Bingham v. Commissioner , 15 B.T.A. 1001 ( 1929 )

ARTHUR W. BINGHAM, EXECUTOR OF THE WILL OF CAROLINE MATHER JACKSON, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Bingham v. Commissioner

Docket No. 20303.

United States Board of Tax Appeals

15 B.T.A. 1001; 1929 BTA LEXIS 2750;

March 21, 1929, Promulgated

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">*2750 1. Where the allegations of a petition are admitted in the answer, and where nevertheless, petitioner introduces evidence for the purpose of proving such allegations, held, that where the evidence does not contradict the allegations but supports them, the Board should accept the composite picture resulting from both, but where the evidence contradicts the allegations, the evidence should be accepted.

2. Certain items of property of a decedent, held to have been received in exchange for property of a prior decedent under section 403(a)(2) of the Revenue Act of 1921.

3. Seaboard National Bank, Executor,11 B.T.A. 1386">11 B.T.A. 1386 followed.

Lee McCanliss, Esq., and Walter D. Fletcher, Esq., for the petitioner.

Brice Toole, Esq., for the respondent.

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MILLIKEN

">*1002 This proceeding involves the redetermination of a deficiency in estate tax in the amount of $17,205.25. Petitioner asserts that respondent committed the following errors: (1) That he erred in disallowing as a deduction the values of certain items of property, aggregating the amount of $205,263.75, which were received by his decedent in exchange for property received">*2751 by said decedent from the estate of a prior decedent who had died within five years prior to the death of his decedent and whose estate had paid a Federal estate tax; (2) that he erred in determining that petitioner had failed to identify the said items of property received by his decedent in exchange for property received by her from said prior decedent; (3) that he erred in determining that petitioner had failed to prove that no part of the value of the property received by decedent from prior decedent was used to pay funeral expenses, miscellaneous administration expenses, debts of decedent, unpaid mortgages, and charitable public and similar bequests in the amount of $21,753.40; (4) that he erred in disallowing as a deduction funeral expenses, miscellaneous administration expenses, debts of decedent, unpaid mortgages and charitable public and similar bequests in the amount of $21,753.40; and (5) that he erred in disallowing as a deduction executor's commissions in the amount of $11,864 and attorney's fees in the amount of $17,500.

FINDINGS OF FACT.

(1) Petitioner is the sole executor of the estate of Caroline Mather Jackson, deceased, and resides at No. 15 East 76th Street, ">*2752 New York, N.Y. Caroline Mather Jackson, hereafter referred to as decedent, died April 15, 1922, a resident of New York, N.Y. On June 7, 1922, letters testamentary were issued by the Surrogate's Court of New York County to Arthur W. Bingham, as sole executor of decedent's estate. Edwin E. Jackson, Jr., who will hereafter be referred to as prior decedent, and who was the husband of decedent and a resident of the State of New York, died testate May 26, 1919. Decedent was sole legatee of prior decedent's will and received thereunder property of the approximate value of $1,000,000 and the Federal estate tax due on said prior decedent's estate was paid.

(2) Decedent received from the estate of prior decedent the following items of property, which were valued in the estate of prior decedent for estate-tax purposes in the aggregate amount of $41,088.19, to wit:

$20,000 par value Manhattan Railway Co. Con. Mtg. 4% bonds;

$20,000 par value St. Louis & San Francisco prior lien, Series A 4% bonds;

$10,000 par value Pennsylvania R.R. Co. General Mtg. Series A 4 1/2% bonds;

200 shares Brooklyn Rapid Transit Co.

">*1003 The above bonds and stocks were sold by decedent through">*2753 her brokers, Benedict Drysdale & Co., on December 22, 23, and 24, 1919, for the aggregate amount of $33,590.35. During the same period said brokers used said funds to the extent of $33,449.49 to purchase for decedent the following bonds:

$20,000 par value St. Louis & San Francisco Ry. (b) 5%.

$20,000 par value Interborough Rapid Transit Co., 5%.

$10,000 par value New York Telephone Co., 4 1/4%.

The aggregate value of the above bonds at the date of decedent's death was $40,457.03.

(3) Decedent recived from the estate of prior decedent the following shares of stock which were valued to the estate of prior decedent for estate-tax purposes at the aggregate sum of $65,512.50, to wit:

200 shares Union Pacific R.R. Co.

