Docket No. 65118.
Richard W. Case, Esq., for the petitioner. George J. Rabil, Esq., for the respondent.
Richard W. Case, Esq., for the petitioner. George J. Rabil, Esq., for the respondent.
The petitioner, income beneficiary of a testamentary trust created by her deceased husband in his will, paid $38,807.97 to the United States for a deficiency assessment in estate tax against the estate (of her deceased husband) after the estate had been wiped out by virtue of its paying a portion of the same deficiency. Petitioner, in 1953, paid $2,500 as a retainer fee to an attorney employed by her and the executors of the estate to being a suit for refund of the estate tax in the United States District Court. The Commissioner disallowed the deduction of the $2,500 attorney's fee on the petitioner's return. Held, that the $2,500 is deductible by petitioner as a nonbusiness expense under section 23(a)(2), I.R.C. 1939.
The deficiency in income tax determined against petitioner for the year 1953 of $1,597 is due to one adjustment made by the Commissioner to the income as reported by petitioner on her return for that year. That adjustment is: ‘Unallowable deduction: (a) Attorney Fees $2,500.00.’ The adjustment is explained in the deficiency notice as follows:
The claimed deduction for attorney fees in the amount of $2,500.00 is disallowed for the reason that the fees are not an ordinary and necessary expense within the provisions of Section 23(a)(2) of the Internal Revenue Code of 1939.
Petitioner contests this adjustment by an appropriate assignment of error.
FINDINGS OF FACT.
Part of the facts have been stipulated and are incorporated herein by this reference.
Bertha K. Goldberg, hereinafter sometimes referred to as petitioner, resides in Baltimore, Maryland, and filed her income tax return for the year 1953 with the district director of internal revenue at Baltimore, Maryland.
The petitioner is the beneficiary under the will of Harry Goldberg, deceased, hereinafter sometimes referred to as the decedent, which will was admitted to probate by the Orphans' Court of Baltimore City on July 2, 1947. Letters testamentary on the estate of the decedent were duly granted to Zanvyl Krieger and Baltimore National Bank by the Orphans' Court of Baltimore City.
By the terms of his will, the decedent provided that after the payment of burial expenses and death taxes all other tangible chattels of domestic or personal use or adornment should be left to the petitioner. The will further provided, as follows:
ITEM FOURTH: All the rest, residue and remainder of my estate and property, real, personal and mixed, of whatsoever kind, nature and description and wheresoever situate, which I may own at the time of my death, or over which I may have the power of testamentary disposition, I give, devise and bequeath as follows:
I. Five per centum (5%) thereof unto and among such corporations (or unto such corporation) organized exclusively for charitable, scientific and/or educational purposes, all or a substantial part of the activities of which have as their aim the advancement of medicine and/or the healing of the sick of afflicted, no part of the net earnings of which inures to the benefit of any private stockholder or individual, and no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation, as the majority of such of my said wife and my sons, Herman Krieger Goldberg and Nathan Zanvyl Goldberg, who shall survive me may designate and appoint, and in such proportions as they may designate and appoint. The power of appointment hereby granted to my wife and sons shall be exercised by an instrument in writing signed by a majority of such persons who shall survive me and delivered to my Executors within twelve (12) months from the date of my death.
II. The remaining ninety-five per centum (95%) thereof, or the whole thereof in default of the valid appointment of five per centum (5%) thereof, as hereinbefore provided in Section I hereof, unto my wife, Bertha K. Goldberg, and Baltimore National Bank, a national banking association, located in Baltimore City, Maryland, its successor or successors, In Trust, However, to hold and manage as a trust fund, and, after paying all taxes, expenses and charged incident to the management, upkeep and repair thereof, including reasonable compensation to my Corporate Trustee for its services hereunder, to pay over and distribute the net income therefrom and dispose of the principal thereof as follows:
A. So long as my wife, Bertha K. Goldberg, shall live and so long as there shall remain any portion of my trust estate undistributed, it is my desire that my said wife shall be assured of an annual income of at least Fifteen Thousand ($15,000.00) Dollars from all sources. To that end I direct: (1) that my Trustees shall pay over unto my said wife, quarterly, during her lifetime, the entire net income derived from my trust estate as from time to time constituted; and (2) that at the end of each and every calendar year after the year of my death my Trustees shall pay over unto my said wife, out of the principal of my trust estate, such sum as may be necessary, if any, when added to the net income from my trust estate payable to my said wife together with all other income received or receivable by her from all sources during such calendar year, to amount in the aggregate to the sum of Fifteen Thousand ($15,000.00) Dollars. In order to enable my Trustees to determine the amount, if any, which shall be so paid to my said wife out of the principal of my trust estate each such year, I direct that my said wife shall submit to my Trustees prior to the end of each calendar year a written statement of all income received by her or which she is entitled to receive during such year from all sources, and my Trustees shall be entitled to rely upon such written statement of my said wife as to the amount of all such income, if any, and my Trustees shall not be required to corroborate or confirm such information so received by them.
