Lewis v. Commissioner
United States Tax Court
Petitioners are residents of Pennsylvania and are the beneficiaries of an inter vivos trust created in that state. Under the trust the trustees are directed to pay all expenses out of trust income and to distribute the remaining net income to life beneficiaries. In the taxable years carrying charges on unproductive real estate were paid by the trustees out of income.
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Petitioners are residents of Pennsylvania and are the beneficiaries of an inter vivos trust created in that state. Under the trust the trustees are directed to pay all expenses out of trust income and to distribute the remaining net income to life beneficiaries. In the taxable years carrying charges on unproductive real estate were paid by the trustees out of income. Under Pennsylvania law there is no clear rule that carrying charges on unproductive property are to be paid out of either principal or income. Allocation may be made between the two depending on equitable considerations. Held,…
1Opinion of the Court
OPINION.
HaRRON, Judge:
The question is whether the income of the trust which was retained by the trustees to take earn of the carrying charges of certain real estate which was unproductive is the income of the life beneficiaries and taxable to them. The petitioners are two of the life beneficiaries and their income tax liability only is before us. Eespondent contends that the rule under Pennsylvania law is that all of the income from unproductive real estate belongs to income beneficiaries of a trust and that it follows that the carrying charges on such property are a charge against principal.…
2Cases cited2 opinions
- Freuler v. HelveringSupreme Court of the United States · 1934
- Nirdlinger's EstateSupreme Court of Pennsylvania · 1938
3Cited by11 opinions
- McVeigh v. CommissionerUnited States Tax Court · 1944
- Commissioner of Internal Revenue v. LewisCourt of Appeals for the Third Circuit · 1944
- Fickert v. CommissionerUnited States Tax Court · 1950
- Hudson v. CommissionerUnited States Tax Court · 1947
- Horn v. CommissionerUnited States Tax Court · 1945
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