Court Opinion

ID: 4496573
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:56.908451+00
Date Added: 2024-06-11T09:47:09.346968
License: Public Domain

Leech,
concurring: The holding of the majority is predicated wholly upon the premise that the conduct and management of the petitioning trusts, during the taxable year, was not a “carrying on [ of] any trade or business.”
The trusts in question, apparently, had existed, in fact; for some 14 years. The powers of the trustees wore very broad, including a right to invest and reinvest the principal and to collect income. The corpus of each trust was large and the income therefrom correspondingly substantial. Obviously, such income was so substantial that $35,000 therefrom was paid to each of the two present trusts annually for the support of their respective beneficiaries. This was so during the tax year. These facts seem to me to be implicit in this record. Therefore, I think that the conduct and management of these trusts during the taxable year was the “carrying on of [a] trade or business” drying the taxable year. Flint v. Stone Tracy Co., 220 U. S. 107; John H. Watson, Jr., et al., Trustees, 35 B. T. A. 706; acquiesced in by the respondent (C. B. XVI-18-8673).
Although the record does not disclose the identity of the items deducted by the petitioners which were allowed by the respondent, since the deduction of compensation for the trustees is not contested, it would seem such an item had been allowed. In any event, from a reading of the respondent’s brief, the respondent apparently placed little if any reliance on the position that the conduct and management of the petitioning trusts did not constitute the carrying on of a trade or business during the taxable year. Thus, his brief states:
* * * It is the position of the respondent that the attorney’s fees were capital expenditures incurred by the executors of the estate and were made *972to increase the value of the estate, and hence not an ordinary and necessary expense, and that in any event they were expenditures occurred [sic] in an isolated, unusual and extraordinary transaction, and were not ordinary and necessary expenses in carrying on any business.
If the action of the respondent in disallowing the disputed deductions is correct, it is so, in my opinion, because the payments supporting those deductions were made in the acquisition of capital assets and, for tax purposes, are nondeductible capital expenditures.
Stephens Fuel Co., 13 B. T. A. 666; Columbia Theatre Co., 3 B. T. A. 622; First National Bank of St. Louis, 3 B. T. A. 807; Emerson Electric Manufacturing Co., 3 B. T. A. 932; Charles P. Hewes, 2 B .T. A. 1279; Laemmle v. Eisner, 275 Fed. 504. Cf. S. & L. Building Corporation, 19 B. T. A. 788 (reversed on other grounds); Spinks Realty Co., 21 B. T. A. 674; affd., 62 Fed. (2d) 860; certiorari denied, 290 U. S. 636; Central Bank Block Association, 19 B. T. A. 1183; affd., 57 Fed. (2d) 5; Horn & Hardart Baking Co., 20 B. T. A. 486; Clara Hill Lindley, 26 B. T. A. 741; affd., 63 Fed. (2d) 807,
ARNOLD concurs in the above.