200 shares Northern Pacific R.R.

500 shares Wabash Ry. preferred "A."

During the period December 28-31, 1920, decedent through her brokers, Jones, Montgomery & Auchincloss sold said stock together with certain Pennsylvania Railroad stock, which she had not acquired from the estate of prior decedent and purchased stocks of the same corporations, all of which more particularly appears from the following account of said brokers with decedent:

DR. MRS. CAROLINE M. JACKSON in account with JONES, MONTGOMERY &
AUCHINCLOSS,CR.
1920
Dec. 28. To 500 Wab. "A" rcvd
200 Nor. Pac. rcvd
200 Un. Pac. rcvd
400 Pennsy. rcvd
Trans. Tax. 500 Wab. "A":
200 Nor. Pac
200 Un. Pac	$36.00
Dec. 30. To 100 Un. Pac. 116 1/4	11,640.00
100 Un. Pac. 116 1/4	11,640.00
100 Nor. Pac. 79 5/8	7,977.50
100 Nor Pac. 79 1/2	7,965.00
100 Wab. "A" 19 1/4	1,940.00
100 Wab. "A" 19 1/8	1,927.50
100 Penn. 39 1/8	3,927.50
100 Wab. "A" 20 1/8	2,027.50
100 Wab. "A" 20	2,015.00
100 Wab. "A" 20 1/4	2,040.00
Dec. 31. Transfer Tax 300 Pa	6.00
1921
Jan. 5. Transfer Tax 100 Pa	2.00
Transfer Tax 200 Pa	4.00
	53,148.00
Jan. 6. Balance on 200 Un. Pac.,
200 Nor. Pac., 500 Wab. "A,"
400 Pennsy	48.00
1920
Dec. 30. By 100 Wab. "A" 20 1/8	$1,993.50
100 Wab. "A" 20	1,981.00
100 Nor. Pac. 79 5/8	7,943.50
100 Nor. Pac. 79 1/2	7,931.00
100 Wab. "A" 19 1/4	1,906.00
100 Wab. "A" 19 1/8	1,893.50
100 Wab. "A" 20 1/4	2,006.00
200 Un. Pac. 116 1/4	23,212.00
100 Pa. 39 1/8	3,895.50
Dec. 31. Chk Edwin E. Jackson, Jr.	338.00
Jan. 6. Balance	48.00
	53,148.00

">*2754 The said 200 shares of Union Pacific, 200 shares of Northern Pacific, and 500 shares of Wabash Ry. preferred "A" which decedent purchased through said brokers had an aggregate value as of the date of decedent's death of $58,150.

">*1004 (4) Decedent received from the estate of the prior decedent the following shares of stock, which were valued to the estate of prior decedent for estate-tax purposes at the aggregate amount of $51,487.50.

300 shares Chicago, Milwaukee & St. Paul preferred.

400 shares Pennsylvania Railroad.

100 shares Chicago & Northwestern.

On December 29, 1921, decedent through her brokers, Callaway, Fish & Co., sold said shares of stock, together with 100 additional shares of Pennsylvania Railroad stock, which latter 100 shares she did not acquire from prior decedent's estate, at the following prices and for the following amounts:

300 shares Chicago, Milwaukee & St. Paul, at 31 7/8	$9,562.50
100 shares Chicago & Northwestern, 62 1/4	6,225.00
500 shares Pennsylvania Railroad, 33	16,500.00
Total	32,287.50

Decedent deposited the proceeds of said sales in bank to her credit in a general account in which she deposited money">*2755 arising from sources other than the sales of property acquired by her from the estate of prior decedent. On January 9, 1922, decedent purchased from Boorum & Pease Co. 500 shares of the second preferred stock of said company for which she paid said company the sum of $50,000. This sum was paid with a check for $49,000 drawn on the aforesaid bank deposit and the sum of $1,000, which was withdrawn from an open account, amounting to $4,500, which decedent had with Boorum & Pease Co. The sum of $28,987.50 received by decedent from the sale of the above stock acquired by her from the estate of the prior decedent was included in said check for $49,000. Before said purchase decedent owned about 1,379 shares of the same stock. The certificate for the 500 shares so purchased was antedated to January 1, 1922, so that it might draw interest from said date. The said 500 shares so purchased had a value as of the date of decedent's death of $47,500.