In addition to the payments hereinbefore provided for my said wife, my Corporate Trustee shall have full power and authority, in its sole and absolute discretion, to pay over unto my said wife from time to time, out of the principal of my trust estate, such additional sum or sums as my Corporate Trustee, in its sole and absolute judgment and discretion, may deem to be advisable or proper to provide for any emergency of whatever nature suffered by her or to provide for her general comfort and well-being, having due regard for all her other sources of income and financial resources as known to my Corporate Trustee.
ITEM NINTH: I nominate, constitute and appoint my brothers-in-law, Abraham krieger and Zanvyl Krieger, and Baltimore National Bank, a national banking association, located in Baltimore City, Maryland, to be the Executors of this my last Will and Testament, but if either of my said brothers-in-law shall fail to qualify or, having qualified, shall fail or cease to act as one of the Executors hereunder, I nominate, constitute and appoint the other of them and the said Baltimore National Bank to be the Executors hereunder. I direct that my Executors shall be excused from furnishing any bond.
On July 29, 1948, the Orphans' Court of Baltimore City approved the first and final administration account of Baltimore National Bank and Zanvyl Krieger, executors of the estate of Harry Goldberg, deceased, which distributed all of decedent's estate which was subject to the probate laws of the State of Maryland in accordance with the terms of decedent's last will and testament. This account showed a total estate to be accounted for of $2,473.68 (income) and $73,487.65 (corpus). It also showed the payment of claims amounting to $23,909.35; the distribution to petitioner of personal property valued at $1,469 pursuant to Item Third of the decedent's will; and a distribution of nine security holdings plus cash in the amount of $6,400.51 (less Maryland inheritance taxes) to Bertha K. Goldberg and Baltimore National Bank, trustees, in accordance with Item Fourth of the decedent's will which set up the testamentary trust.
On August 2, 1948, the estate tax return was filed by the decedent's executors showing an estate tax liability of $14,474.41 which was paid to the collector of internal revenue at Baltimore.
On ‘Schedule G— Transfers During Decendent's Life’ of the estate tax return of the decedent, there was included as part of the decedent's gross estate the amount of $75,482 described as follows:
Non-negotiable receipt of Baltimore National Bank, Trustee under agreement dated November 1, 1946 for 50 shares Voting Trust Common stock of Gunther Brewing Company, Inc. at 1509.64— Values determined in accordance with terms of agreement.
The aforesaid trust agreement dated November 1, 1946, provided in part as follows:
I, HARRY GOLDBERG, have transferred to myself, as Trustee, Voting Trust Certificates for fifty (50) shares of the capital stock of Gunther Brewing Company, Inc., and
WHEREAS, it is my desire and intention that the said securities be held, managed, invested, reinvested and distributed as a Trust Fund for the benefit of myself and of the other person or persons hereinafter named,
NOW, THEREFORE, I hereby acknowledge and declare that I am in possession of the said Gunther stock, and that I will hold the same in trust, subject to the provisions hereinafter set forth.
FIRST: During my lifetime, the net income therefrom shall be paid over to me for my sole use and benefit, and upon my death, if my wife, BERTHA K. GOLDBERG, shall then be living, the entire net income shall be paid over to her so long as she shall live.
SECOND: Upon and after the death of my wife, or upon my death, if she predecease me, it is my intention to create two separate Trusts hereunder: Trust Estate A for the benefit of my son, HERMAN KRIEGER GOLDBERG, which shall consist of one-half of the principal of the entire Trust Fund and any accumulations thereto; Trust Estate B for the benefit of my son, NATHAN ZANVYL GOLDBERG, shall consist of one-half of the principal of the entire Trust Fund and any accumulations thereto; and I direct that the Trustees shall keep the income and principal accounts of each such Trust Estate separate and distinct from the other Trust Estate in the same manner as if these two Trust Estates were created by two separate agreements.
