New England Merchants National Bank v. Converse

Guardians ad litem are here objecting to trustees’ accounts because no adjustment was made between income and principal to reimburse principal for a portion of Federal capital gains taxes paid out of principal. Pursuant to Federal law certain capital expenses were deducted in determining the net income taxable to the income beneficiaries; if those expenses had been available as deductions in determining the capital gains taxes, lesser taxes would have been paid out of principal. We hold that in the circumstances of these cases the trustees are not required to make the adjustment in question.

In…