
    ESTATE OF HARRY S. BOND v. THE UNITED STATES
    [No. 205-57.
    Decided January 24, 1964]
    
      
      Martin BubashMn for the plaintiff. Philip Zimet, John J. /Slain, and Alfred L. Scanlan ivere on the brief.
    
      Gilbert W. Bubloff, with whom was Assistant Attorney General Louis F. Oberdorfer, for the defendant. Edward 8. Smith, Lyle M. Turner, and Philip B. Miller were on the brief.
    Before Jones, Chief Judge, Whitaker, Laramoee, Dureee and Davis, Judges.
    
   Jones, Chief Judge,

delivered the opinion of the court: This is a suit by the executor of the estate of Harry S. Bond for a refund of income taxes which plaintiff alleges were erroneously collected for the year 1951. Plaintiff asserts that there was an overpayment of income taxes due to his failure to deduct from taxable income for 1951 that portion of the income which became payable to the legatees and distributees during that year.

The issue involved section 162 (b) and (c) of the Internal Revenue Code of 1939, as amended by section 111 of the Revenue Act of 1942 (26 U.S.C. §162 (19'52 ed.)) and Treasury Regulations issued pursuant thereto, pertinent-parts of which are found in the footnote.

The Foots

Tbe facts are set out in tbe findings of fact. Briefly, they are as follows:

Harry S. Bond (decedent) died December 24, 1935. ITis will was admitted to probate in Connecticut, December 31, 1935. It provided three classes of bequests: 1. Specific: Certain personal effects were bequeathed. These are set out in the fourth and tenth paragraphs of the will. 2. General: Legacies in definite amounts aggregating $248,500 were directed to be paid to designated persons. These are set out in finding 4. 3. Besiduary: The remainder of the assets of the estate, after payment of expenses, debts, and the above bequests were satisfied, was left to certain relatives. (Finding 5.)

The bulk of the estate consisted of stock in the Hotel Bond Company (hereafter referred to as the “Corporation”) valued for tax purposes at $343,859.70. However, at the time of his death the decedent owed the Corporation the sum of $239,755.50.

The will contemplated that the decedent’s assets, including the stock in the Corporation, were to be sold and the proceeds distributed according to the terms of the will within 2 years. Yet the executors ( originally five in number, of which number one died, one later resigned, and one was removed) operated the Hotel Bond Company properties approximately 17 years until June 1,1951, at which time they sold decedent’s stock in the Corporation to the Gateway Company for $779,-745.60. Out of the proceeds of the sale the sum of $239,745.60 was turned over to the Corporation in payment of the estate’s debt to the Hotel Bond Company. The sales price exceeded the estate tax valuation by $435,885.90, thus resulting in gross income of that amount.

In late June or early July 1951, the executors filed with the Probate Court of the District of Hartford, Connecticut, an administration account which contained a schedule of proposed distribution of the estate’s assets. This schedule provided for the payment of principal aggregating $248,500 to the cash legatees. The schedule also provided, pursuant to the terms of Connecticut law, for the payment of interest on these cash legacies, except those listed in the sixth and seventh paragraphs of the will, at the rate of 6 percent per annum from December 24,1936 to July 17,1951, in the sum of $173,453.01.

The hearing, after two postponements, was finally set for December 27, 1951., On the latter date the Probate Court entered an order finding the accounts filed by the executors true — with certain minor exceptions not germane here — and finding “that all legacies which have not lapsed have been paid” and “that all claims duly presented within the time limited by this Court have been paid, settled or barred by law.” The court then ordered the rest, remainder and residue of the estate to be paid over to the residuary distributee according to the terms of the will. The actual payment of these legacies was not made until October 30, 1952.

