Case Name: State ex rel. Hickox, Executor, Respondent, vs. Widule, Appellant
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1917-10-23
Citations: 166 Wis. 113
Docket Number: 
Parties: State ex rel. Hickox, Executor, Respondent, vs. Widule, Appellant.
Judges: 
Reporter: Wisconsin Reports
Volume: 166
Pages: 113–126

Head Matter:
State ex rel. Hickox, Executor, Respondent, vs. Widule, Appellant.
March 15
October 23, 1917.
Income taxation: Deductions: Annuity paid from income received by trustee: Taxes paid on nonproductive property.
1. Where property is willed in trust to be invested and a specific amount per year paid out of the net income to a designated beneficiary for life, and such beneficiary’s interest in the estate is appraised and the statutory inheritance tax paid, the yearly income received by the trustee for the beneficiary is subject to taxation under the Income Tax Law of this state.
2. General taxes paid on nonproductive property are not a proper deduction, under sub. (h), see. 1087m — 4, Stats.
Wixslow, C. J., and Eschweiler, J., dissent.
Appeal from a judgment of the circuit court for Milwaukee county: J. G. Ludwig, Circuit Judge.
Reversed.
The appeal is from a judgment in a proceeding which annulled an assessment of $115 made by the assessor of incomes for Milwaukee county and affirmed by the board of review and tax commission, upon an income reported by the relator as executor of the will of Samuel A. Field.
The will in question, after bequeathing a legacy of $20,000 to his wife, gave the residue of his estate to his executors in trust to manage, control, and invest during the life of his wife, and further provides as follows:
“Ten. Ont of the income from my estate herein conveyed in trust, and after deducting the costs and expenses of managing and preserving the property and the annual charges and expenses of managing the trust, I will and direct that my said executors and trustees pay to my said wife quarterly during her natural life, for her own use and benefit, such net income to the amount and extent of five thousand ($5,000) dollars per annum, commencing from the date of my decease.”
The county court determined that the value of the estate transferred in trust on January 4, 1911, was $32,821, and assessed an inheritance tax thereon of $520.32, which was paid by Mrs. Field January 30, 1911. The will gives the residue of the estate to nephews and nieces of Samuel A. Field living at the time of Mrs. Field’s death. The amount of the inheritance tax upon the residue was held in abeyance by the county court until the death of Mrs. Field, when the necessary facts could be ascertained. In March, 1915, the respondent, as executor, returned to the assessor of incomes a correct statement of the entire incomes received by him for the year 1914, the statement of return showing gross receipts of $8,860.92. The executor claimed and was allowed deductions aggregating $2,360, which represented interest paid and expenses of administration, but a deduction of $5,000, an-nuitjr to Mrs. Field, claimed, and also taxes paid on nonproductive property in the sum of $1,953.51, were refused.
The assessor levied a tax of $115 on the $6,500 income remaining after deducting $2,360. The findings and levy of tax made by the assessor were affirmed by the board of review and the'tax commission, and the circuit court reversed such action and set aside the tax assessed.
For the appellant there was a brief by the Attorney General, E. E. Brossard, assistant attorney general, Winfred G. Zabel, district attorney of Milwaukee county, and D. W. Sullivan, assistant district attorney; and the cause was argued orally by Mr. Brossard.
Chas. T. Hickox of Milwaukee, for the respondent.

Opinion:
The following opinions were filed June 12, 1917:
Tvekwin, J.
The questions presented by the appellant, as stated in the brief of counsel, are in substance as follows: (1) When a testator wills property in trust to be invested and a specific amount per year paid out of the net income to a designated beneficiary for'life, and such beneficiary's interest in the estate is appraised and the statutory inheritance tax paid, is the yearly income received by the trustee for the beneficiary subject to taxation under the Income Tax Law of this state? (2) Are general taxes paid on nonproductive property a proper deduction under the Income Tax Law ?
Counsel for appellant assign the following error: The court erred in holding that the assessment of $6,500, received by the executor in 1914 as income from the trust estate in question, was void for the reasons: (1) that the executor was not entitled to a deduction of $1,953.51 on account of taxes paid on nonproductive property; (2) that the executor was not entitled to a deduction of $5,000 on account of the payment of this sum to testator's widow in accordance with the provisions of the will; (3) that the income received by the testator, as such, during the year 1914 was $8,860.92, from which he was entitled to no deduction except $2,360 for interest paid on existing indebtedness of the estate and necessary expenses in producing the income, leaving a net taxable income of $6,500.
We are of opinion that the error is well assigned.
It is perfectly clear under the statute that the deduction claimed on account of taxes paid on nonproductive property was not allowable. Sub. (h), sec. 1087m — 4, Stats. This statute allows deductions for "Taxes paid by such persons during the year other than inheritance taxes upon the property or business from which the income hereby taxed is derived." It is without dispute that the taxes sought to be deducted in the instant case were not paid upon property or business from which the income was derived.
A majority of the court is of the opinion that the yearly income received by the trastee, less the deduction made of $2,360, was subject to taxation under the Income Tax Law; but no four justices agree upon the reasons for their conclusions, hence none can be given.
Bp the Qourt. — The judgment of the court below is reversed, with costs, and the cause remanded with instructions to affirm the levy of the tax made by the assessor.and affirmed by the tax commission.