First Nat'l Bank v. Commissioner

*1428 The Commissioner determined a deficiency in income tax of $ 63,625.32 for the year 1941. The issues presented are: (1) Whether the respondent erred in failing to allow deductions in the amount of the income of the estate claimed by petitioner as income currently *1429 distributable under section 162 (b) of the Internal Revenue Code to the beneficiaries of a testamentary trust created by decedent's will, those beneficiaries not including the widow, who, by reason of her dissent from the will, ceased to be a beneficiary of the trust; and (2) whether the respondent erred in including in the net income of petitioner income which petitioner claims never belonged to decedent's estate for the reason that it was income of the widow of decedent from property belonging to her from the instant of decedent's death, and thereafter by reason of her dissent from the will. The petition prays, inter alia, that we determine that petitioner is entitled to a refund of $ 4,453.93 claimed as overpayment of income tax for 1941.

FINDINGS OF FACT.

On September 3, 1940, letters testamentary were issued by the Chancery*5 Court of Obion County, Tennessee, to the petitioner as executor of the estate of Hugh C. Smith, who died, testate, August 25, 1940. The petitioner had been designated in the will of Hugh C. Smith as executor and trustee. The estate of Hugh C. Smith was, throughout the taxable year and thereafter, still in the process of administration. Petitioner, as executor, filed the income tax return for the estate for the year 1941 with the collector of internal revenue for the district of Tennessee.

After directing the payment of all his debts and funeral expenses and providing for cash legacies totaling $ 26,000 and devising and bequeathing to his wife their home and all the household effects therein, the will of decedent provided, in part, as follows:

Third. All the residue of my estate, both real and personal, I devise and bequeath in trust to the First National Bank of Memphis, as Trustee, to be held and managed by it, and subject to the following conditions:

From the net income derived from my estate, the Trustee is to pay my wife, Laura, the sum of Six Hundred ($ 600) Dollars per month during her life, and to my brother, Romaldus J. Smith and my sister, Eileen Smith Cowhig, the sum*6 of Three Hundred ($ 300.00) Dollars per month, each, during their life-time. In addition to these monthly payments, the said Trustee is given full discretionary power to increase or decrease these monthly allowances as my income may permit, for the benefit of any of the said parties, in the event of any unforeseen contingency, which in its discretion, makes the said increase or decrease necessary.

After the payment of all inheritance taxes, both Federal and State, the Trustee is not to be limited in the distribution of the net income to the amounts above stated, but is to distribute the entire net income to my wife and my said brother and sister, or their children, in the event of their deaths before the termination of this trust, in the same proportion as is herein provided, but never less than the amounts hereinabove stated; i. e., the amount of income to be paid my wife in any event to be twice the amount paid to my brother and sister, or their heirs.

Fourth: In the event of the death of my brother or sister, the children of any deceased brother or sister is to have their parent's share of income equally distributed among them, except Jack Turner, who is to receive only the legacy*7 provided for in Paragraph Two.

*1430 Fifth: This trust hereby established shall continue so long as my wife or any of my said brothers or sisters shall live, and upon the death of the last one of them, the said trust shall cease, and my entire estate to be divided into six parts, and the title thereto vested absolutely in the issue per stirpes of Romaldus J. Smith, Eugene A. Smith, Eileen Smith Cowhig, Joel G. Smith, Mary Smith Mooty and Lilla Smith Turner. In the event any of my brothers or sisters should die, leaving no children or descendants surviving them, then that portion of my estate which would have gone to them shall be equally divided per stirpes among my remaining brothers or sisters, or their descendants.

Sixth: The Trustee is authorized in the event it becomes necessary to encroach upon the corpus of the estate, in order to make the monthly payments hereinabove authorized for my wife, brother and sister, if at any time, in its discretion, it is for the best interest of the beneficiaries to do so.

Seventh. The Trustee is directed to invest funds of the estate in good Municipal or Government Bonds, and to buy, sell or exchange said bonds whenever in its discretion*8 the same becomes necessary.

Among the personal assets of my estate are thirty-five (35) shares of the capital stock of Hugh C. Smith, Inc., the balance of the stock being owned by R. E. Sanford, Pete Pitzer, Kate Flack, and my wife, and it is my wish and desire that my Trustee cooperate with them in the continuance of the corporation. However, my said Trustee is given full discretionary power, after the death of my wife, but not before, in the event, in its judgment, it becomes necessary to sell all or any part of the said thirty-five (35) shares of the said capital stock; the proceeds derived from any sale to be reinvested in good Municipal or Government Bonds, as hereinabove directed.