(5) Decedent received from the estate of prior decedent $10,000 par value Bethlehem Steel 7 per cent bonds, which were valued to the estate of the prior decedent foe estate-tax purposes at $10,154.72. At maturity, January 16, 1922, the principal">*2756 of said bonds, to wit, $10,000, was paid to decedent. Decedent deposited said sum of $10,000 in bank to her credit in a general account, in which she deposited money arising from sources other than the sale of property acquired from the estate of the prior decedent. Said amount remained in bank to her credit until January 23, 1922, when she withdrew from said account the amount of $10,186.67, with which she purchased through her brokers, Lee, Higginson & Co., $10,000 par ">*1005 value Duquesne Light first mortgage 6 per cent bonds, for which she paid $10,186.67. Of this amount the sum of $10,000 was received by decedent from the payment of the Bethlehem Steel bonds aforesaid. The value of the Duquesne Light bonds purchased as aforesaid as of the date of decedent's death was $10,373.33.

(6) Decedent received from the estate of the prior decedent the proceeds of certain insurance policies in the amount of $25,595.88. This amount had been included in the estate of prior decedent and the estate tax paid thereon. She received the further sum of $59,603.32, which represented a debt of Boorum & Pease Company to the prior decedent, and which was included in the estate of the">*2757 prior decedent and the estate tax paid thereon. The above amounts were deposited by decedent to her credit in the general account in which she deposited money arising from sources other than the sale of property acquired from the estate of the prior decedent. Said amounts remained in bank to her credit until July 30, 1919, when she withdrew from said bank account by check the sum of $49,000, which she used in part payment on the purchase of premises Nos. 15 and 17 E. 76th Street, New York City. This sum of $49,000 was a part of the amount received by decedent as the proceeds of the insurance policies above set forth and the debt of Boorum & Pease Co. to the prior decedent. Said two pieces of real estate, Nos. 15 and 17 E. 76th Street, New York City, were included by respondent in decedent's estate for estate-tax purposes at the aggregate value of $170,000.

(7) At the date of the death of decedent she had a bank balance in the United States Mortgage & Trust Co. of $7,070.88, no part of which represented any funds or securities, or other property, acquired by her from the prior decedent's estate. This amount was used by said executor to pay funeral bills, debts and obligations">*2758 of decedent and general administration expenses. On October 26, 1922, said executor sold $7,000 par value Pittsburg, McKeesport & Connellsville 5 per cent bonds for $6,699.78 and on the same date he sold $3,000 par value Third Avenue Railway Adjustment 5 per cent bonds for $1,808. None of the above securities were acquired by decedent from the estate of the prior decedent. The proceeds of the sale of these securities were used by said executor to pay debts and obligations of decedent's estate, including a bill of $2,000 due Samuel Marx, Inc., appraisers. On January 1, 1923, said executor began to sell securities for the purpose of accumulating sufficient cash to pay charitable bequests in the amount of $50,000. Among the securities so sold were $500 par value Third Avenue Railway Refunding 4 per cent bonds, which were sold for $296.19, and $5,000 par value Liggett & Meyers Tobacco Co. 7 per cent bonds, which were sold for $5,907.84. None of the above securities were received by decedent from the ">*1006 estate of the prior decedent. The executor's commissions amounted to the sum of $27,435.53. The total amount of attorney's fees and attorney's disbursements paid by the">*2759 estate was the sum of $18,555.46.

Respondent determined that the gross estate of decedent amounted to $1,405,053.03 and that the net estate of decedent for the purpose of computing the estate tax amounted to $535,312.30. In computing the latter amount he, among other things, disallowed executor's fees in the amount of $11,864 and attorney's fees in the amount of $25,000, on the ground that no part of either amount had been paid. In making said computation, he determined the following deductions in the following amounts:

Funeral expenses	$3,342.50
Miscellaneous administration expenses	4,781.64
Debts of decedent	20,680.89
Unpaid mortgages	86,612.97
Charitable, public and similar bequests	50,000.00
Total	165,418.00

He further determined that said items should be deducted from that part of the estate of decedent which she acquired from prior decedent, for the reason that the estate had failed to show that property received from prior decedent had not been deducted under paragraphs (1) and (3) of subdivision (a) of section 403 of the Revenue Act of 1921.

