Court Opinion

ID: 4495561
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:23.843079+00
Date Added: 2024-06-11T14:54:10.072959
License: Public Domain

Arttndell,
dissenting: In every practical sense the petitioner’s wife received the executrix’s commission of $142,707.88 in 1930 and should pay a tax thereon in that year as contended for by the Commissioner. Petitioners were on a cash receipts and disbursements basis. The facts are simple. Emily E. Cadwalader and her sister were executrices of the estate of Charles G. Eoebling, their father. The holding of the Bureau of Internal Revenue at that time required that executrices’ commissions must be paid before a deduction might be had for estate tax purposes. The estate was without ready cash to make the payments. Mrs. Cadwalader and her sister, therefore, advanced the money to themselves as executrices and issued a note to each covering the so-called loan. They immediately took back the money, together with the note. In 1927 this transaction was examined by a revenue agent, who recommended that the executrix’s commission be included in income for the year 1925. Mrs. Cadwalader protested this suggestion on the ground that she in fact had received no income from the estate. The Commissioner accepted her plea and the item was eliminated from taxable income and no tax paid. I believe that this action was correct for she had in effect simply received a note for her claimed commission and the whole matter was one of accommodation in order that the Eoebling estate might secure a deduction for tax purposes. When in fact the commission of $142,-707.88 was allowed by the court and paid in 1930, instead off reporting this sum as income, Mrs. Cadwalader urged that she should have been taxed on it in 1925. As 1930 was the year in which she in fact received the cash commission from the Eoebling estate, that is the year in which the income was received and the tax upon its receipt due. The Commissioner should prevail.
Smith and Sea well agree with this dissent.