There were seven separate appeals from the Probate Court’s order of December 27, 1951. Two of these appeals complained, inter alia, of the alleged invalidity of the sale of the stock of the corporation by the executors and prayed that the sale be set aside. These appeals were nonsuited September 26,1952. The five other appeals claimed that the plaintiffs therein were aggrieved by the approval, acceptance, and allowance of the administration accounts, by alleged mismanagement on the part of the executors, and the improper allocation of payments between the legatees in the schedules filed and approved in the order of December 27, 1951. Numerous representations were made by the five different appellants as grounds for setting aside or modifying the probate order of December 27,1951. These included, inter alia, that the court erred in improperly allowing certain accounts of the executors, in not properly allocating the amounts to be distributed, in accepting the proposed schedules, in not allowing interest on certain legacies, and on the method of scheduled distribution.

According to a stipulation for judgment signed by the legatees October 27, 1952, an order was entered by the Superior Court on November 7, 1952, in these five appeals, providing that interest be paid on the legacies set out in the sixth and seventh paragraphs of the will at the rate of 5 percent per annum from December 24 1936, to the date of distribution, October 30, 1952. There had been allowed no interest to these several legatees according to the schedules originally filed. Since the several disputants had at last agreed on a distribution, which the court approved for payment as of October 30', 1952, we have not undertaken to list the changes, if any of consequence, in the first and last schedules of payment.

The Issue

The ultimate issue is whether by the terms of section 162 (b) and (c) (as amended by section 111 (b) and (c) of the Revenue Act of 1942, supra) and the Treasury Regulations issued pursuant thereto, the bequests named in the will became payable or were properly to be paid or credited to the legatees, heirs, or beneficiaries during the year 1951, or whether a present legal right to compel distribution arose during that year.

We think in the circumstances of this case the income for 1951 was neither paid, payable, nor properly to be credited to any of the legatees during that year, nor could such legatees have enforced distribution during 1951.

The Probate Court order of December 27, 1951, was materially changed in the latter part of the year 1952.- This change involved not only a correction of error made as a result of the fact that the probate judge had been led to believe that all of the legacies which had not lapsed had been paid, but also a correction of the failure to allow interest on the legacies set out in the sixth and seventh paragraphs of the will. This interest had not been included in the list of scheduled payments submitted to the court for action in the probate order of December 27, 1951.

The correction of this error changed the prorated amount available for distribution to the other legatees by the final order of distribution as of October 30, 1952. The Probate Court order of December 27,1951, did not direct the distribution of any of the general legacies. It did direct that payment of any residue of the estate 'be made to the residuary disti'ibutees. However, there was no such remainder or residue. This part of the order no doubt was the result of the impression the court had that all unlapsed legacies had been paid. There were not enough funds in the estate to pay the amounts specified in the definite legacies and statutory interest thereon and these amounts of interest had to be prorated. There was no remainder in the estate. In addition, the order of December 27, 1951, reserved no amounts for the payment of the estate’s income taxes. These income taxes were reported and paid in early 1952, in the sum of $108,971.48.

Thus, clearly the funds were not only not distributed or credited to the legatees in 1951, they were not ready for such action. In fact, neither the proposed schedule of distribution nor the court’s erroneous recital and approval of a distribution supposedly already made included any mention of or reservation for payment of income taxes. The schedule submitted by the executors in 1951 had proposed interest payments to certain of the legatees, pursuant to the Connecticut law, in the aggregate sum of $173,453.01. But when the several disputants entered into a stipulated agreement in late 1952 it had been found that the payment of income taxes and other expenses h(ad left only $76/T58.60 for payment of interest on the legacies. So this amount was prorated among the named legatees, thus permitting payment of less than half the interest due.

The stipulation for judgment, signed on October 27,1952, finally provided for actual payment to the legatees and fixed the distribution date as October 30, 1952. The Superior Court entered an order approving the 5 percent interest payment on the legacies named in the sixth and seventh paragraphs of the will which had been denied interest according to the original schedules filed by the executors. The court approved the schedule of distribution agreed upon by the interested parties and decreed the ending of interest on all the legacies as of October 30,1952, the date of distribution. The actual payment to the designated legatees was made on October 80,1952. The executors filed a supplemental report with the Probate Court in January 1953 showing the distribution that was made on October 30, 1952. This was approved in June 1953 by the Probate Court for the District of Hartford.