EIGHTH: A. Upon my death, resignation or removal, ZANVYL KRIEGER and BALTIMORE NATIONAL BANK, a national banking association, located in Baltimore, Maryland, its successor or successors, shall be the Trustee hereunder.
B. All powers (discretionary or otherwise) and all duties and immunities herein conferred or imposed upon the Trustees shall be appurtenant to the office and shall belong to me while I shall act as Trustee hereunder and shall devolve upon any successor Trustees or Trustee.
The corpus of the November 1, 1946, trust was includible in decedent's gross estate for Federal estate tax purposes and it was included in the estate tax return but was not administrable in the Maryland probate proceedings. The assets included in this inter vivos trust did not pass under the will of decedent and did not form a part of the estate which came into the hands of the executors under his will. The executors, under the will, who qualified as such were Zanvyl Krieger and Baltimore National Bank.
The Commissioner of Internal Revenue, within the time permitted by law, assessed an estate tax deficiency against the estate of decedent upon the grounds (a) that the decedent had transferred certain securities to the petitioner in contemplation of death, and (b) that the executors had undervalued a deposit receipt representing a voting trust certificate for 50 shares of common stock of Gunther Brewing Company, sometimes hereafter referred to as the Gunther stock.
On June 7, 1951, the collector of internal revenue received a total of $61,915.63 in payment of the estate tax deficiency previously assessed against the estate of decedent. The aforesaid estate tax deficiency in the amount of $61,915.63 was paid from the following sources: (a) By the trustees of the testamentary trust of Harry Goldberg, deceased, who paid to the collector of internal revenue on June 7, 1951 $23,107.66; and (b) by the petitioner individually who paid to the collector of internal revenue on June 7, 1951, $38,807.97. The payment made by the trustees under the will of Harry Goldberg, deceased, in the amount of $23,107.66 ‘cleaned out the trust entirely,‘ leaving no assets of any kind in the hands of the trustees.
When the executors under the will of Harry Goldberg, deceased, received from the collector of internal revenue the statement of Federal estate tax due in the amount of $61,915.63, the trust officer of Baltimore National Bank, who was in charge of the administration of the trust under the will of the decedent, consulted with Zanvyl Krieger, the coexecutor with the bank in the administration of the estate, with respect to raising the necessary funds for the purpose of paying the deficiency. This was done because the trustees of the testamentary trust had on hand insufficient funds with which to pay the deficiency. Krieger, who was a brother of petitioner, believing that the Government would demand from the petitioner as transferee payment of the remaining deficiency which would have been left unpaid by the trustees under the will of Harry Goldberg, deceased, advised the petitioner to raise the money necessary to pay the balance of the deficiency. Pursuant to this advice, the petitioner raised the difference between the total Federal estate tax deficiency assessed against the estate of Harry Goldberg, deceased, and the amount which the trustees of the testamentary trust had on hand at the time the assessment was made. This difference (which was $38,807.97) was paid by the petitioner out of her individual funds by a check drawn to the order to the collector of internal revenue.
There was no understanding between the executors under the will of Harry Goldberg, deceased, and the petitioner with respect to any repayment to the petitioner of the amount raised by her and paid to the collector of internal revenue in satisfaction of the estate tax deficiency.
After the estate tax deficiency referred to above had been paid, Richard W. Case, a member of the Bar of the State of Maryland, was employed on May 15, 1953, for the purpose of filing a claim for refund and a suit for refund, if necessary, for the aforesaid Federal estate tax deficiency. Case was paid a retainer fee of $2,500 for these services, said fee being paid by petitioner from her bank account by a check dated June 9, 1953. In addition, the attorney was to receive 20 per cent of any amount recovered less the retainer fee of $2,500. There was no agreement made by anyone that petitioner should ever be reimbursed for this $2,500.
