#### State ex rel. Brenk, Respondent, vs. Widule, Clerk, etc., Appellant.

*October 6*

October *26, 1915.*

*Taxation of incomes: Inheritance of real estate: Income from without the state.*

Assuming, but not deciding, that an inheritance, received by a resident of this state, of real estate located in another state is income within the meaning of the state Income Tax Law, it is within the class of incomes derived from sources wholly without the state and therefore not taxable under that law.

Appeal from a judgment of tbe circuit court for Milwaukee county: LaweeNce W. Halset, Circuit Judge.

*Affirmed.*

*Gertiorari*to reverse tbe action of tbe income tax board of review of tbe county of Milwaukee in assessing an inheritance of real estate located in tbe state of Michigan as a part of tbe taxable income of tbe relator.

Tbe relator is a resident of tbe state of Wisconsin and engaged in business in tbe city of Milwaukee. Mary Brenk, mother of the relator, died on tbe 14th day of April, 1913, in tbe city of Jackson, Michigan, and left an estate consisting entirely of real estate, all of which is located in tbe state of Michigan. Tbe relator’s share of tbe estate amounted to $7,316.80. On tbe 24th day of February, 1914, tbe relator made a report of bis income for tbe year 1913 and filed tbe report with tbe county assessor of incomes for tbe county of Milwaukee. In this report be listed tbe inheritance here in question under tbe bead of “Gross income,” but claimed the right to deduct tbe inheritance from tbe amount shown on bis report under tbe bead of “Deductions and exemptions.”

The county assessor refused to allow tbe deduction and the county board of review sustained tbe bolding of tbe assessor. •Tbe relator then appealed to tbe Wisconsin tax- commission *397and tbe commission entered an order confirming tbe action of tbe county assessor and tbe board of review.

Tbe relator petitioned for and tbe circuit court for Milwaukee county allowed a writ of *certiorari*to review tbe action of tbe assessing officers. Tbe circuit court entered judgment annulling tbe acts of tbe county assessor of incomes and tbe income tax board of review of Milwaukee county and allowing tbe inheritance to be deducted from tbe taxable income of tbe relator. From sucb judgment tbis appeal is taken.

For tbe appellant there was a brief by tbe *Attorney Gertr eral, E. E. Brossard,*assistant attorney general, *Winfred 0. Zabel,*district attorney of Milwaukee county, *W. L. Tibbs*and *Daniel W. Sullivan,*assistant district attorneys, *Daniel W. Hoan,*city attorney of Milwaukee, and *Max Schoetz, Jr.,*assistant city attorney; and tbe cause was argued orally by *Mr. Brossard, Mr. Sullivan,*and *Mr. Schoetz.*

For tbe respondent there was a brief by *Alexander & Burlce,*and oral argument by *E. P. Burlce.*

Siebecker, J.

Tbe inquiry is, Did tbe court err in bold-ing that tbe real estate tbe relator inherited from bis mother is not taxable as income under tbe provisions of tbe state Income Tax Act ? Tbe inheritance, consisting of real estate, is located in tbe state of Michigan, and was received by tbe relator from his-mother, who at tbe time of her death in April, 1913, was a resident of tbe state of Michigan. Relator was then a resident of tbe city of Milwaukee, and in tbe month of February, 1914, made return of his income for tbe year of 1913 to tbe assessor of incomes for tbe county of Milwaukee for purposes of taxation.

Sec. IOSIto — 10, Stats. 1913, provides that the state tax commission and assessors of income shall annually on January first, or as soon as,practicable thereafter, assess every income received during tbe preceding calendar year liable to *398taxation under tbe law. Tbe law in force January 1, 1914, must control in tbe instant case. Sub. 2, sec. 1087m- — 2, declares that tbe term “income,” as used in tbe act, shall include: (a) All rent of real estate; (b) all dividends from stock and interest from money loaned or invested; (c) all wages, salaries, or fees; (d) all business profits; (e) all royalties from mines, franchises, and legalized privileges; (f) “and all other gains, profits or income of any kind derived from any source whatever except such as hereinafter exempted.” Sec. 1087m — 4 provides for various deductions, and among others specifies the following in sub. (i) : “All inheritances, devises and bequests received during the year which are subject to and have complied with the inheritance tax laws of this state.” The taxing authorities of Milwaukee county and the state tax commission, it is stated, have included inheritances as being “income” within the provisions of the Income Tax Act and determined that relator’s inheritance of real estate located in the state of Michigan was assessable income. The provisions of the act do not clearly express the legislative intent on this subject. The correctness of the interpretation the taxing authorities have given this part of the statute is important, and in the light that the issues of the case now before us will be finally determined under another phase of the statute, we deem it advisable not to determine whether or not an inheritance is income within the meaning of the Income Tax Act. Assuming, without deciding, that relator’s inheritance of real estate located in the state of Michigan is income within the meaning of this statute, is it assessable under the provisions of this act? The provisions of sub. 3 of sec. 1087m- — 2, Stats. 1911, were fully considered and construed in the case of *State ex rel. Arpin v. Eberhardt,*158 Wis. 20, 147 N. W. 1016. Upon full discussion and consideration of the different parts of this statute it was determined that:

> “All income received by residents of the state from sources *399witbin it is taxable, and all income of sncb residents from sources without the state on account of rentals, stocks, bonds, securities, or evidences of indebtedness is taxable. No other income is made taxable by the law and therefore cannot be taxed.”

Nothing is suggested nor do we perceive any reasons why this was not the correct interpretation of the statute. The provisions of this section as amended in 1913 do not change the law in this respect. Assuming for the purposes of this case that this inheritance is “income” within the meaning of the Income Tax Law, it is within the class of incomes derived from sources wholly without the state, and therefore is not taxable under the law. The trial court properly set aside the action of the Milwaukee county income tax board of review by which relator was refused a deduction of the amount of $7,316.80, the sum he specified in his income tax return as an inheritance of real estate located in the átate of Michigan.

*By the Qourt.*— The judgment appealed from is affirmed..