State ex rel. Hickox v. Widule

The following opinions were filed June 12, 1917: Tvekwin, J. The questions presented by the appellant, as stated in the brief of counsel, are in substance as follows: (1) When a testator wills property in trust to be invested and a specific amount per year paid out of the net income to a designated beneficiary for’life, and such beneficiary’s interest in the estate is appraised and the statutory inheritance [115] tax paid, is the yearly income received by the trustee for the beneficiary subject to taxation under the Income Tax Law of this state? (2) Are general taxes paid on nonproductive property a proper deduction under the Income Tax Law ? Counsel for appellant assign the following error: The court erred in holding that the assessment of $6,500, received by the executor in 1914 as income from the trust estate in question, was void for the reasons: (1) that the executor was not entitled to a deduction of $1,953.51 on account of taxes paid on nonproductive property; (2) that the executor was not entitled to a deduction of $5,000 on account of the payment of this sum to testator’s widow in accordance with the provisions of the will; (3) that the income received by the testator, as such, during the year 1914 was $8,860.92, from which he was entitled to no deduction except $2,360 for interest paid on existing indebtedness of the estate and necessary expenses in producing the income, leaving a net taxable income of $6,500. We are of opinion that the error is well assigned. 1. It is perfectly clear under the statute that the deduction claimed on account of taxes paid on nonproductive property was not allowable. Sub. (h), sec. 1087m — 4, Stats. This statute allows deductions for “Taxes paid by such persons during the year other than inheritance taxes upon the property or business from which the income hereby taxed is derived.” It is without dispute that the taxes sought to be deducted in the instant case were not paid upon property or business from which the income was derived. 2. A majority of the court is of the opinion that the yearly income received by the trastee, less the deduction made of $2,360, was subject to taxation under the Income Tax Law; but no four justices agree upon the reasons for their conclusions, hence none can be given. Bp the Qourt. — The judgment of the court below is reversed, with costs, and the cause remanded with instructions [116] to affirm the levy of the tax made by the assessor.and affirmed by the tax commission.