OPINION.
MaRQUette :
The Commissioner in liis answer to the petition herein denies that the Board has jurisdiction to hear and determine the taxpayer's appeal as to the years 1918 to 1920, for the reason " that the Commissioner has not determined that a deficiency in tax is due from the taxpayer for either the years 1918 or 1919."
We think that the Commissioner's position as to the jurisdiction of the Board to determine the taxpayer's tax liability for the year 1920 is well taken. The record herein discloses that no deficiency in tax has been asserted by the Commissioner for that year, but that, on the contrary, he has determined that there is an overassessment. The taxpayer asks that we hear the appeal as to the year 1920 and find that the overassessment should be increased. The situation presented comes squarely within the rule laid down by the Board in Appeal of Cornelius Cotton Mills, 4 B. T. A. 255, and Appeal of John F. Cook, 4 B. T. A. 916, and on the authority of those decisions this appeal, in so far as it relates to the year 1920, is dismissed.
We are, however, of the opinion that the Board has jurisdiction to determine the taxpayer's liability for the year 1918. The evidence herein shows that the Commissioner has, since the enactment of the Revenue Act of 1924, heard and denied the taxpayer's claim for the abatement of additional tax assessed for the year 1918. The record does not disclose when the additional tax was assessed. That, however, we think is of no importance, for even if the tax was assessed prior to the enactment of the Revenue Act of 1924, the Board has jurisdiction to hear an appeal from the Commissioner's determination denying a claim for abatement of such tax, where the determination was made subsequent to the date of said enactment. Appeal of Joseph Garneau Co., 1 B. T. A. 75; Appeal of Terminal Wine Co., 1 B. T. A. 697. The action of the Commissioner as set forth in the letter of March 3, 1925, quoted in the findings of fact herein, was made subsequent to the enactment of the Revenue Act of 1924 and is clearly a final determination of the taxpayer's income tax for the year 1918, from which an appeal lies to this Board.
The taxpayer contends that the estate of Isaac Mason is still in process of settlement and that although by his last will arid testament the persons named as executors thereof were also named as trustees, they never qualified as trustees or became such, and that the entire net income of the estate computed on the accrual basis should not be included in the income of Sarah F. Mason, as beneficiary under the last will and testament of Isaac Mason, but only the amounts actually paid her by the executors. They also contend that, while the books of the furniture store were kept on the accrual basis, the sales made by it were on the installment plan; that the books accurately reflect the facts necessary to show the net income of the furniture store, computed on the installment sale basis, and that in any event only the amounts actually paid by the executors to Sarah F. Mason in the years 1918, 1919 and 1921, should be included in her income as having been received by her from the estate of Isaac Mason. The taxpayer has not, however, produced sufficient evidence to enable us to determine the net income of the furniture store computed on the installment sale basis, even if we were to hold that method to be a proper one. Therefore, since it is admitted by the parties hereto that the books were kept on the accrual basis and that the income for the several 'years involved herein, computed on that basis, is as set forth in the findings of fact, we must conclude that the income so determined and computed was the true income of the estate of Isaac Mason for those years.
The net income of each year was credited to the account of Sarah F. Mason.
The question to be determined, therefore, is whether there should be included in the income of Sarah F. Mason for the years 1918, 1919 and 1921, the entire net income of the estate of Isaac Mason, so computed, or only the portions thereof actually paid to her by the executors in those years.
The years 1918 and 1919 are governed by section 219 of the Revenue Act of 1918, which provides:
See. 219. (a) That the tax imposed by sections 210 and 211 shall apply to the income of estates or of any kind of property held in trust, including—
(1) Income received by estates of deceased persons during the period of administration or settlement of the estate;
(2) Income accumulated in trust for the benefit of unborn or unascertained persons or persons with contingent interests;
(3) Income held for future distribution under the terms of the will or trust; and
(4) Income which is to be distributed to the beneficiaries periodically, whether or not at regular intervals, and the income collected by a guardian of an infant to be held or distributed as the court may direct.