OPINION.

MILLIKEN: This proceeding involves the construction and application of section 403 of">*2760 the Revenue Act of 1921. The pertinent parts of that section read:

(a) In the case of a resident, by deducting from the value of the gross estate -

(1) Such amounts for funeral expenses, administration expenses, claims against the estate, unpaid mortgages upon, or any indebtedness in respect to, property * * * as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered, but not including any income taxes upon income received after the death of the decedent, or any estate, succession, legacy, or inheritance taxes;

(2) An amount equal to the value of any property forming a part of the gross estate situated in the United States of any person who died within five years prior to the death of the decedent where such property can be identified as having been received by the decedent from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property so received: Provided, That this deduction shall be allowed only where an estate tax under this or any prior Act of Congress was paid by or on behalf of the estate of such prior decedent, ">*2761 and only in the amount of the value placed by the Commissioner on such property in determining the value of the gross estate of such prior decedent, and only to the extent that the ">*1007 value of such property is included in the decedent's gross estate and not deducted under paragraphs (1) or (3) of subdivision (a) of this section. This deduction shall be made in case of the estates of all decedents who have died since September 8, 1916;

(3) The amount of all bequests, legacies, devises, or transfers * * * to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and 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, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educational purposes. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917; * * *

We have not been favored with a brief in behalf of respondent and therefore do not know whether he still insists">*2762 that the term "in exchange" is limited to one exchange. In view of the decisions of the Board in , and in numerous other cases and of the decision of the Circuit Court of Appeals for the Third Circuit in , this question must be resolved adversely to respondent.

Petitioner, in a brief filed in his behalf, asserts that he has suffciently identified the securities on hand at the date of death of the decedent which she acquired in exchange for securities received from her prior decedent, when he has shown that the proceeds of the sale of the original securities were deposited in a bank account and there commingled with other funds and the new securities were purchased with a check on said account and where at no time between the sale and purchase was the balance in bank less than the amount of the proceeds of the sale of the first securities. In support of this contention his counsel cites the following decisions of the Board: ">*2763 ;; ; ; and In view of the conclusions which we have reached, it is unnecessary to review these decisions.

A peculiar situation is presented in this proceeding. Petitioner has introduced evidence in support of two or three allegations which are admitted by respondent's answer. The question of the effect of this evidence is not discussed in the brief filed in behalf of the petitioner. Our investigation of the authorities discloses that while one who admits an allegation of his adversary is prohibited from introducing evidence in conflict with his admission (31 Cyc. 676-677), one can not by admission deprive his adversary of the right to introduce evidence to prove a fact alleged by him, for the reason that if such rule prevails it would result in presenting to the jury a cold ">*1008 fact instead of the colored painting which the evidence would disclose. See ">*2764 ; ; ; ; ; ; ; ; ; . These cases also lay down the rule that the admission or rejection of testimony under these circumstances lies within sound discretion of the court. Here the testimony was taken by depositions, the depositions were filed by petitioner at the hearing and no objection or exception whatever was made or taken by respondent. Under these circumstances we see no reason for us to raise any question as to the competency of the testimony. We have been unable to find any case where the testimony has in any way conflicted with the facts alleged and admitted. We believe that the true rule is that, where the facts proved do not contradict but fall within the facts alleged and admitted, we should accept the composite picture resulting from the combination of both; but">*2765 where the facts proved conflict with the facts alleged and admitted, we should accept the evidence as controlling. We have applied this rule in making our findings of fact.

The facts which appear in item (2) of our findings of fact clearly demonstrate that the proceeds from the sale of the securities received by decedent from the estate of the prior decedent remained in the hands of decedent's brokers, Benedict Drysdale & Co., and were invested by them in new securities. The securities so purchased remained in the possession of decedent until her death and were included by respondent in her gross estate.