Whether section 162(b) or section 162(c) is applicable, the Probate Court decree of December 27, 1951, did not make any income assignable to the beneficiaries, within the statute, in the year 1951. From what we are told of Connecticut law, that decree did not finally order any distribution or allocation to the specific legatees, and those beneficiaries had no right at that time to enforce payment. The curiously worded decree did not explicitly direct distribution to the specific legatees; an appeal was taken; significant modifications were made in a later year; and the ultimate distribution differed materially from what appeared likely in 1951. The 1951 decree should therefore not be deemed a true final closing of the estate or an enforceable order of distribution. Accordingly, in 1951, there was no income “to be distributed currently by the fiduciary to the legatees, heirs, or beneficiaries” (under section 162(b)) or income “which is properly paid or credited during such year to any legatee, heir, or beneficiary” (under section 162(c)). See Treas. Beg. Ill, Section 29.162-2(b); Commissioner v. Stearns, 65 F. 2d 371 (C.A. 2d 1933), cert. denied.I, 290 U.S. 670 (1933). This ground of decision suffices to dispose of both aspects of taxpayer’s claim — that based on the principal amount of the legacies and the alternative argument as to the interest. For the legacies themselves, there is the additional ground that, after as well as before the 1942 amendment, these lump sum payments constituted principal, not income, to the specific legatees. Old Colony Trust Co. v. Commissioner, 38 B.T.A. 828 (1938); Dunlop v. Commissioner, 165 F. 2d 284 (C.A. 8th 1948). Cf. Carlisle v. Commissioner, 165 F. 2d 645 (C.A. 6th 1948) (residuary dis-tributee) . With respect to the interest, we see no need in this case to pass upon the correctness or the reach of Davidson v. United States, 137 Ct. Cl. 416, 149 F. Supp. 208 (1957).

We have examined the numerous cases cited by both plaintiff and defendant in their briefs. We will not undertake to review all of them. There are some conflicts and overlapping. A number of the cases cited by plaintiff deal with the question of whether interest which had been paid on legacies was to be included in the legatees’ gross income. Some of the cases cited by plaintiff clearly state that an order entered by the Probate Court decreeing distribution is final unless appeal is taken therefrom. Some of them indicate that it is final in the peculiar circumstances of the particular case even though there is an appeal therefrom. There is thus some conflict in those decisions.

In spite of the seeming conflicts, out of all these decisions emerges the simple conclusion that the estate must pay the tax in the year of the receipt of its income, with the single exception that the estate brings itself within the terms of section 162 (b) or (c). Under these provisions of the statute it is made quite clear that the tax is to be paid either by the estate or the legatees during the current year.

We hold that the record in this case taken as a whole shows that the legacies were not paid, payable, or credited to the legatees during the year 1951, and that the legatees had no present right to compel distribution during that year; that all the legacies were paid on October 30, 1952; that they were paid by the executors out of the estate’s income for the year 1951; that the estate’s income tax paid by the executors for the year 1951 is the only tax shown to have been paid on that income, and that the exceptions set out in section 162 (b) and (c) do not apply in the facts and circumstances of record in this case.

The petition is dismissed.

FINDINGS OF FACT

The court, having considered the evidence, the report of Trial Commissioner W. Ney Evans, and the briefs and argument of counsel, makes findings of fact as follows:

1. Harry S. Bond (hereinafter usually referred to as “decedent”) was a resident of the Town and County of Hartford, Connecticut. He died testate on December 24,1935.

2. The decedent’s last will and testament, dated April 26, 1984, was admitted to probate in the Probate Court for the District of Hartford on December 31,1935. Under the decedent’s last will and testament there were named as executors: Frank P. Furlong, Arthur L. Shipman, Willard B. Rogers, Edmund J. Oles, and Frances K. Pushe.