I also vest in my said Trustee the full discretionary power to sell all or any part of any of my other personal property, in the event some contingency should arise and my said Trustee should deem it expedient or advisable to sell the same, the proceeds of any such sale to be reinvested in bonds as hereinabove provided.

Tenth. All inheritance and succession taxes are to be paid by my executor or trustee out of the residuary estate, and shall not be charged to the individual shares of any beneficiary.

*9 Eleventh. The Executor and Trustee is expressly authorized to sell any real estate, if in its discretion it is deemed best to do so for the purpose of discharging taxes or other obligations of the estate, or for the purpose of reinvesting the proceeds in Municipal or Government Bonds, as directed in the seventh paragraph hereof, and all purchasers of said real estate from my said executor and trustee are expressly relieved of seeing to the application of any proceeds.

The executor and trustee were expressly relieved of executing a bond.

Less than a month after the executor qualified the widow, Laura Long Smith, appeared in open court and signified her dissent, in writing, from the will of her husband and her election to renounce all rights under the will and to take her dower and legal share of the estate in lieu of such right.

On December 17, 1941, the petitioner, as complainant, filed a suit in the Chancery Court of Shelby County, Tennessee, against Romaldus J. Smith and twenty-six other defendants, asking for construction of the third, fourth, fifth, and tenth clauses of the will. With regard to the third clause of the will the complaint alleged:

*1431 "Under the third clause*10 of the will of the said Hugh C. Smith, the trustee is not to be limited in the distribution of the net income, but is authorized to distribute the entire net income to the widow, brother and sister, or their children in the event of their deaths before the termination of the trust, the amount of income to be paid the widow in any event to be twice the amount paid to the brother and sister, or their children. Since the widow has dissented from the will, your complainant is in doubt as to what the true intent, purport and construction of this clause of the will should be. In other words, since the widow has dissented and, as a result thereof, the personal assets of the estate will be decreased to the extent of one-third and the real assets to the extent of one-third for life, should the trustee, under these circumstances, distribute the entire net income derived from the residue of the estate equally between the brother and sister. [Emphasis supplied.]

The prayer of the bill was, in pertinent part, as follows:

Complainant therefore prays: * * * 2. That this trust be established and all the provisions thereof be performed, and the rights and interests of all the parties under *11 the same declared. * * * 4. That the Court construe the aforesaid portions of said will and state clearly what are complainant's duties, together with the rights of the various defendants thereunder, and in order that complainant may be relieved from all risk and liability incident to the contentions and conflicting rights and claims, if any, of the defendants, it prays the Court to retain the cause in Court until said trust shall have been fully executed * * *

The proceeding was not collusive; nor was there any tax motive therein. There was no suggestion in the suit by anyone that the estate was insolvent.

After a hearing at which attorneys representing diverse interests were present and evidence was introduced, a decree was entered by the chancery court on September 15, 1942, which, in pertinent parts, is as follows:

This cause, having heretofore been heard and an Interlocutory Decree entered in which the cause was retained in Court for further adjudication and for all purposes, came on this day to be further heard before Honorable John E. Swepton, Chancellor, upon the entire record in the cause and also upon the cross-bill of John H. Turner; the pleadings filed in connection with*12 the said cross-bill; the testimony of witnesses in open Court, and upon argument of counsel, from all of which it satisfactorily appears to the Court as follows:

That the Court is of the opinion and so adjudges and decrees that it was the intention of the testator in the third clause of the will of the said Hugh C. Smith that the entire net income was to be distributed to his widow, brother, and sister, and the widow having dissented from the will and the defendant, Romaldus J. Smith, having died subsequent to the death of- the testator, the Trustee is authorized to distribute the net income one-half to the defendant Mrs. Eileen Smith Cowhig and one-half to the estate of Romaldus J. Smith up to the date of his death, to-wit January 28, 1942, and the balance equally among the defendants Louise Smith, Louis Smith, and Mrs. Lottie Goode, the surviving children of Romaldus J. Smith, they under the terms of the said will to receive their *1432 father's interest in income prior to the termination of the trust, the said income to accrue to the life beneficiaries as and from the date of the death of the testator.

* * * *

The Court is also of the opinion and so adjudges and decrees*13 that the proper construction of the fifth clause of the will, the widow having dissented therefrom is that upon the death of the defendant, Mrs. Eileen Smith Cowhig, the said trust shall cease, the effect of the dissent of the said widow, insofar as the termination of the trust is concerned, being the same as if she had died.