An analysis of the account rendered to decedent by her brokers, Jones, montgomery & Auchincloss, relative to the sale and purchase of the securities set forth in item (3) of our findings of fact, shows that these were in fact "wash" sales. The sales and purchases were made on the same day and precisely the same stocks were sold and repurchased at precisely the same prices. The proceeds of the stocks received by decedent are easily traceable into the stocks which decedent owned at the time of her death. It, however, appears that the new stocks cost decedent in brokerage $321">*2766 and transfer taxes $36, or a total of $357, which it appears was paid by decedent out of funds other than those arising from the sale of the securities which she received from the estate of prior decedent.

With reference to the sales of the securities and the purchase of 500 shares of second preferred stock of Boorum & Pease Co., set forth in item (4) of our findings of fact, petitioner made the following allegations in his petition:

">*1009 10. As set forth under B-III of Schedule G of the Federal Estate Tax Return, the decedent received from the estate of her husband the following securities:

300 shares Chicago, Milwaukee & St. Paul, Pfd.
400 shares Pennsylvania Railroad.
100 shares Chicago and Northwestern.
Total	$51,487.50

On December 18, 1921, Callaway, Fish and Co., the decedent's brokers, sold the shares of stock enumerated above for her. On January 9, 1922, the decedent took the proceeds of the stock, sold through Callaway, Fish & Co., and purchased the following:

500 Shares Boorum & Pease Co., 2nd Pfd. at 95. New York
Corporation Market price at date of death	$47,500.00
Dividends payable January, April, July October 1.

">*2767 The above allegations were admitted by respondent in his answer. Notwithstanding the above admission, petitioner introduced evidence to sustain the allegations. This evidence discloses that on December 29, 1921, decedent, through her brokers, Callaway, Fish & Co., sold the shares of stock received by her from the estate of former decedent and in addition thereto, 100 shares of Pennsylvania R.R. stock which she did not so acquire, and received from Callaway, Fish & Co. the total amount of $32,287.50. Deducting from this amount sale price of the 100 shares of Pennsylvania R.R. stock, which decedent did not acquire from former decedent, leaves a balance of $28,987.50, which is the amount decedent received for the stock acquired from the estate of her prior decedent. She deposited the total sum of $32,287.50 in bank to her credit in an account in which it was mingled with money arising from sources other than the estate of prior decedent. She then drew her check for $49,000 upon this bank account payable to Boorum & Pease Co., and with the additional sum of $1,000 withdrawn from her open account with that company, she purchased the said 500 shares of stock and paid therefor the">*2768 sum of $50,000. It further appears from the evidence that the balance in bank between the date of the sale of securities and the purchase of the Boorum & Pease Co. stock was never less than the amount received from the sale of the securities. Here we have a composite picture made up of the admission by respondent that the stock of Boorum & Pease Co. was purchased with the proceeds of stock received from prior decedent and evidence that these proceeds fell short of the necessary amount to purchase the Boorum & Pease stock by approximately the sum of $21,000. We are of opinion that under this state of case the admission remains good to the extent of the proceeds arising from the sale of the original stocks. Nor are we confined to these facts alone. The evidence further shows that the original stocks were sold on December 29, 1921, that decedent ">*1010 did not have sufficient funds in bank to pay the whole amount due; that it was necessary to add to what she could withdraw from bank an additional amount of $1,000 from her open account with Boorum & Pease Co.; that she already owned over 1,300 shares of this stock, and that her new stock was dated back to January 1, 1922, in">*2769 order that the dividends should run from that date. These facts strongly indicate that the original stocks were sold in order that their proceeds might be used to purchase the Boorum & Pease Co. stock. On all the facts we are of the opinion that petitioner has traced into the Boorum & Pease Co. second preferred stock, proceeds of stock acquired from the prior decedent to the extent of $28,987.50 par value of such stock.

We have found in item (5) of our findings of fact that the amount of $10,186.67 paid by decedent for the Duquesne Light bonds included the sum of $10,000 received by her in payment of the principal of the Bethlehem Steel bonds. Here again respondent admitted the allegations of the petitioner relative to said sale and purchase and here again petitioner introduced evidence. This evidence disclosed that the proceeds of the Bethlehem Steel bonds went into a general bank account and that decedent purchased the Duquesne Light bonds with a check drawn upon such bank account, but the same witness, who gave the above testimony and who was entirely conversant with the affairs of both decedent and prior decedent, testified on cross examination:

Q. Didn't you say, though, ">*2770 that the proceeds, which were in the form of a check, was deposited in her general account?