3. The aforementioned executors posted their bond with the Probate Court on December 31, 1935. They were appointed executors on the same day. Arthur L. Shipman died on October 17, 1938, and Frank P. Furlong resigned his office in May 1942. Frances K. Pushe was removed as an executrix of the estate in 1951. The two remaining executors, Willard B. Rogers and Edmund J. Oles, filed the claim for refund of taxes on behalf of the estate which is the subject matter of the action pending in this court.

4. The decedent’s will provided that all estate taxes and debts should be paid. Various provisions of the will provided for legacies in the following sums:

a. Second: * * * to the Hartford, Connecticut Trust Company in trust for the Cedar Hill Cemetery, Incorporated, $5,000.
b. Third: * * * to the Rutland Rural Cemetery Corporation, $2,500.
c. Fifth: * * * to
Herman Emerson Bond-$5,000
Fred Holbrook Bond- 5,000
George Calvin Bond, Sr- 5,000
Samuel Fisk Bond- 5,000
Edward Pollard Bond- 5,000
Nellie Bond Smith-$5,000
Lena Bond Trask- 5,000
Grace Bond Cole- 5,000
Bernice Bond Bush- 5,000
d. Sixth: * * * To the Hartford, Connecticut Trust Company in trust for the benefit of needy relatives, $25,000.
e. Seventh: * * * to each grandchild surviving, being on death:
Jacqueline T. Bond_$5,000
Sally M. R. Christenson- 5,000
Harry B. Roberts_ 5,000
William David Roberts- 5,000
f. Eighth: * * * to Edward P. Shea, $1,000.
g. Ninth: * * * to persons named in the will, if employed by the Hotel Bond Company at decedent’s death (all but two of whom were so employed), as follows (excluding those not employed by the Hotel Bond Company at decedent’s death):
Margaret C. Calnan-$15,000
Frances K. Pushe_ 10,000
Lena Gunning_ 5,000
Nedis M. Prior_ 1,000
Willard B. Rogers- 25, 000
Edmund J. Oles- 15,000
Frank P. Furlong_ 5,000
Arthur L. Shipman_ 5,000
Thomas B. O’Connor_ 10,000
Leonard Markese_ 10,000
Henri M. Earn_ 10,000
Walter T. Carliell_ 10,000
Paul P. Paschetto_ 5,000
Charles D. McGee_ 10, 000
Charles Zeppa- 5,000
William H. Fitzimmons- 1,000
Jesse L. Foster_ 1,000
Edward L. Deegan_ 1,000
Douglas A. Southall, Sr- 1,000
T. Arthur Meenaghan_ 1, 000
Samuel M. Haber_ 1,000
John Kinney_ 1,000
J. Henry Heap_ 1,000
Frank Delmastro_ 1.000

The above-enumerated legacies amounted to two hundred and forty-eight thousand five hundred dollars ($248,500).

5. Under paragraph Eleventh of his will, the decedent’s residuary legatees were his children, Doris Bond Roberts, Earl Ellsworth Bond, Lloyd Parsons Bond, and Harry Raymond Bond.

6. In appointing his executors, the decedent further provided that:

I desire my said executors to sell or liquidate my interest in the Hotel Bond Company and my real estate in Hartford, West Hartford and Canton, and my furnishings in Canton, before my estate is distributed, if the same can be done advantageously, and I therefore authorize them at their option to take two years to administer upon and settle my estate.

7. On December 24, 1985, the date of his death, Harry S. Bond held legal or beneficial title to the 2,810 shares which comprised the common stock of the Hotel Bond Company. This stock was included in the decedent’s gross estate for federal tax purposes at a value of three hundred and forty-three thousand eight hundred and fifty-nine dollars and seventy cents ($848,859.70). At the date of his death, the estate of the decedent was indebted to the Hotel Bond Company in the amount of two hundred and thirty-nine thousand seven hundred and fifty-five dollars and fifty cents ($239,755.50).

8. The executors appointed under the will of the decedent assumed management of the corporation on behalf of the estate and continued the active administration of the Hotel Bond and the Bondmore Hotel, both of which were owned by the Hotel Bond Company, as well as the Bond Annex, which the corporation leased.

