Weston v. Commissioner

• Decision Date: 04 October 1965
• Docket Number: Docket No. 266-64.
• Citation: 1965 TC Memo 264,24 TCM (CCH) 1439
• Parties: Lawrence O. Weston v. Commissioner.
• Court: U.S. Tax Court

24 T.C.M. (CCH) 1439 (1965)

T.C. Memo. 1965-264.

Lawrence O. Weston v. Commissioner.

Docket No. 266-64.

United States Tax Court.

Filed October 4, 1965.

Anthony E. Spitaleri, for the petitioner. Lawrence A. Wright, for the respondent.

Memorandum Findings of Fact and Opinion

BRUCE, Judge:

Respondent determined deficiencies in the income tax of the petitioner for the years 1959, 1960 and 1961, in the amounts of $587.35, $345.87, and $896.63, respectively. The only issue presented is whether the petitioner, Lawrence O. Weston, beneficiary under the Leroy A. Weston Trust, is entitled to deduct in the taxable years 1959, 1960 and 1961, losses in the amounts of $3,479.47, $10,710.92, and $5,976.77, respectively, as representing his proportionate share of losses incurred by the trust.

Findings of Fact

The stipulation of facts and exhibits attached thereto are incorporated herein by this reference.

Petitioner Lawrence O. Weston is a resident of Adams, Massachusetts, and filed his individual Federal income tax returns for the years 1959, 1960 and 1961, including an amended return for 1960, with the district director of internal revenue at Boston, Mass.

Leroy A. Weston died testate on November 13, 1937, survived by his wife, Mary O. Weston, and two sons, Lawrence O. Weston, petitioner herein, and William Donald Weston. Under the will of Leroy A. Weston, all the residue of his estate remaining after payment of his debts, funeral expenses and certain minor specific bequests, was left to his son Lawrence O. Weston in trust. The fifth and sixth paragraphs of the will provided as follows:

Fifth: (a) All the rest, residue and remainder of my estate, real and personal, whether now possessed or hereafter to be acquired, I give, devise and bequeath unto my son, Lawrence O. Weston, in trust nevertheless, for the following uses and purposes: After my estate has been settled, the net assets thereof, including my plumbing business located at North Adams, Massachusetts, and my gasket and form business located in Adams, Massachusetts, shall be held by my trustee. One-third thereof shall be deemed vested in my said wife and the final distribution thereof shall be in accordance with her will or the intestate laws of the commonwealth. The distribution of the balance shall be as hereinbelow set forth.

(b) Said plumbing business and gasket and form business which have been in existence for many years I wish continued under the management of said trustee. The latter shall have full power to carry on said business in the same general way that it has been carried on heretofore. He is hereby granted full power and authority to enlarge either of said business establishments if in his judgment he deems it wise to do so, and he may pledge or mortgage the trust estate or any part thereof in order to raise moneys which from time to time may be required to successfully carry on the business.

(c) While the business is continued and this trust remains in existence, my trustee shall receive just and reasonable compensation for services performed in carrying on the same. At the end of each year my trustee shall render an accounting and at such times, if the condition of the business warrants it, such dividend as he shall decide shall be paid in the following proportions: One-third of the surplus to be divided shall be paid to my said wife for her own use forever; the balance shall be divided between my son Lawrence and my son William Donald in the following proportions: Of each four hundred twenty-five ($425) dollars to be divided, Lawrence shall receive three hundred twenty-five ($325) dollars and shall retain in separate account as trustee for said son William Donald the sum of one hundred ($100) dollars to be invested and expended as hereinbelow provided.

(d) This trust for the operation of my said business establishments shall be continued for ten years from my decease, if said son Lawrence shall live that long; it may be continued longer if all the beneficiaries so agree. It shall be terminated in any event upon the death of said Lawrence.

(e) Upon termination (for whatever reason) the trust fund hereby established shall be divided as follows:

1. To my wife, her legatee or legatees, heir-at-law or heirs-at-law, one-third of said trust fund.

2. If both sons are living at the time of the termination of this trust, the balance of the trust fund shall be divided between my sons on the above stated basis, that is, three hundred twenty-five ($325) dollars to said Lawrence to each one hundred ($100) dollars set apart and held by said Lawrence for the benefit of said William Donald.

3. If said William Donald has decreased leaving no widow or issue, his share shall be divided equally between my said wife and Lawrence.

4. If Lawrence is deceased leaving no widow or issue, his share shall be divided equally between my wife and William Donald.

5. If William Donald has deceased leaving a wife, said William Donald's share shall go to her. If he shall leave a wife and/or issue, William Donald's share, that is, on the basis of one hundred ($100) dollars to each three hundred twenty-five ($325) dollars which Lawrence shall receive, shall be held by said Lawrence as trustee for William Donald's family and expended in accordance with the terms and conditions hereinbelow set forth.

6. If Lawrence is deceased leaving a wife, one-half of the share he would have received, that is, on the three hundred twenty-five-one hundred dollars basis, shall go to his wife. The balance shall be equally divided between my wife and William Donald. If Lawrence should decease leaving a wife and/or issue, two-thirds of the share he would have received if living shall belong to his wife and/or issue and the balance of the trust fund he would have received if living shall be divided equally between my wife and said William Donald.

7. If both sons have deceased, leaving neither widows nor issue, at the time of the expiration of this trust, the entire trust estate shall go to my said wife for her own use forever.

(f) The income from above trust fund which shall accrue to my said son William Donald and/or the share to which he or his family shall become entitled by a sale of either of my business establishments shall be held by my said son Lawrence as trustee, nevertheless, for the following uses and purposes: Said fund and any additions thereto shall be safely invested and the interest and whatever portion of the principal which in the discretion of my said son Lawrence is necessary for the support and maintenance of said son William Donald and/or his family shall be used for that purpose. Said trustee shall have full power to pay over to said William Donald the whole or any part of this trust estate at any time he shall so choose, but the time and amount of payment shall be in his absolute discretion. If William Donald should decease leaving a wife but no issue, the balance of this trust fund shall be paid immediately to said wife. If said son William Donald should decease leaving wife and issue, this trust fund shall be used for the family's benefit and the balance, if any, shall be paid over to said family in accordance with the distribution laws of the Commonwealth when William Donald's child or the youngest of his children reaches his or her majority.

Notwithstanding anything herein contained, it is my intention that the trust hereby established for the benefit of William Donald and/or his family shall not be continued beyond the death of said son Lawrence, and therefore, at his death, the trust hereby established shall be deemed terminated and the trust fund

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