

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

1. A New York will, providing for the liquidation of residuary real estate, the proceeds of which it bequeathed to designated beneficiaries, directed the executors within the period of two lives in being to dispose of the property, as and when in their judgment it could be sold to advantage. They were free to form and use for this purpose a holding company if they saw fit, and to decide, in their discretion, whether to distribute the proceeds of any sale or to retain them for further conversion before distribution. Until the time of distribution, the net income was to be paid semiannually to the beneficiaries.

Held:

(1) That the executors took the fee title in trust, and not merely a power. P. 24.

(2) By the law of New York, where land is left by will to executors to convert into money and distribute, the executors take the fee title upon the trust, and the beneficiaries have no interest in the corpus other than to enforce performance of the trust. P. 25.

2. A loss resulting from a sale of real estate by executors holding fee title on a trust to manage and sell and to distribute the proceeds is a loss of the estate, and cannot be deducted by the beneficiary in making his personal return of income under the Revenue Act of 1921. P. 26.

60 F.2d 52 affirmed.

Certiorari, 287 U.S. 592, on cross petitions to review a judgment reversing a judgment -- 51 F.2d 268 -- against the Tax Collector and directing a retrial. Upon this review,

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the reversal is affirmed, but the cause is remanded to the District Court with direction to dismiss the complaint.

CARDOZO, J., lead opinion

MR. JUSTICE CARDOZO delivered the opinion of the Court.

The 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 loss 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 article of his will, he directed his executors to sell and convert into personalty his entire residuary estate, and to 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 be 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 allow 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, after setting up the trust for $500,000 and

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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...

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