Court Opinion

ID: 5788317
Source: CourtListenerOpinion
Date Created: 2022-01-12 18:04:44.066655+00
Date Added: 2024-06-11T08:42:10.808962
License: Public Domain

Staiet, Jr., J.
(dissenting). Petitioner contends that the amount of commissions he received as a coexecutor of an estate is taxable income as of the date of the final decree settling the executors’ accounts, rather than the date of receipt of payment of said commissions. The date of the decree was December 16, 1958, and the commissions were received by petitioner in January, 1959. The record does not disclose what income was included in petitioner’s income tax return for the calendar year 1958, which return was presumably filed on or about April 15, 1959, at least two months after the receipt of the payment. The record does show, however, that petitioner included the item of commissions in his Federal income tax return for the year 1959, but omitted the item from his New York State income tax return of 1959 with a statement that the amount of the commissions became “duo and■ immediately available to tax*301payer” on the date of the final decree. Petitioner concededly reported his income on the cash receipts basis.
Section 359 of the Tax Law in effect in 1958 arid 1959 provided as follows: “The term ‘gross iricome’: 1. Includes gains, profits and income derived from salaries, wages or compensation for personal service, of whatever kind and in whatever form paid . * * *. The amount of all such items shall be included in the gross income for the taxable year in which received by the taxpayer, unless,.under the methods of accounting permitted in this article, any such amounts are to be properly accounted for as of a different period ”.
The New York State Income Tax Regulations provided that, if n$) determination of compensation is had until the completion of services, the amount received is ordinarily income for the taxable year in which received if the return is rendered on the receipts and disbursements basis.
Petitioner contends, that although he did riot receive the commissions until January, 1959, that he, nevertheless, constructively received the commissions in 1958 and should be taxed as income earned in that year.
“In probate admiriistration, executors are regarded as separate legal persons in their individual and official capacities. In exercising their discretion when to pay to themselves as individuals money pursuant to decrees directing payment but leaving it discretionary with them when payment shall be made, they must consider the interest of the estate without regard to their personal interest. Accordingly, a mere court award of commissions has been held not to be equivalent to constructive receipt of the commissions where the executor performs no official act showing that the money was available to him in a personal capacity. ” (33 Am. Jur. 2d, Federal Taxation [1973], § 3096.)
The holding of the majority that petitioner constructively received the commissions in 1958 in effect is treating such item as an accrued item of income, and would result in, a rule that whenever services are completely rendered, the value of such services becomes taxable income at that time regardless of when the payment for such services is received.
Under the facts of this proceeding, it is incredible to permit petitioner to avoid taxation by the State of New York of the amount of the commissions received in 1959, and may even result in permitting snch income to avoid being subject to any income tax to the ¡State of New York.
*302Herlihy, P. J., and Kane, J., concur with Reynolds, J.; Staley, Jr., and Sweeney, JJ., dissent and vote to confirm in an opinion by Staley, Jb., J.
Determination annulled, and petition granted, with costs. .