A. In her general account.

Q. I am not referring to that check - her check, which was sent to Lee Higginson & Company in payment of the new securities, Duquesne Light. Did that check indicate whether it was a payment made from the Bethlehem Steel bonds proceeds or from general funds derived from other sources?

A. I don't know just what you mean but it was the proceeds of the Bethlehem Steel bonds that paid for the Duquesne Light bonds.

Q. Why do you say that?

A. Because that money was to be reinvested and not used for anything else. She did not use that in her general expenses.

In view of this uncontradicted testimony, and irrespective of respondent's admission, it is clear that securities received by decedent from the prior decedent have been identified to the extent of $10,000 par value in the Duquesne Light bonds.

With respect to the purchase by decedent of premises 15 and 17 East 76th St., New York City, we have found in item (6) of our findings of fact that the amount of $49,000 was paid by decedent on the purchase price out of funds received from a debt due">*2771 former decedent and out of insurance policies, both of which were included in and taxed as part of the estate of former decedent. With respect to these transactions, it is alleged in the petition -

12. ">*1011 As set forth under D-II of Schedule G of the Federal Estate Tax Return, the decedent received $25,595.88 from the estate of her husband, which was paid into his estate on insurance policies held by him at his death, and which were included in the taxable property under Schedule C of the said Estate Tax Return in his estate. Decedent also received a debt, which was due the estate of the prior decedent, consisting of a loan to Boorum & Pease Co., which was valued in the Federal Estate Tax Return of the prior decedent at $59,603.32. On July 30, 1919, the decedent purchased the premises at 15 and 17 East 76th Street, New York City, and $49,000 of the purchase price of said premises was paid by the decedent from the moneys received from the insurance policies and the obligation of the Boorum & Pease Co., as set out above.

Respondent's answer admits the above allegations. Petitioner introduced evidence to the effect that the proceeds of the debt were deposited in a general">*2772 bank account from which the sum of $49,000 was withdrawn and used in making a part payment on the purchase price of the real estate. This evidence in no way conflicts with the admission that the proceeds of the debt to the extent of $49,000 were used in making such part payment. Both facts no doubt are true. We, therefore, hold that petitioner has traced money received by decedent from the estate of the prior decedent, to the extent of $49,000, into the real estate at 15 and 17 East 76th St.

The question now arises, to what extent, if any, should petitioner be allowed deductions in the above cases? Section 403(a)(2) provides that this deduction may be allowed "only in the amount of the value placed by the Commissioner on such property in determining the value of the gross estate of such prior decedent, and only to the extent that the value of such property is included in decedent's gross estate and not deducted under paragraphs (1) and (3) of subdivision (a) of this section." With respect to the first limitation in the above provision, we said in ">*2773 :

* * * In other words, the value of such previously taxed property for the purpose of determining the deduction can not be greater than the amount at which it was included in the decedent's gross estate and can not be greater than the amount at which it was valued in determining the gross estate of the prior decedent, but should be as large as the lesser of the two amounts above mentioned.

Within the limits prescribed in section 403(a)(2), it appears clear that Congress intended to give full effect to the deduction and thus avoid double taxation. At the same time it was the intent of Congress to prevent the exemption from estate tax of the value of property of a decedent which he did not receive from the estate of a former decedent who had died within five years and the transfer of whose estate had been taxed. Each of these intentions should be given full effect, and in so doing we see no reason why one piece of property acquired with both property received from a prior decedent and other ">*1012 property may not be exempted in computing the net estate to the extent that property of the prior decedent is traced">*2774 into it, subject of course to the other limitations of the section. It would not be contended, we think, that where a decedent had acquired a one-half interest in a piece of real estate with the proceeds of property received from the prior decedent, the value of such one-half interest would not be deductible. There is no valid reason why the same rule should not apply where the decedent acquired property with the proceeds of property received both from the former decedent and from other sources.

