Court Opinion

ID: 4603233
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:31:30.12422+00
Date Added: 2024-06-11T07:59:38.858524
License: Public Domain

MINNIE STRAUS WEIL, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Weil v. CommissionerDocket No. 10780.United States Board of Tax Appeals11 B.T.A. 415; 1928 BTA LEXIS 3811; April 4, 1928, Promulgated *3811  The beneficiary of a trust who receives the income for life and has the power of appointment by will of the remainder has no right to deduct a loss sustained by the trustee in the sale of part of the corpus of the trust.  Manford W. Ehrich, Esq., for the petitioner.  John F. Greaney, Esq., for the respondent.  STERNHAGEN *415  Deficiency of $3,450.23 income tax for 1919.  The Commissioner disallowed a deduction of $9,041.67 taken by petitioner as a loss resulting from the sale of securities, part of the corpus of a trust fund of which she was beneficiary.  FINDINGS OF FACT.  The petitioner was during 1919 the beneficiary of a trust created by the will of her father, Isidor Straus.  The material portions of the will are as follows: FOURTH: I give, devise and bequeath to my executors hereinafter named three separate sums of Five hundred thousand dollars ($500,000.) each to be held by them in trust nevertheless, for the following uses and purposes, that is to say: To invest and reinvest each of said sums from time to time in such securities as they may deem proper, (subject to the restrictions hereinafter provided) and to collect the rents, *3812  issues, income and profits thereof, and after the payment of all taxes and expenses, to pay the net income of one such sum to each of my daughters, SARAH HESS, wife of DR. ALFRED F. HESS, MINNIE WEIL, wife of DR. RICHARD WEIL, and VIVIAN SCHEFTEL, wife of HERBERT A. SCHEFTEL, respectively for and during her natural life, and upon her death to divide the *416  principal of the trust fund set aside for her among such persons, in such propoitions as she may by her Last Will and Testament direct, or in the event of her failure to dispose of said principal sum, in whole or in part, by a Last Will and Testament, then I direct my executors to distribute the whole, or such part of the principal as remains undisposed of, amongst such persons as would have been entitled to take the same under the intestacy laws of the State of New York, if she had been the sole and absolute owner of said fund.  During 1919 certain securities which were a part of the corpus of the trust for this petitioner were sold at a loss of $9,041.67.  OPINION.  STERNHAGEN: The petitioner urges her right to deduct on her own return the loss sustained by the trustee in the sale of part of the corpus.  The adverse*3813  rule announced in , and by the Board in , , and , is sought to be distinguished because here the petitioner was not only the beneficiary of income for life but was the donee of a power of appointment of the remainder.  But in New York this does not give her the fee.  , affd. ; . The appointee takes from the donor.  . There is no significance in the cases cited by petitioner where the creator and beneficiary are held under the New York Personal Property Law entitled, as against the trustee, to break a trust where there are no present conflicting interests.  Here, as in the earlier cases already cited, there is no present effect of the sale upon the beneficiary, who pays tax only upon the income she receives.  The direct impact of the loss is not upon her.  She can not complain if because*3814  of the lack of a present identified owner of the remainder there is no taxpayer to suffer the loss or take the deduction.  Her income is nevertheless received by her and subjects her to the tax.  Judgment will be entered for the respondent.