Evening star., 1927-02-24
TAFT MAY Be TAXED
ON CARNEGIE GIFT
A. Other Annuitants, IncIud-
ing Lloyd George, A.
fected by Ruling.

PHILADELPHIA. February "A P)
William III. Taft. Chief Justice OF
the United States; David Lloyd
George, former Premier of England
Mrs. Theodore Roosevelt and Mrs
Grover Cleveland and the Right Hon
John Burns are among a number OF
national and International celebrities
who may have to pay United States
income taxes on annuitieS ranging
from $1,000 to $4,000 they are recelN-
ing from the estate of the late An
drew Carnegie.
In an Interpretation given yester-
day of the annuity clauses of the Will
of the renowned iron master the
United States Circuit Court of APP
peals. in a decision by Judge Victor
Is. Woolley, ruled that the moneys
with which the Home Trust Co. of
New York, executor and trustee of
the Carnegie estate, pays the annual
gifts to these notables and 40 others,
personal friends and employees of Mr..
Carnegie, is derived from trust funds,
and is Income" within the meaning
OF the Federal tax laws and amenable
to taxation.
Annuities Were Held Gifts.
AC tOuII Sel dSfue lUe IultlS Ol
Judge Schoonmaker of the United
States District Court at Pittsburgh,
who in test suit filed by the estate
OF John W. Beatty, IL director of the
Carnegie Institute at Pittsburgh, held
that 10 annu1ties were outright gifts
by Mr. Carnegie and not assessable
under the income tax laws. Mr..
Beatty was left an annuity of $5. 900.
Justice Taft receives $4,000 a year
from the Carnegie estates; Lloyd
George likewise gets an annuity of
Cleveland and the Hon. Mr.. Burns
each receive $4,000 yearly Other
beneficiaries are Miss Margaret Will
son of the Normal College of New
York, $4,000; Walter Damrosch. i'm
pressario. $4,000: Mr.. Tuttle, secretary
OF the Ofatorio Society of New York
$4,000; John Morley, London, $5,0OO:
John Wilson and Thomas Burt. mem.
bers of Parliament, and Sir Swire
Smith, each $4,000.
Others Provided For.
MIR. Carnegie made handsome pro-
VISIONS for mary other friends and
also for the help of his estate at
Skido, Scotland, and added also TO his
long list of contributions to education
and social and educational advance
ment.
The fundamental legal proposition
involved was whether because of the
TACT the executor had set aside securi.
ties from the principal of Mr.. Car
negles estate to assure the payment
OF the $4,000 annuity to Mr.. Beatty.
the gift became taxable because ii
was paid with income from an invest.
ment.
Judge Schoonmaker ruled the gift
was not taxable because the iron
master had not mentioned i'm any way
.ne remembrance was to come out of
income from any part of his estate.
In disagreelng with this view
Judge Woolley, rendering the opinion
Tor the court composed of himself.
Judge Burlington and Judge Davis,
asserted that If the annuities were
paid from the principal of Mr.. Carne.
g1e's estate, there was the legal posi-.
bility they would not be taxable, but
ne pointed out that the testator
vested in his executor the authority
to set apart any of the securities he
owned in amounts sufficient to pro-
duce the annuities to the persons
specified, or to purchase annuities for
the beneficiaries.
May Go to Supreme Court.
Judge Schoonmaker's decree allowed
Mrs. Cora b. Beatty, executrix of the
estate of her husband to recover $572
from the collector of internal reve-
nue. for the Pittsburgh district, which
was the tax paid on the $1,000 he
received from the Carnegie fund for
1920. Mr.. Beatty died September 20,
1924.
It. Is said today decision will affect
all of the Is annuitants, as the execu-
tor of the Carnegie estate withdrew
from the principal sufficient securities
to insure the payment of the annuities
designated by Mr.. Carnegie.