Commissioner of Internal Revenue v. Whitehouse, 2294.
Decision Date | 17 February 1930 |
Docket Number | No. 2294.,2294. |
Citation | 38 F.2d 162 |
Parties | COMMISSIONER OF INTERNAL REVENUE v. WHITEHOUSE. |
Court | U.S. Court of Appeals — First Circuit |
Morton P. Fisher, Sp. Asst. to Atty. Gen. (Sewall Key, Sp. Asst. to Atty. Gen., and C. M. Charest, Gen. Counsel, and Stanley A. Suydam, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., on the brief), for petitioner.
Robert W. Candler, of New York City and Marion N. Fisher, of Washington, D. C. (Spotswood D. Bowers, of New York City, on the brief), for Whitehouse.
Before BINGHAM, ANDERSON, and WILSON, Circuit Judges.
This is an appeal by the Commissioner of Internal Revenue from an adverse decision of the Board of Tax Appeals in 7 B. T. A. 600. It involves the question whether an annuity of $5,000, bequeathed to Sybil Whitehouse by James Gordon Bennett, is taxable to her as income. Bennett, a citizen of New York, died on May 14, 1918, leaving a will, duly probated, by which the appellee and several others were left annuities aggregating over $100,000; the residue of the estate was left to a public charity, the James Gordon Bennett Memorial Home for New York Journalists, to be incorporated "as soon as practicable." Pending such incorporation, the income of the estate was left to three friends (also made executors) absolutely. The Home was organized in May, 1919, about a year after Bennett's death. By the executors' account on December 30, 1920, they show that they had permanently set aside to the Home a residue of personal property of $3,133,260, subject to taxes, annuities, and other charges. This annuity, and most of the others, were paid from the corpus of the estate, until November 14, 1920; thereafter this and most of the others, from income.
The applicable provisions of the Revenue Act of 1921, c. 136, 42 Stat. 227, 237, are as follows:
The present question is whether this annuity was a gift or bequest under section 213 (b) (3), supra, or was distributive income taxable under section 219 (a) (4), supra.
We think the Board of Tax Appeals was right in holding it a bequest within the fair meaning of section 213 (b) (3), and therefore not taxable as part of the annuitant's income.
In general, we observe that the opinion of the Board of Tax Appeals is sound and adequate, both in its reasoning and in its citation and treatment of the pertinent authorities; it leaves little to be added by this court.
The law of New York obviously controls in construing the will. De Vaughn v. Hutchinson, 165 U. S. 566, 570, 17 S. Ct. 461, 41 L. Ed. 827.
The corpus of the estate of the testator was charged with the payment of the annuities. No specific fund was set aside in trust for their payment. Pierrepont v. Edwards, 25 N. Y. 128; Clark v. Clark, 147 N. Y. 639, 42 N. E. 275; Peck v. Kinney (C. C. A.) 143 F. 76, and authorities cited. In Matter of Toms, 84 Misc. Rep. 312, 147 N. Y. S. 550, 554, the court said:
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