Applying the above rule to the Boorum & Pease Co. stock, we find that the securities received by decedent from prior decedent were valued in the estate of the latter at the sum of $51,487. These securities were sold for $28,987.50 and the proceeds, together with $21,012.50 received from other sources, were used to purchase the Boorum & Pease Co. stock. Therefore, the amount of this stock which is attributable to the estate of prior decedent is 2898750/5000000 of 500 shares. Cf. The Boorum & Pease Co. stock was valued to the estate of decedent at $47,500. Since the proportion of the latter amount attributable to the estate of the prior">*2775 decedent is less than the value of the property received from former decedent, as of the date of his death, such proportional value of the Boorum & Pease Co. stock, is the amount of the deduction which should be allowed. This rule should also be applied to the facts appearing in items (3), (5) and (6) of our findings of fact. Under item (2) the amount of the deduction is the sum of $40,457.03, this being less than the value of the securities received from the prior decedent as included in his estate.

Respondent denied the deduction of executor's commission in the amount of $11,864 and attorney's fees in the amount of $25,000, on the ground that no part of either had been paid. Petitioner introduced testimony to the effect that the total executor's commissions amounted to $27,435.53, and the total disbursements for attorney's fees and disbursements amounted to $18,555.46. The gross estate of decedent was valued by respondent at $1,405,053.03, of which only $170,000 represented real estate. We have no doubt that the amounts proved represent reasonable and statutory allowances under the law of New York (cf. ">*2776 ), and that the whole amount so proved would be deductible but for the fact that petitioner in his petition has limited himself by alleging error as to respondent's refusal to permit the deduction of executor's commission in the amount of $11,864 and attorney's fees in the amount of $17,500. We are of opinion that deductions for these items should ">*1013 be allowed, but only in the amounts claimed in the petition, the amounts so claimed being less than the amounts proved.

Petitioner further asserts that respondent erred in determining that petitioner had failed to prove that no part of the property received by decedent from the prior decedent had been used to pay funeral expenses, debts of decedent, unpaid mortgages, and charitable bequests in the amount of $21,753.40. Petitioner proceeded to take proof on the question of from what sources this amount was paid. We believe this evidence irrelevant. In , we held that the provision in section 403(a)(2) which prescribes that the deduction with respect to property received from a prior decedent is limited">*2777 to amounts not deducted under paragraphs (1) or (3) of subdivision (a), was inserted by Congress for the purpose of preventing a double deduction; that a double deduction did not result when the estate of the decedent received from sources other than the prior decedent was greater in value than the deductions permitted by paragraphs (1) and (3); and that when the estate of decedent received from sources other than the prior decedent was in value in excess of the amount of the deductions under paragraphs (1) and (3), the whole of such deductions should be taken from such part of the estate, regardless of from what sources such items were paid.

Applying the above rule to this proceeding, we find that the net estate of decedent as determined by respondent amounts to $535,312.30, and that, after deducting all the additional amounts allowed by us as representing property received from the estate of prior decedent, there still remains an amount largely in excess of the amounts sought to be deducted for executor's commission, attorney's fees, debts and unpaid mortgages. We are, therefore, of opinion that petitioner is entitled to deduct from the gross estate of decedent the amounts allowed">*2778 by respondent as representing property acquired from the former decedent, plus the additional amounts allowed in this opinion and plus the following amounts: $21,753.40, representing debts of decedent and unpaid mortgages; $11,864, executor's commissions; and $17,500, attorney's fees.

Reviewed by the Board.

Judgment will be entered under Rule 50.

MURDOCK

MURDOCK, dissenting: I dissent in part from the prevailing opinion. The Commissioner has allowed deductions for funeral and administration expenses and also for charitable, public and similar bequests and he further determined that these items should be deducted from that part of the estate of the decedent which she had acquired from the prior decedent, because there was no showing that the value of ">*1014 property received from the prior decedent had not been deducted under paragraphs 1 and 3 of subdivision (a) of section 403 of the Revenue Act of 1921 to the extent of the deductions allowed under those paragraphs. In this he erred in part, since it appears that there were funds to pay the funeral and administration expenses without touching the property received from the prior decedent. But before">*2779 allowing deductions for the full amount of all bequests to charities, etc., under paragraph 3, and at the same time allowing deductions under paragraph 2 of the full amount of the value of the property received from a prior decedent, we should know that property received from the prior decedent has not been specifically devised or bequeathed to charities and that it was not necessary to use property received from the prior decedent to pay or satisfy the bequests or devises to charities, etc. In the present case we do not know that the property received from the prior decedent has not been needed for these purposes.