The Court is further of the opinion and so adjudges and decrees that the widow having dissented from the will, is entitled to one-third of the personal estate after the payment of all obligations, taxes, costs of administration, etc., and that such interest is subject to the payment of the Federal Estate Taxes, but reserves for future adjudication the question of whether there should be any equitable apportionment of the estate tax between her and the other interested parties, the cause being retained in Court for the adjudication of that question and for all other purposes. To the action of the Court in holding that the widow's one-third interest in the personal estate is subject to the payment of Federal Estate Taxes, the defendant, Laura Long Smith, excepts and prays an appeal to the next term of the Court of Appeals, which appeal is by the Court at this*14 time disallowed and overruled, and to which action of the Court in so overruling and disallowing her appeal the defendant, Laura Long Smith, excepts.

All of Which Is Accordingly Ordered, Adjudged and Decreed This     Day of September, 1942.

In the 1941 income tax return of the estate made by the executor there was reported net income of $ 112,427.26, of which $ 93,689.39 was deducted as distributable to beneficiaries, leaving a net taxable income of $ 18,737.87, on which tax was computed in the amount of $ 4,453.93 and paid. The executor included in the $ 112,427.26 the income from all property which the widow took by her dissent and such income was not excluded by the respondent.

On September 6, 1944, the First National Bank of Memphis, as executor, filed a claim for refund of the taxes paid of $ 4,453.93, on the ground that the executor was, according to the decree of the Chancery Court of Shelby County, under an absolute obligation to pay the entire net income of the estate for the year 1941 to the widow and beneficiaries under the will and therefore was entitled to a deduction for an amount so distributable equal to the entire net income of the estate. This claim for refund*15 recited that the $ 4,453.93 had been paid on March 14, 1942. On November 14, 1944, the bank, as executor, filed an amended claim for refund of the above taxes paid, on the alternative ground that the wife, having dissented from the will, was entitled to one-third of the personal property, to her homestead interest *1433 in the real estate, and to a life interest in one-third of the remainder of the real estate of her deceased husband from and after the date of his death, that the income reported in 1941 was derived from the entire estate of decedent, that one-third thereof never belonged to either the decedent's estate or his beneficiaries under his will, but belonged to his widow, and that, even though the claim for refund be denied on the original ground alleged, it was properly allowable in part because of the fact that a part of the income reported belonged to the widow and not to the estate. The petition herein was filed June 7, 1945.

On July 6, 1945, the value of the net estate, after paying all debts and claims except Federal estate and state inheritance taxes and after allowing administration expenses and debts, was determined by the Commissioner to be $ 1,111,166.81*16 for estate tax purposes. A stipulation was later entered into reciting a deficiency of $ 94,556.02 in Federal estate tax, upon which the Tax Court entered its decision. The deficiency in Federal estate tax agreed upon, as well as the estate and inheritance taxes of Tennessee and Kentucky of $ 65,307.42 and $ 14,040.50, had been paid at the time of the hearing herein.

OPINION.

It is admitted by petitioner, on brief, that no part of the 1941 income of the estate was paid or properly credited and that hence no deduction for income paid or credited is allowable under section 162 (c) of the Internal Revenue Code, and that if the 1941 income is not deductible under section 162 (b)¹ it is not deductible under any other section or subsection of the code.

*17 The petitioner's main contention is that the 1941 income of the estate was to be distributed currently by the fiduciary "from the date of death of the testator" to the life beneficiaries of the trust, who were the brother and sister of decedent, after the widow's dissent, and that consequently such income is deductible in computing the net income of the estate under section 162 (b). In support of this contention petitioner relies largely upon the decree of the chancery court, insisting that, the decree being that of a state court of competent *1434 jurisdiction, we must treat it as conclusive of the matters therein decided and that such matters are "beyond any inquiry on the part of the Tax Court as to [their] correctness." He then proceeds to argue, in effect, that one of the matters decided in the decree was that the income of the estate was to be distributed currently to the beneficiaries from the date of decedent's death. This construction of what was decided in the decree on this matter rests entirely upon the provisions of paragraph I thereof, which states:

That the Court is of the opinion and so adjudges and decrees that it was the intention of the testator in the third*18 clause of the will * * * that the entire net income was to be distributed to his widow, brother, and sister, and the widow having dissented from the will * * * the Trustee is authorized to distribute the net income one-half to the defendant Mrs. Eileen Smith Cowhig and one-half to the estate of Romaldus J. Smith * * * the said income to accrue to the life beneficiaries as and from the date of the death of the testator. [Emphasis supplied.]

