Burt v. Commissioner
United States Tax Court
Decedent created a testamentary trust, directing the trustee to pay annually specified amounts to named beneficiaries for life, and to use principal if income should be insufficient. In 1942 and 1943 the trust received taxable and tax-exempt income, the amount of each type being in excess of the specified payments. The trustee made the payments to the surviving beneficiaries, and, in computing net income, deducted the full amount of them.
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Decedent created a testamentary trust, directing the trustee to pay annually specified amounts to named beneficiaries for life, and to use principal if income should be insufficient. In 1942 and 1943 the trust received taxable and tax-exempt income, the amount of each type being in excess of the specified payments. The trustee made the payments to the surviving beneficiaries, and, in computing net income, deducted the full amount of them. The Commissioner disallowed deduction of a percentage of the aggregate payments equal to the percentage of tax-exempt income in the trust's total income…
1Opinion of the Court
OPINION.
Johnson, Judge-.
The Commissioner determined a deficiency of $5,745.93 in petitioner’s income tax for 1942 and a deficiency of $8,046.13 in its income and victory tax for 1943, in part by disallowing as a deduction a percentage of amounts distributed to beneficiaries pursuant to decedent’s will equal to the tax-exempt percentage of total trust income available for distribution. Petitioner contends that the full amounts paid to the beneficiaries are deductible under section 162 (d) (1), which is applicable to its distributions, because the definition of distributable income incorporated…
2Cases cited2 opinions
- Helvering v. ButterworthSupreme Court of the United States · 1933
- Stewart v. CommissionerUnited States Tax Court · 1947
3Cited by3 opinions
- Townsend v. CommissionerUnited States Tax Court · 1949
- Burt v. CommissionerUnited States Tax Court · 1949
- Offutt v. CommissionerUnited States Tax Court · 1959