(b) The fiduciary shall be responsible for making the return of income for the estate or trust for which he acts. The net income of the estate or trust shall be computed in the same manner and on the same basis as provided in section 212, except that there shall also be allowed as a deduction (in lieu of the deduction authorized by paragraph (11) of subdivision (a) of section 214) any part of the gross income which, pursuant to the terms of the will or deed creating the trust, is during the taxable year paid to or permanently set aside for the United States, any State, Territory, or any xjolitical subdivision thereof, or the District of Columbia, or any corporation organized and operated exclusively for religious, charitable, scientific, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual; and in cases under paragraph (4) of subdivision (a) of this section the fiduciary shall include in the return a statement of each beneficiary's distributive share of such net income, whether or not distributed before the close of the taxable year for which the return is made.
(c) In cases under paragraph (1), (2), or (3) of subdivision (a) the tax shall be imposed upon the net income of the estate or trust and shall be paid by the fiduciary, except that in determining the net income of the estate of any deceased person during the period of administration or settlement there may be deducted the amount of any income properly paid or credited to any legatee, heir or other beneficiary. In such cases the estate or trust shall, for the purpose of the normal tax, be allowed the same credits as are allowed to single persons under section 216.
(d) In cases under paragraph'(4) of subdivision (a), and in the case of any income of an estate during the period of administration or settlement permitted by subdivision (c) to be deducted from the net income upon which tax is to be paid by the fiduciary, the tax shall not be paid by the fiduciary, but there shall be included in computing the net income of each beneficiary his distributive share, whether distributed or not, of the net income of the estate or trust for the taxable year, or, if his net income for such taxable year is computed upon the basis of a period different from that upon the basis of which the net income of the estate or trust is computed, then his distributive share of the net income of the estate or trust for any accounting period of such estate or trust ending within the fiscal or calendar year upon the basis of which such beneficiary's net income is computed. In such cases the beneficiary shall, for the purpose of the normal tax, be allowed as credits in addition to the credits allowed to him under section 216, his proportionate share of such amounts specified in subdivisions (a) and (b) of section 216 as are received by the estate or trust.
The question in so far as it relates to the year 1921 is governed by section 219 of the Revenue Act of 1921, which is as follows:
Sec. 219. (a) That the tax imposed by sections 210 and 211 shall apply to the income of estates or of any kind of property held in trust, including—
(1) Income received by estates of deceased persons during the period of administration or settlement of the estate;
(2) Income accumulated in trust for the benefit of unborn or unascertained persons or persons with contingent interests;
(3) Income held for future distribution under the terms of the will or trust; and
(4) Income which is to be distributed to the beneficiaries periodically, whether or not at regular intervals, and the income collected by a guardian of an infant to be held or distributed as the court may direct.
(b) The fiduciary shall be responsible for making the return of income for the estate or trust for which he acts. The net income of the estate or trust shall be computed in the same manner and on the same basis as provided in section 212, except that (in lieu of the deduction authorized by paragraph (11) of subdivision (a) of section (214) there shall also be allowed as a deduction, without limitation, any part of the gross income which, pursuant to the terms of the will or deed creating the trust, is during the taxable year paid or permanently set aside for the purposes and in the manner specified in paragraph (11) of subdivision (a) of section 214. In cases in which there is any income of the class described in paragraph (4) of subdivision (a) of this section the fiduciary shall include in the return a statement of the income of the estate or trust which, pursuant to the instrument or order governing the distribution, is distributable to each beneficiary, whether or not distributed before the close of the taxable year for which the return is made.
(e) In cases under paragraphs (1), (2), or (3) of subdivision (a) or in any other case within subdivision (a) of this section except paragraph (4) thereof the tax shall be imposed upon the net income of the estate or trust and shall be paid by the fiduciary, except that in determining the net income of the estate of any deceased person during the period of administration or settlement there may be deducted the amount of any income properly paid or credited to any legatee, heir, or other beneficiary. In such cases the estate or trust shall, for the purpose of the normal tax, be allowed the same credits as are allowed to single persons under section 216.