Assuming that the matters decided by the decree are controlling here as the law of Tennessee, we are of the opinion that the construction of the quoted provisions of the decree as argued by petitioner is not correct and that the court did not by the quoted provisions decide, as so argued, the question of whether or not the income was currently distributable to the remaining life beneficiaries of the trust from the date of the death of decedent.

The bill upon which the decree was based was filed December 17, 1941. That bill alleged, inter alia, with reference to the third clause of the will: "Since the widow has dissented from the will, your complainant is in doubt as to what the true intent, purport and construction of this clause of the*19 will shall be. In other words, since the widow has dissented and, as a result thereof, the personal assets of the estate will be decreased to the extent of one-third and the real assets to the extent of one-third for life, should the trustee, under these circumstances, distribute the entire net income derived from the residue of the estate equally between the brother and sister." The prayer of the bill relating to the third clause of the will was: "That this trust be established * * * and the rights and interests of all the parties under the same be declared." and "That the Court construe the aforesaid portions of said will and state clearly what are complainant's duties, together with the rights of the various defendants thereunder * * * ." The decree based upon these statements in the bill, in so far as concerns the third clause of the will, was entered in September 1942.

It is evident from the bill that no specific question was presented to the court as to whether or not the income was "to be distributed currently" to the life beneficiaries or as to when it was to be distributed, except that it was, obviously, not to be distributed until after the *1435 entry of the decree. *20 The purpose of the bill was, so far as clause third of the will was concerned, to secure determination by the court of the question of "should the trustee, * * * distribute the entire net income derived from the residue of the estate equally between the brother and sister." [Emphasis supplied.] This was the express question posed for the court and it was answered by paragraph I of the decree.

We do not think, in view of the question presented to it, that the expressions by the court in the decree that "the Trustee is authorized to distribute the net income" and "the said income to accrue to the life beneficiaries as and from the date of the death of the testator" meant, or were intended to mean, that the income was currently distributable from the date of the death of the decedent and during the taxable year 1941. To attribute such a meaning to those expressions would be to impute to the court the making of a futile gesture, for it would have been impossible at that time to distribute currently during the taxable year 1941, that year having passed by several months at the time of the entry of the decree. We conclude, therefore, that the decree is not controlling on this Court*21 on the question of whether or not the income of the estate was to be distributed currently to the life beneficiaries from the date of the death of the testator and during the taxable year.

Petitioner contends further that, if we refuse, as we have, to treat the decree of the chancery court as conclusive "as to the property rights involved," we must construe the will as to such rights by applying the state law as otherwise established, and cites, as sole authority as to what that law is, American National Bank of Nashville v. Embry, 181 S.W. (2d) 356, in which, petitioner says, "the Supreme Court of Tennessee has had occasion, for the first time, to pass directly upon the question presented."

In the cited case, as here, the functions of executor and trustee were vested in the same corporation and it was there stipulated that the estate had been fully administered while here it is shown by testimony and admitted on brief that the estate of Hugh C. Smith was still in process of administration throughout the taxable year. It would therefore appear that the residuary estate in the cited case, together with the income therefrom, was in the hands of the*22 corporation as trustee (or should have been) and not in its hands as executor, since the estate had been fully administered. It is true that it was decided in that case that the income of the entire estate accrued to the trust beneficiary from the date of the death of the testatrix, but it was not decided that the beneficiary had a "present" right to receive such income during the administration of the estate. In the will before us and in the decree of the chancery court the trustee and not the executor was authorized to make payment to the life beneficiaries of the trust, and *1436 not only is it not shown that the trustee had received any property from the executor prior to or during the taxable year, but also the contrary is clearly indicated by the prayer in the bill that "the trust be established."

Treating the cited case as the "first time" the Supreme Court of Tennessee has had occasion "to pass directly upon the question presented," as stated by petitioner, and having no other or later authority cited, and having found none, we conclude that the law of Tennessee has not been established on the question here involved, i. e., whether the income in question was currently*23 distributable during the taxable year to the beneficiaries of the testamentary trust set up in Hugh C. Smith's will, his estate having been in process of administration during the taxable year.

Having reached the conclusion that the law of Tennessee does not control disposition of the question here either by reason of the decree of the chancery court or by reason of any other decision, or decisions, of the Tennessee courts, we shall now consider other authorities pertinent to the question.

