Source: https://supreme.justia.com/cases/federal/us/295/112/
Timestamp: 2019-04-21 04:35:24+00:00

Document:
1. Under the Revenue Act of 1924, the ward, not the guardian, is the "taxpayer." P. 295 U. S. 115.
2. An attorney's fee paid by a guardian on behalf of and out of the income of his ward, who was not engaged in any business, for the conduct of litigation to recover income for the ward, held not deductible under § 214(a)(1) of the Revenue Act of 1924 as an ordinary or necessary expense incurred in carrying on a business. Id.
Certiorari, 293 U.S. 537, to review a judgment reversing a decision of the Board of Tax Appeals which reversed an order of the Commissioner disallowing a deduction from income tax.
filed by the guardian on behalf of his ward, a deduction of the attorneys' fee was claimed."
The Board of Tax Appeals held the attorney's fee was deductible as an ordinary and necessary expense in carrying on business. § 214(a)(1). The Commissioner claimed it was personal expense of the minor taxpayer, excluded from deduction by § 215(a)(1), and the court below upheld this view. It declined to follow Commissioner v. Wurts-Dundas, Circuit Court of Appeals, Second Circuit, 54 F.2d 515. Because of this conflict, the cause is here.
attorney's fee arose out of litigation conducted in the name of the ward. It was paid for her benefit out of her income.
"The whole of a minor's income received by his guardian is taxable to the minor irrespective of its accumulation in the guardian's hands, distribution to the minor or payment for his support or education. . . . Either the minor or his guardian must make the return, but in either case it embraces all the income, and is the minor's individual return, not that of the guardian or the trust."
The ward was not engaged in any business. So far as appears, the same thing is true of the guardian. See Kornhauser v. United States, 276 U. S. 145; Commissioner v. Field, 42 F.2d 820; Hutchings v. Burnet, 61 App.D.C. 109, 58 F.2d 514; Walker v. Commissioner, 63 F.2d 351; Lindley v. Commissioner, 63 F.2d 807. Moreover, guardianship is not recognized by the statute as a taxable entity.
"Sec. 2(a) When used in this Act --"
"(1) The term 'person' means an individual, a trust or estate, a partnership, or a corporation. . . ."
"(9) The term 'taxpayer' means any person subject to a tax imposed by this Act."
"Sec. 214(a) In computing net income there shall be allowed as deductions:"
"(1) All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. . . ."
"Sec. 215(a) In computing net income, no deduction shall in any case be allowed in respect of --"
"(1) Personal, living, or family expenses."
"Sec. 225(a) Every fiduciary (except a receiver appointed by authority of law in possession of part only of the property of an individual) shall make under oath a return for any of the following individuals, estates, or trusts for which he acts, stating specifically the items of gross income thereof and the deductions and credits allowed under this title -- "
"(1) Every individual having a net income for the taxable year of $1,000 or over, if single, or if married and not living with husband or wife."

References: § 214
 § 214
 § 215
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