Anderson's Estate v. Commissioner

The correctness of a decision of the Board of Tax Appeals is challenged by the petition to review filed by the taxpayer.

Frank B. Anderson died testate on September 17, 1935, leaving an estate in excess of $2,000,000. His will declared that all his property was community property, one-half of which belonged to his wife. He left the remainder of the property to a bank as a residuary legatee to hold as trustee, with exception of certain other gifts. On December 30, 1936, the state probate court made its decree of final distribution, distributing the property. The cash remaining in the estate on that date amounted to $68,770.05. Of that amount, $1,500 was retained in the estate, and the balance, after payment of executors’ and attorneys’ fees, was distributed.

During the year 1936, the estate had a net income, after certain adjustments were made, of $281,994.48. The receipts constituting corpus of the estate as well as receipts of income, were commingled on the books of the executor. During 1936, the executor made cash disbursements amounting to $853,564.19 which included federal estate and state inheritance taxes amounting to $528,643.93.

The income tax return for the year 1936…