In Estate of Peter Anthony Bruner, 3 T. C. 1051, the decedent left a will by which, after providing for certain legacies and the payment of his debts, he bequeathed and devised all his residuary estate to beneficiaries of a trust created by the will. Decedent's two nephews were named in the will as executors and trustees. The will provided that the trustees should pay the income to the beneficiaries "semiannually," "Said payments to continue semiannually from the time of my death." Letters testamentary were issued to the executors a few days after the death of decedent and shortly after the beginning of the first of the two taxable years involved. About seventeen*24 days after the expiration of the last taxable year the executors transferred all of the assets to themselves, as trustees under decedent's will. The executors claimed deductions from the income of the residuary estate, contending that such income was "to be distributed currently by the fiduciary" within the meaning of section 162 (b), because the will "specifically provides that the trustees (who are also the executors) shall pay the net income to named beneficiaries" and that such payments should "continue semiannually from the time of my death."

While we said that "The laws of the Commonwealth of Pennsylvania recognize the right of beneficiaries to the income of a testamentary trust from the date of the testator's death in the absence of a clear intention to the contrary" (emphasis supplied) and that the respondent did not question that right, we, nevertheless, held that, as contended by respondent, the beneficiaries had no "present" right to receive such income in either of the two taxable periods, May 10 to December 31, 1940, and the calendar year 1941, for the reason that the *1437 testamentary trust "was not set up until January 17, 1942," on which date the executors*25 transferred all of the assets of the estate to themselves as trustees. In construing the will of the testator we considered the rule established by the Supreme Court of Pennsylvania to the effect that the trust beneficiaries had the right to the income of the trust "from the date of the testator's death." The law of Tennessee which we have assumed to be established as to the matters decided by the decree of the chancery court is to the effect that the income of the trust was "to accrue to the life beneficiaries as and from the date of the death of the testator." We can see no material difference in facts or principle between the Bruner case and the instant case, except that there it is shown that subsequent to the taxable years involved the executors turned over the assets of the estate to themselves as trustees, while here it is not shown that the assets of decedent's estate, or any part of them, were turned over by the executor to itself as trustee prior to or during the taxable year, or, as for that matter, at any time anterior to the entry of the decree of the chancery court. On the contrary, it is rather clearly indicated that the assets were not turned over to the trustee*26 at any time prior to or during the taxable year, since the estate was, during those years, in process of administration and the record does not show that all debts of the estate had been paid prior to or during that year and since the prayer of the bill filed December 17, 1941, was, inter alia, "that the trust be established." Moreover, we think that the facts in the present case more strongly justify our conclusion than did the facts in the Bruner case justify the conclusion there reached, since in that case the will, after providing for payments of income to the beneficiaries, further expressly provided that such payments were to continue "semiannually from the time of my death," while here the will was not so specific, since it says only "From the net income * * * the Trustee is to pay" certain designated amounts to the beneficiaries of the trust.

We think Estate of Peter Anthony Bruner, supra, controls, and under authority of that case we hold that the income from the estate going to the beneficiaries of the testamentary trust is not deductible from the income of the estate as income "to be distributed currently" under section 162 (b), *27 supra.

We are supported in our conclusion by In re Smith's Estate v. Henslee, 64 Fed. Supp. 196, wherein the petitioner here and plaintiff there sought to recover from the collector $ 15,418.28 as an alleged overpayment which had been made on its total net income and defense tax liability of $ 51,292.96 for the period August 26 to December 31, 1940. The court decided against the plaintiff. There, as here, the facts showed: Provisions of the will of Hugh C. Smith; the issuance of letters testamentary to the bank on September 3, 1940; the widow's *1438 dissent; the decree of the chancery court; the filing of a return and the payment of tax thereon by the executor as such; the filing of the claims for refund by the executors; that the estate was still in process of administration; and that the debts of the estate were not disclosed in the proof. But while in the instant case it is not affirmatively shown, as it was there, that "No part of the income of the estate nor any other property of the estate has come into the hands of the plaintiff bank as trustee under the will" or that "The plaintiff bank has done no act or thing, in the capacity*28 of trustee, touching any property or income of the estate," it can be said that here it is not shown that any part of the income of the estate or any other property had, prior to or during the taxable year, come into the hands of petitioner as trustee or that the petitioner had done any act or thing in the capacity of trustee touching any property or income of the estate.

It may be observed that the income going to the beneficiaries of the testamentary trust here involved has not been brought within the ambit of William C. Chick, 7 T. C. 1414, since it is not shown that prior to or during the taxable year all assets of the estate had been reduced to possession by the executor and the legacies provided by the will of decedent and the debts of the estate paid by it.