9. The executors continued their management of the hotels from the time of their appointment until June 1, 1951, at which time the stock of the Hotel Bond Company was sold to the Gateway Company, pursuant to a contract of sale entered into on November 30,1950.

10. The Bond Estate kept its books and filed its tax returns on a calendar year basis, and adopted the cash receipts disbursements method of accounting, filing its fiduciary income tax return for the calendar year ending December 31, 1951, on a cash receipts and disbursements basis.

11. On June 1, 1951, the estate sold the common stock of the Hotel Bond Company to the Gateway Company for a total price of seven hundred and seventy-nine thousand seven hundred and forty-five dollars and sixty cents ($779,-745.60). Of this amount, two hundred and thirty-nine thousand seven hundred and forty-five dollars and sixty cents ($239,745.60) was turned over to the Hotel Bond Company in payment of the estate’s debt to the corporation.

)12. The sales price of the stock of the Hotel Bond Company exceeded the estate tax'valuation of the stock by four hundred and thirty-five thousand eight hundred and eighty-five dollars and ninety cents ($435,885.90).

13. Some time between June 18, 1951, and July 4, 1951, following the completion of the sale to the Gateway Company of the stock of the Hotel Bond Company, the executors of the estate filed an administration account in the Probate Court of the District of Hartford. The administration account filed at that time contained schedules of proposed distribution of the estate’s assets.

14. The schedule of proposed distribution attached to the administration account referred to in finding 13 above provided for a two hundred and forty-eight thousand five hundred dollar ($248,500) payment of principal to legatees. The schedule of proposed distribution attached to the aforesaid administration account also provided for payment of interest on the legacies (except those enumerated in the sixth and seventh paragraphs of the will) at the rate of 6 percent per annum from December 24, 1936 (1 year following the death of the testator), to July 17, 1951, in the total sum of one hundred and seventy-three thousand four hundred and fifty-three dollars and one cent ($173,453.01).

15. On July 5, 1951, the Probate Court ordered a hearing on the aforesaid administration account to be held on July 17, 1951. This hearing was adjourned first to August 28, 1951, then to November 5,1951, and finally to December 27,1951.

¿6. On December 27,1951, the Honorable Russell Z. Johnston, Judge of the Probate Court, District of Hartford, entered an order finding that the accounts filed by the executors, as referred to above, were true with certain minor exceptions not germane for the purpose of this case, and ordered that the rest, residue, and remainder of the estate be distributed, transferred, and paid over to and among the residuary distributees according to law and the provisions of the decedent’s will. The decree erroneously stated that all legacies which had not lapsed had been paid.

17. Following the entry of the Probate Court’s order of December 27, 1951, seven separate appeals were taken therefrom. Two of the appeals complained, among other things, of the invalidity of the sale of the stock of the Hotel Bond Company by the executors and prayed that said sale be set aside. These appeals were nonsuited on September 26,1952. Five other appeals claimed that the plaintiffs therein were aggrieved by the approval, acceptance, and allowance of the administration accounts and the order of distribution of December 27, 1951. According to a stipulation for judgment, signed on October 27, 1952, an order was entered by the Superior Court on November 7,1952, in these five appeals, providing that interest be paid on the legacies in the sixth and seventh clauses of the will at the rate of 5 percent (5%) per annum from December 24, 1936, to the date of distribution, October 30,1952.

18. Distribution was made on October 30,1952, the executors paying to the legatees named under paragraphs Second, Third, Fifth, Sixth, Seventh, Eighth, and Ninth of the decedent’s will a total of three hundred and twenty-three thousand eight hundred and nine dollars and eleven cents ($323,809.11), being the funds then available to the estate. All distributions made by the executors to beneficiaries named in the will were made on this date. All of the estate’s assets were distributed solely to the legatees, in the following manner: two hundred and forty-seyen thousand sixty dollars and fifty-two cents ($247,060.52) paid as principal, seventy-six thousand seven hundred and fifty-eight dollars and sixty cents ($76,758.60) paid as interest. No residuary legatee or beneficiary, other than the legatees, ever received any of the estate’s assets.