Within the time permitted by law, Richard W. Case, pursuant to the employment referred to above, filed a civil action in the United States District Court for the District of Maryland on behalf of the estate of Harry Goldberg, deceased, for the purpose of recovering the Federal estate tax and interest deficiencies described above. On February 20, 1956, the United States District Court for the District of Maryland in the matter of Baltimore National Bank and Zanvyl Krieger, Executors u/w Harry Goldberg, deceased, Plaintiffs, vs. United States of America, Defendant, (Civil Action No. 7439) filed an order providing that the plaintiffs should recover from the defendant the sum of $52,314.77, together with interest at 6 per cent per annum as required by law. Subsequently, Baltimore National Bank, as one of the executors, received a total of $68,330.97 as a result of the aforesaid order represented by $52,314.77 in tax and $16,016.20 in interest.
Of this amount, the Baltimore National Bank, as one of the executors, refunded to petitioner the $38,807.97 which she had paid from her own funds on the deficiency assessment and paid her $11,881.09 interest, or a total payment of $50,689.06. However, before paying over to petitioner this $50,689.06, her pro rata share of the attorneys' fees was deducted from the payment to be made to her. A total payment of $13,666 was paid for attorneys' fees of which $10,137.67 was allocated to petitioner. However, since petitioner had made the payment to attorney Case in 1953 of $2,500 as a retainer fee, only $7,637.67 was deducted from the amount to be paid petitioner. Also $72.74 was deducted as her share of expenses. The net amount which was paid to petitioner was $42,978.65.
The only issue in this proceeding is whether petitioner, the widow of Harry Goldberg, deceased, and who was the income beneficiary of a testamentary trust created by decedent in his will, may deduct as a nontrade or nonbusiness expense pursuant to section 23(a)(2), I.R.C. 1939, $2,500 which she paid in 1953 as a retainer fee to an attorney for the purpose of suing for and recovery of an estate tax deficiency, the payment of which had (a) wiped out the entire testamentary trust corpus, and (b) made it necessary for the petitioner to pay the balance of the deficiency and interest from her individual funds.
All section references are to the Internal Revenue Code of 1939, as amended.
In support of her contention petitioner relies upon section 23(a)(2), printed in the margin. Petitioner relies upon that portion of section 23(a)(2) which reads: ‘or for the management, conservation or maintenance of property held for the production of income.’
SEC. 23. DEDUCTIONS FROM GROSS INCOME.In computing net income there shall be allowed as deductions:(a) EXPENSES.—(2) NON-TRADE OR NON-BUSINESS EXPENSES.— In the case of an individual, all the ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income, or for the management, conservation, or maintenance of property held for the production of income.
Respondent does not dispute that petitioner paid the $2,500 attorney's fee in question during the taxable year 1953, nor does he contend that petitioner ever recovered any of said attorney's fee. What he does contend is that the attorney's fee paid in the suit for recovery of the estate tax deficiency was properly the obligation of the estate itself; that petitioner was a mere volunteer in the payment of the $2,500 in question; and that section 23(a)(2) cannot be used as affording her any right to the deduction.
As a prelude to our discussion of the question involved it is well to point out that there are two trusts which are part of the picture shown by the Findings of Fact. One of the trusts was the testamentary trust created by the will of decedent; petitioner was the sole income beneficiary of that trust. If that trust had had on hand sufficient funds to have paid the deficiency and there would have been no occasion to call upon petitioner for help. This much we understand petitioner to concede. However, the testamentary trust had on hand only $23,107.66. This entire amount was used to pay on the deficiency and the balance required to pay in full the deficiency plus interest, $38,807.97, was furnished by petitioner. Petitioner furnished this $38,807.97 upon the advice of her brother, who was one of the executors of the estate.
The second trust which is in the fact picture of this case was an inter vivos trust which decedent had set up in his lifetime, making himself the income beneficiary for life with remainder to his wife, petitioner, upon his death. Respondent argues that the executors of decedent's will could have used the corpus of this trust, which was 50 shares of Gunther stock, to pay the deficiency and if they had done so, there would have been no need to call upon petitioner. In making this argument, respondent says in his brief:
By selling the 50 shares of Gunther stock included in the gross estate, they could have paid the estate taxes and the attorney's fees in connection with the litigation in the District Court. However, they chose to pay the proposed deficiencies and interest in full by means of funds advanced by the petitioner, rather than employing admitted assets of the decedent's gross estate. [Emphasis supplied.]