Our conclusion above is limited in its application to the income of the estate which was to go to the beneficiaries of the trust as distinguished from the income of that part of the decedent's property at the time of his death which, by reason of the dissent of the widow, terminated her rights as a beneficiary under the will and substituted therefor a right to a one-third interest in decedent's*29 real estate and a right to one-third of his personal estate.

Petitioner cites Estate of Robert W. Harwood, 3 T. C. 1104, apparently in support of his position that it was the intention of decedent, manifested in his will, that the beneficiaries of the trust here were entitled to have the income therefrom paid them currently from and after decedent's death and during the taxable year. We do not think the cited case supports such a contention, since there the income involved was actually paid by the executors to themselves as trustees as a distribution during the taxable years, and we held that, although the estate was in process of administration at the time of the payment of income to the trustees, it was nevertheless properly paid, under section 162 (c), because it was within the intention of the testator that such could be done under his will, which provided that the trustees were to "pay him [the beneficiary represented by the trust] at some time prior to the end of each calendar year one-third of the net income of the fund for such calendar year." We held that, the trustees, as distributees, having been actually paid the income in question by the*30 executors during the taxable year, the income paid was properly *1439 paid under section 162 (c), not 162 (b), and that the taxpayer was entitled to the deduction thereof as claimed. We took occasion to distinguish the case there from Estate of Peter Anthony Bruner, supra, and it is likewise further distinguished from the instant case.

On the second issue, the petitioner contends that the income derived from the interests in decedent's property, the right to which the widow acquired by reason of her dissent, should not be included, as it was here, in the income of the estate. Those interests were: (1) A dower during her life for the widow in one-third part of all lands of which her husband died seized and possessed or of which he was at death the equitable owner, "Michie's Tennessee Code of 1938," secs. 8351 and 8360; and (2) one-third part of the personal estate of her husband, "Michie's Tennessee Code of 1938," sec. 8360. Petitioner's contention is predicated upon the proposition that the property representing the widow's interest after her dissent was hers from the time of decedent's death and that therefore the income therefrom was likewise*31 hers from that time and for that reason was never the income of the estate, as represented by the executor. In support of this contention petitioner cites no authority other than "Code of Tennessee, secs. 8358-8364," and we find nothing in those sections except broad provisions as to the part of her husband's estate to which a wife has a right upon dissent from his will.

We can not agree with this contention of petitioner, for the reasons: (1) That the widow had no vested legal title to, or estate in, the dower interest and was not entitled presently to any income therefrom arising prior to the assignment or setting apart of the dower to her as provided by the statutes of Tennessee, and then only to the income from that part as set aside or assigned, North v. Puckett, 164 Tenn. 100; 46 S. W. (2d) 73; Latta v. Brown, 96 Tenn. 343; 34 S. W. 417, 420; see also 9 R. C. L. 593, 594, paras. 35 and 36; 28 C. J. S. 144, para. 67 (b) 146, para. 68 (a); and (2) the record fails to show that such assignment was made prior to or during the taxable year, or, as for that *32 matter, that it has ever been made; and (3) that the widow's one-third interest in the personal property of decedent had not been allowed or set apart to her prior to when it was allowed her by paragraph IV of the decree of the chancery court entered more than eight months after the end of the taxable year, and it is only the income therefrom arising after the entry of the decree which would presently belong to her under the principle of the North case, since the principle there announced as to income derived from a widow's dower interest would apply, we think, with equal force to income derived from the widow's interest in the personal estate of her deceased husband, this latter interest certainly not being of greater dignity, if as great, than that of a dower interest.

We therefore decide the second issue against the petitioner and hold *1440 that the respondent did not err in including in the income of the estate for the taxable year the income which may have been derived from that part of decedent's property to which his widow acquired a right by reason of her dissent.

We do not understand that petitioner contends that the income from the property of decedent, the right*33 to which property was acquired by the widow through her dissent, is deductible under section 162 (b) as income "to be distributed currently by the fiduciary." Nor do we understand that an issue upon which such a contention could be based is presented by the pleadings. But if our understanding of the contentions of petitioner and the issues presented by the pleadings is not correct, and such an issue is presented and such contention is made, we must reject the contention, since from our disposition of the second issue it is obvious that the income from the property of decedent, the right to which was acquired upon her dissent, was not "to be distributed currently" (during the taxable year) to the widow.

Decision will be entered for the respondent.