19. In January 1953', the executors filed a supplemental account with the Probate Court for the District of Hartford, covering the period from July 17,1951, to November 8,1952. This supplemental account was approved and allowed by the Probate Court for the District of Hartford on June 19, 1953, following a hearing held on that date.

20. Said supplemental account indicates a distribution of the estate’s assets to beneficiaries named in the will in the sum of three hundred and twenty-three thousand eight hundred and nine dollars and eleven cents ($323,809.11). This sum was composed solely of payment of two hundred and forty-seven thousand sixty dollars and fifty-two cents ($247,060.52) to the legatees as principal, and payment of seventy-six thousand seven hundred and fifty-eight dollars and sixty cents ($76,758.60) to the legatees as prorated interest.

21. The distribution of prorated interest to the legatees in the sum of seventy-six thousand seven hundred and fifty-eight dollars and sixty cents ($76,758.60) was a lesser sum than the one hundred and seventy-three thousand four hundred and three dollars and one cent ($173,403.01) in total interest due them, as shown in the schedule of proposed distribution set forth in the administration account approved by the Probate Court on December 27, 1951.

22. The estate, after payment of federal income taxes and other expenses of administration, had only sufficient funds available, upon distribution in October 1952, to pay the legacies and a prorated interest thereon.

23. The supplemental account showed the estate’s payment of one hundred and eight thousand nine hundred and seventy-one dollars and forty-eight cents ($108,971.48) in federal income taxes.

24. On January 30,1952, the estate filed its federal income tax return for the calendar year ending December 31, 1951. That return showed a net gain of two hundred and seventeen thousand nine hundred and forty-two dollars and ninety-five cents ($217,942.95), representing one-half of the capital gain attributable to the sale of the stock of the Hotel Bond Company. The alternative tax computation made pursuant to Schedule C in the aforesaid return showed an income tax liability of one hundred and eight thousand nine hundred and seventy-one dollars and forty-eight cents ($108,971.48), which tax the estate paid on January 30,1952.

25. In computing its taxable income for the year 1951, the estate took deductions of sixty-four thousand thirty-eight dollars and sixty-eight cents ($64,038.68), representing expenditures for attorneys’ fees and other miscellaneous and incidental administration expenses.

26. On January 30, 1952, following the filing of the fiduciary income tax return for the year 1951, an immediate audit was requested by the executors “for the reason that the estate is involved in litigation in the Superior Court for the County of Hartford, State of Connecticut, and such audit is necessary to satisfy said Court.”

27. On February 25, 1954, the estate filed a claim for refund on Form 843 with the Internal Revenue for the District of Hartford, Connecticut. The claim was in the amount of one hundred and eight thousand nine hundred and seventy-one dollars and forty-eight cents ($108,971.48) for the year 1951.

28. On January 22, 1957, notice of disallowance in full of the estate’s claim for refund was given by the defendant, in accordance with, the provisions of section 3772(a) (2) of the Internal Revenue Code of 1939.

29. On April 29, 1957, the estate filed a petition in this court, setting forth the contentions previously made in the claim for refund filed with the District Director, as referred to in finding 27 above.

30. During 1947 and 1948, some of the legacies were purchased at their face amounts, in a total sum of one hundred and seven thousand dollars ($107,000). In addition, during that same period, all the residuary legacies were purchased by and assigned to the same purchaser who had acquired the legacies for a total sum of one hundred and twenty-three thousand dollars ($123,000). The executors were advised of these assignments.

31. (a) Decedent’s will created three classes of bequests:

(1) General legacies (paragraphs 2, 3, 5, 7, 8, and 9 of the will) .

(2) Specific legacies (paragraphs 4 and 10 of the will).

(3) Residuary legacies (paragraph 11 of the will).

(b) The will contained no provision for the payment of interest on legacies. The provision for payment of interest on certain legacies was inserted in the schedule of proposed distribution (finding 14) attached to the administration account (finding 13) in compliance with Connecticut law.