Undoubtedly, the 50 shares of Gunther stock were ample in value to have paid the entire deficiency, interest thereon, and attorney's fee incurred in the suit in the United States District Court to recover the amount which had been paid. But these 50 shares of Gunther stock were not, as respondent says in his brief, ‘admitted assets of the decedent's gross estate.’ It is true that they were includible in decedent's gross estate for the purpose of the estate tax because the decedent had reserved the income for life to himself and they were, therefore, property, the transfer of which was to take effect in possession at or after decedent's death. The executors of decedent made no contest that the value of these 50 shares of Gunther stock was includible in decedent's gross estate. In fact, they did include them. It is true that part of the deficiency in estate tax determined by the Commissioner was due to an increase which he made in the value of these shares of stock. But that has nothing to do with the question we have here to decide. These shares of Gunther stock were not property that the executors of decedent's estate could use in the payment of the deficiency in estate tax. They were not in the possession of the executors of the estate and were not being administered by them in the Maryland probate court. They were in the possession of the trustees of the inter vivos trust which decedent created by a trust indenture November 1, 1946, which was prior to his death, June 23, 1947. Decedent was trustee of this inter vivos trust prior to his death and upon his death, Zanvyl Krieger and Baltimore National Bank became successor trustees.
It is no doubt that, as respondent argues in his brief, the Commissioner by a proper proceeding could have collected the remainder of the deficiency in estate tax out of this Gunther stock. We do not understand that petitioner makes any dispute but that this could have been done. In fact, it was because petitioner's brother, Zanvyl Krieger, who was one of the executors of the estate and an attorney at law, knew that petitioner was the income beneficiary of both the testamentary trust and the inter vivos trust and that the Commissioner could by an appropriate proceeding demand from her payment of the deficiency that he advised her to furnish the $38,807.97 required to pay the balance of the deficiency. It was also because petitioner's brother knew these things that he advised petitioner to pay the $2,500 retainer fee to the attorney to file claim for refund on behalf of the estate and in case such refund was refused, then to sue in the United States District Court for the recovery of the amount of the deficiency in estate tax paid, plus interest as provided by law.
It is because of the circumstances which we have detailed above that petitioner contends that she is entitled to deduct under section 23(a)(2) the retainer fee of $2,500 which she paid attorney Case in 1953. Petitioner relies upon Northern Trust Co. v. Campbell, 211 F.2d 251 (C.A. 7, 1954). We think that case supports petitioner in her contention that she is entitled to the deduction of the $2,500 in issue under the provisions of section 23(a)(2).
In the Northern Trust Co. case, supra, it appeared that after the estate of a decedent had been closed an estate tax deficiency was claimed from the taxpayer, as transferee. A deficiency assessment was made and was paid by the taxpayer. Thereafter, the taxpayer retained counsel who filed a claim for refund in the United States District Court for the Northern District of Illinois, Eastern Division. The taxpayer was successful in this proceeding and recovered the full amount of the previously paid estate tax deficiency plus interest. To prosecute the suit, the taxpayer paid in excess of $9,000 in attorneys' fees which he claimed as a deduction. The court held that the legal fees paid by the taxpayer in prosecuting the claim for refund of estate taxes previously paid were a deductible expense under section 23(a)(2). In rejecting the Government's contention that the expenses were personal in nature and therefore not deductible, the court stated:
We do not agree with the government's contention. It is not the personal liability but rather the nature of the expense itself, and the proximate relation to the business or income producing property of the taxpayer which is the standard for determining whether an expense is deductible under Sec. 23(a) (2) or nondeductible under Sec. 24(a)(1), Internal Revenue Code. Here, the trust property which the Commissioner sought unsuccessfully to tax, as part of the estate of taxpayer's father, was held for the production of income, first by the father, then by the trustees, and finally by taxpayer as remainderman. The expense incurred in successfully contesting the government's claim was in proximate relation to the conservation of property held for the production of income.
Respondent vigorously contends that the Northern Trust Co. case, supra, is not applicable here because no transferee liability had ever been determined against petitioner and that, as a matter of fact, the executors of the estate had ample property which they could have used in the payment of the estate tax deficiency, viz, the Gunther stock. We have already pointed out that the Gunther stock was not property in the hands of the executors of the estate; that while it was property which the Commissioner no doubt could have subjected to the payment of the deficiency, it was not property which the executors could have used for that purpose.