(d) In cases under paragraph (4) of subdivision (a), and in the case of any income of an estate during the period of administration or settlement permitted by subdivision (c) to be deducted from the net income upon which tax is to be paid by the fiduciary, the tax shall not be paid by the fiduciary, but there shall be included in computing the net income of each beneficiary that part of the income of the estate or trust for its taxable year which, pursuant to the instrument or order governing the distribution, is distributable to such beneficiary, whether distributed or not, or, if his taxable year is different from tlmt of the estate or trust,-then there shall be Included in computing his net income his distributive share of the income of the estate or trust for its taxable year ending within the taxable year of the beneficiary. In such cases the beneficiary shall, for the purpose of the normal tax, be allowed as credits, in addition to the credits allowed to him under section 216, his proportionate share of such amounts specified in subdivisions (a) and (b) of section 216 as are received by the estate or trust.
(e) In the case of an estate or trust the income of which consists both of income of the class described in paragraph (4) of subdivision (a) of this section and other income, the net income of the estate or trust shall be computed and a return thereof made by the fiduciary in accordance with subdivision (b) and the tax shall be imposed, and shall be paid by the fiduciary in accordance with subdivision (c), except that there shall be allowed as an additional deduction in computing the net income of the estate or trust that part of its income of the class described in paragraph (4) of subdivision (a) which, pursuant to the instrument or order governing the distribution, is distributable during its taxable year to the beneficiaries. In cases under this subdivision there shall be included, as provided in subdivision (d) of this section, in computing the net income of each beneficiary, that part of the income of the estate or trust which, pursuant to the instrument or order governing the distribution, is distributable during the taxable year to such beneficiary.
It may be pointed out that subdivision (c) of both of the sections of law above quoted provides that, in the case of income received by estates of deceased persons during the period of administration or settlement of the estate, the tax shall be imposed upon the net income of the estate and shall be paid by the fiduciary, except that, in determining the net income of such estate, there may be deducted the amount of any income properly paid or credited to any legatee, heir, or other beneficiary, and in such cases the estate, for the purpose of the normal tax, is to be allowed the same credits as are allowed to single persons under section 216. Subdivision (d) of section 219 of the Act of 1918 provides that, in the case of income which is to be distributed to the beneficiaries periodically, whether or not at regular intervals, and in the case of any income of an estate during the period of administration or settlement permitted by subdivision (c) to be deducted from the net income upon which tax is to be paid by the fiduciary, "the tax shall not be paid by the fiduciary, but there shall be included in computing the net income of each beneficiary his distributive share, whether distributed or not, of the net income of the estate or trust for the taxable year." The corresponding subdivision of section 219 of the Revenue Act of 1921 provides that in the cases referred to " the tax shall not be paid by the fiduciary, but there shall be included in computing the net income of each beneficiary that part of the income of the estate or trust for its taxable year which, pursuant to the instrument or order governing the distribution, is distributable to such beneficiaries, whether distributed or not."
Under the last will and testament of Isaac Mason, Sarah F. Mason was entitled to receive during her lifetime the entire net income of his estate. The net income of the estate was therefore income "to be distributed to the beneficiaries periodically," within the meaning of subdivision (d) of section 219 of the Revenue Act of 1918, and also "the income of the estate or trust for its taxable year which, pursuant to the instrument or order governing the distribution, is distributable to such beneficiary," within the meaning of subdivision (d) of section 219 of the Revenue Act of 1921, and under these sections is taxable to the beneficiary and not to the fiduciary. We are of the opinion that the facts of this appeal bring it clearly within the provisions of subdivision (d) of section 219 of the Revenue Act of 1918, and subdivision (d) of section 219 of the Revenue Act of 1921, and that there should be included, in computing the net income of Sarah F. Mason as beneficiary under the last will and testament of Isaac Mason for the years 1918 to 1921, inclusive, the entire net income of the estate or trust for those years, regardless of the fact that it was not actually paid to her.
It is not considered necessary to discuss the question whether the income involved herein is to be treated as income of an estate in course of administration or as income of a trust. If income of an estate during the period of administration, it was deductible by the executors, under subdivision (c) of section 219 of both the Revenue Acts of 1918 and 1921, as income properly paid or credited to the beneficiary, and if income of a trust, it was clearly income which was to be distributed to the beneficiary periodically or which, pursuant to the instrument or order governing the distribution was distributable to such beneficiary. The treatment of the income must therefore be the same in either case, and the result is that the entire net income of the estate or trust is taxable to the beneficiary and not to the fiduciary.
Judgment will be entered on 15 days' notice, under Rule 50.