(c) Decedent contemplated completion of the administration of his estate within a period of approximately 2 years.

(d) Decedent’s estate was in process of administration for 17 years, including all of the taxable year 1951.

32. (a) No provision for federal income taxes was contained in (1) the order entered by the Probate Court on December 27, 1951 (finding 16) or (2) the schedules of distribution (finding 14) thereby approved.

(b) The order of the Probate Court mentioned in the preceding paragraph contained no express direction for distribution of the estate’s assets within the year ending December 31, 1951, nor did the executors make distribution, in whole or in part, within that time.

(c) Plaintiff contends that, under the law of Connecticut, a decree of probate accepting the account of a fiduciary is a final judgment, which imposes on the fiduciary the legal obligation to make distribution in accordance therewith, and that the order of the Probate Court described in finding 16 was such a decree.

CONCLUSION OE LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is not entitled to recover, and the petition is therefore dismissed. 
      
       2,6 U.S.C. § 162 (1952 ed).:
      "§ 162. Net income.
      “Tiie net Income of tie estate or trust shall be computed in the same manner and on the same basis as in the case of an individual, except that—
      * * * * *
      “(b) [as amended by § 111(b) of the Revenue Act of 1942, c. 619, 56 Stat. 798] There shall be allowed as an additional deduction in computing the net income of the estate or trust the amount of the income of the estate or trust for its taxable year which is to be distributed currently by the fiduciary to the legatees, heirs, or beneficiaries, but the amount so allowed as a deduction, shall be included in computing the net income of the legatees, heirs, or beneficiaries whether distributed to them or not. As used in this subsection, ‘income which is to be distributed currently’ includes income for the taxable year of the estate or trust which, within the taxable year, becomes payable to the legatee, heir, or beneficiary. * * *
      “(c) [as amended by § 111(e) of the Revenue Act of 1942, supra] In the case of income received by estates of deceased persons during the period of administration or settlement of the estate, and in the ease of income which, in the discretion of the fiduciary, may be either distributed to the beneficiary or accumulated, there shall be allowed as an additional deduction in computing the net income of the estate or trust the amount of the income of the estate or trust for its taxable year, which is properly paid or credited during such year to any legatee, heir, or beneficiary, but the amount so allowed as a deduction shall be included in computing the net income of the legatee, heir, or beneficiary
      
        * * * 3 #
      Treasury Regulations 111 (1939 Code) :
      “Sec. 29.162-2. Allocation of estate ahd tkust income to legatees ANP BENEFICIARIES.—
      
        * * * * *
      
      “(B) Allocation among income beneficiaries and legatees.- — ■
      • * * * *
      “As used in section 1.62, the term ‘income which becomes payable’ means income to which the legatee, heir, or beneficiary has a present right, whether or not such income is actually paid. Such right may be derived from the directions in the trust instrument or will to make distributions of income at a certain date, or from the exercise of the fiduciary’s discretion to distribute income, or from a recognized present right under the local law to obtain income or compel a distribution of income. Income is not considered to become payable within a taxable year where during the entire taxable year there is only a future right to such income. For example, under valid terms of a trust instrument income received by a trust during a taxable year is to be accumulated under the twenty-first birthday of the beneficiary (or his prior death), at which time the accumulated income is to be distributed to the beneficiary (or his estate, as the case may be). In such case, the income of the trust received in any taxable year prior to the taxable year of the trust in which the date of distribution occurs (the beneficiary’s twenty-first birthday or his prior death) is not income which becomes payable within such prior taxable year but is income which becomes payable in the taxable year of the trust in which the date of distribution occurs. In any case, income becomes payable at a date not later than the date it is actually paid for the use of the distributee.”
     
      
       Since there were 41 general legatees for definite amounts, some of whom were also residuary legatees, it is not surprising that a dispute should arise and appeals should be taken. In fact, one of the appellants, a brother of the deceased, was one of the general legatees and, along with other relatives, a residuary legatee.
     