It is true, of course, that petitioner had not been subjected to a transferee assessment, as such, when she paid a portion of the Federal estate tax deficiency assessed against the estate of Harry Goldberg, deceased. But that, we think, is not controlling. The important point is that the petitioner's income-producing property— the entire corpus of the trust established under decedent's will and a substantial part of her individual estate— had been consumed by the action of the Internal Revenue Service. Petitioner paid a reasonable fee to have the $38,807.97 which she supplied the executors of her husband's estate for the payment of the balance of the deficiency in estate tax refunded, if possible. This fact, we think, justifies the deduction. We do not think the petitioner had to wait until the Commissioner determined a transferee liability against her before taking action to conserve her income-producing funds.
The suit was successful and when the executors paid over to petitioner her part of the recovery, a certain portion of the attorneys' fees incurred in the litigation was allocated to petitioner and taken out of her portion of the recovery. She was allowed credit for the $2,500 which she had already paid in 1953. She was not reimbursed for this $2,500 attorney's fee which she had paid in 1953; she was simply allowed credit for it in the final settlement. What the tax consequences were when petitioner received payment in 1956 of her part of the recovery from the suit brought in 1953, we do not have before us for decision in this case and we express no opinion as to that. What we do decide is that petitioner is entitled to deduct under the provisions of section 23(a) (2) the $2,500 retainer fee which she paid to attorney Case in 1953.
We think that Herman F. Ruoff, 30 T.C. 204, is not controlling here because we think it is distinguishable on its facts. In the Ruoff case, the taxpayers were the owners of property which had been seized by the Alien Property Custodian and which the taxpayers sought to recover by a civil suit. They did, in fact, recover, as a result of the litigation, a substantial amount of the property which had been seized by the Alien Property Custodian. They paid their attorneys.$67,800.72 for their services in the conduct of the litigation. They deducted the amount so paid on their income tax return for 1953 and claimed such deduction as a nonbusiness expense under section 23(a) (2). The respondent disallowed the deduction. The majority opinion of the Tax Court in the Ruoff case, supra, sustained the Commissioner and, in the concluding paragraph of our opinion, we stated:
We conclude that the present situation is no different from those in which it has repeatedly been held that expenses incurred in defense of title must be capitalized and are not deductible as current items. On this issue we view respondent's determination as correct.
In the instant case, the petitioner had not had any of her property seized by the Commissioner of Internal Revenue or anyone else. The Commissioner was asserting a deficiency in estate tax against her husband's estate and the estate did not have sufficient funds with which to pay the deficiency and petitioner, upon the advice of her brother, one of the executors of the estate, supplied funds with which to pay the balance. Her reason for doing so was to avoid a potential assessment against her as a transferee of her husband's estate for so much of the deficiency as the executors of the estate were unable to pay out of funds which were in their possession. By this suit which was brought in the United States District Court and which has been described in our Findings of Fact, the executors of the estate recovered the money which had been paid, plus interest thereon, and petitioner was reimbursed for what she had advanced, plus interest. She was not reimbursed for the $2,500 retainer fee she had paid attorney Case in 1953.
Under circumstances related in our Findings of Fact, petitioner paid her attorney a retainer fee of $2,500 in 1953 to prosecute the refund suit and for reasons we have already stated, we think she is entitled to a deduction of this amount under section 23(a)(2). Northern Trust Co. v. Campbell, supra. In the Northern Trust Co. case, the court held the attorney's fees incurred by a taxpayer in successfully contesting the Government's claim for an estate tax deficiency was in proximate relation to the conservation of property held for the production of income. In so holding, the court, among other things, said:
We have not been cited any cases directly in point, nor have we been able to locate any. However, Trust of Bingham v. Commissioner of Internal Revenue, 325 U.S. 365, * * * and Selig v. Allen, D.C. 104 F.Supp. 390, affirmed Allen v. Selig, 5 Cir., 200 F.2d 487, do give broad support for the proposition that the expenses are deductible. * * *
We think our holding in the instant case that the $2,500 attorney's fee here in question is deductible under section 23(a)(2) is not only supported by the court's decision in Northern Trust Co. v. Campbell, supra, but that it is also in harmony with the Supreme Court's decision in Trust of Bingham v. Commissioner, 325 U.S. 365.
We make this further statement that we do not think the facts in the instant case bring it within the ambit of those cases of our Court and other courts which have held that expenses incurred in defense of title must be capitalized and are not deductible as current items.
Reviewed by the Court.
Decision will be entered for the petitioner.
HARRON, J., dissents.
FISHER, J., did not participate in the consideration of or decision in this report.