      
       Both the House and Senate Committee Reports on H.R. 7378, -which became the 1942 Act, indicate that Amendment 111, which affected section 162 of that Act, was approved because under the construction of existing law some beneficiaries were avoiding the tax or shifting the burden to other beneficiaries. The amendment, 162 (b) and (e), makes it crystal clear that the tax must be paid either by the estate or it is brought within the scope of section 162, as amended, by the beneficiary.
     
      
       Taxpayer also relies upon. Polt v. Commissioner, 233 P. 2d 893 (C.A. 2d 1956) ; DcBrabant v. Commissioner, 90 P. 2d 433 (C.A. 2d 1937) ; Carlisle v. Commissioner, 165 P. 2d 645 (C.A. 6th 1948) ; Dunlop v. Commissioner, 165 P. 2d 284 (C.A. 8th 1948) ; United States v. Arnold, 89 P. 2d 246 (C.A. 3d 1937) (which involved a small sum which did not belong to the estate) ; Potwine’s Appeal, 31. Conn. 381 (1863). Taxpayer cites numerous other cases and comments on a number of them in plaintiff’s brief.
      The defendant cites United States v. Folckemer, 307 P. 2d 171 (C.A. 5th 1962) ; Wolf v. Commissioner, 84 P. 2d 390 (C.A. 3d 1936) ; Freuler v. Bettering, 291 U.S. 35 (1934). There are a number of other cases, some of which are commented on in the brief. Both parties fairly discuss the meaning and interpretation of some of the eases which are cited in both briefs.
     
      
       An exemplified copy of the -will is in evidence as Joint Exhibit No. 1, which is incorporated herein by reference.
     
      
       This was in paragraph one of the will.
     
      
       As used herein, “legacy” means a bequest under paragraphs Second, Third, Fifth, Sixth, Seventh, Eighth, and Ninth of the Last Will of Harry S. Bond, and “legatee” means a person or persons designated as recipient of such legacy under the aforementioned paragraphs of the will.
     
      
       Legal title to four (4) shares, beneficially held by the testator, was assigned to the executors, four of whom were directors of the company, as qualifying shares. Also issued and outstanding were 3,056 preferred shares (par value $100) of Hotel Bond Company stock. None of this preferred stock was owned by the decedent or his estate.
     
      
       As stated in finding 18, actual payment of the legacies was not made until October 30, 1952.
     
      
       The numerous grounds of appeal from the probate order of December 27, 1951, are set out in exhibits 9 and 10. Also the grounds of appeal by residuary legatees are set out in exhibit 15.
     
      
       The principal amount of the legacies shown in the schedule of proposed distribution set forth in the administration account was two hundred and forty-eight thousand five hundred dollars ($248,500). The payment of principal was two hundred and forty-seven thousand sixty dollars and fifty-two cents ($247,060.52,). The slight difference was attributable to the withholding of such amount from a cemetery trust created under the second paragraph of the decedent’s will. This small additional principal payment was subsequently made by the executors in 1953.
     
      
       The sum of one thousand one hundred and thirty-two dollars and fifty cents ($1,132.50) which represented the proceeds of the sale of the decedent’s personal effects was distributed to the specific legatees thereof, in accordance with the fourth and tenth clauses of the will.
     
      
       All of the foregoing findings, with the exception of footnotes 1 and 2, were contained In the parties’ Stipulation of Facts, filed at the pretrial conference on May 10, 1962, and Inserted In the Pretrial Conference Memorandum (of the same date) as Schedule I.
     
      
       Finding 4.
     
      
       Paragraph four of the will bequeathed “all * * * furniture and articles of personal and household use and adornment * * *” to “those of my children who shall be living at the time of my decease” ; and paragraph ten bequeathed to a named person “my Rolls Royce automobile and my two Rolls Royce robes * *
     
      
       Finding 5. This bequest disposed of “all the rest, residue and remainder of my estate * *
     
      
       Plaintiff asserts that, under the law of Connecticut, interest commencing 1 year after the decedent’s death is payable on cash legacies.
     
      
       Finding 6.
     
      
      
        Cf. finding 16, last sentence.
     