dissent">Matthews,

dissenting: I think the Federal estate taxes paid by the trust estate in the years 1928-1932 are deductible by the trust in its income tax returns for those years because (1) this trust estate was the estate of decedent for estate tax purposes [the inclusion of which in gross estate is solely responsible for any estate tax being due], (2) the trust estate paid the estate taxes; and (3) section 23 (c) of *970the Revenue Acts of 1928 and 1932 allows estate taxes to be deducted by the estate.

Section 23 provides that:

In computing net income there shall he allowed as deductions:

* * * * * * *

(e) Taxes generally. — Taxes paid or accrued within the ifixable year * * * * * * * * * *

For the purpose of this subsection, estate, inheritance, legacy, and succession taxes * * * shall be allowed as a deduction only to the estate.

The terms “ estate taxes ” and “ estate ” in section 23 (c) have the same meaning as they have in the estate tax provisions of the statute. Under the estate tax provisions a tax is imposed upon the transfer of the net estate of every decedent dying after the enactment of the act and it is to be measured by the value of the net estate and paid out of the estate which measures the tax. The estate whose transfer is taxed may consist of several parts, administered by several different persons, and each of those persons may be required to return the property being administered by him. Section 302 (b) of the Revenue Act of 1926 provides that if the executor is unable to make a complete return of any part of the gross estate of decedent he shall include in his return the description of such part and the name of each person holding a legal or beneficial interest therein and upon notice from the collector such person shall make a return as to such part of the gross estate. One part is as much the estate of decedent for estate tax purposes as any other part, all being thrown together in determining the net estate which measures the tax, and each part of the estate is required to beau its just and equitable portion of the tax imposed because of the transfer of such part. Sec. 314 (b), Revenue Act of 1926.

The effect of the majority opinion is to read into section 23 (c) a qualification which is not in the statute, namely, that estate taxes shall be allowed as a deduction only to the “estate being administered by an executor.” If Congress had intended to limit the deductions for estate taxes only to that part of the estate being administered by the executor, I think it would have said so. It is clear that the decedent’s estate and not the beneficiaries of that estate shall have the deduction but there is nothing in the language used to indicate that only that part of the estate being administered by an executor is entitled to a deduction of the estate taxes in the income tax return. The estate of a decedent for estate tax purposes may and often does embrace several trust estates, which are separate entities for income tax purposes. Of course, if the trustee of a revocable tr'ust such as we have here does not pay any of the estate tax the trust is not entitled to a deduction in its income tax return for such tax. Neither would the estate being administered by an executor be entitled to a *971deduction for estate taxes which it did not ¡jay and which were due to the inclusion in the estate of a trust which was testamentary in nature.

Section 314 (b) of the estate tax provisions states that it is the purpose and intent of the estate tax title that so far as is practicable and unless otherwise directed by the will of decedent the tax shall be paid out of the estate before its distribution.

The will of E. W. Scripps as to the distribution of his property and the pa^yment of estate taxes must be ascertained from reading his will and the trust instrument together. It is the trust instrument which provides to whom the estate is to be distributed upon termination of the trust and in the trust instrument decedent provided for payment of the estate taxes out of the income or xJi'iiicipal of the trust estate.

As the estate tax imposed was due wholly to the inclusion of the trust estate in decedent’s estate, and as the decedent directed that the estate taxes should be paid out of the income or principal of the trust and such taxes were paid by the trust, both the will of the decedent and the intent and purpose of the statute were carried out.

If E. W. Scripps had left no property at death except his interest in this trust estate, the trustee as the person in actual possession of such property of the decedent would have been required to perform all the duties imposed by the statute on an executor or administrator of a decedent. These duties would include filing the estate tax return and paying the tax out of the trust funds in his hands. In such case I do not believe that the right of the trust estate to a deduction under section 23 (c) in its income tax return of the estate taxes paid by it would be questioned. The fact that decedent also left property to be administered by his executor, the value of which was far less than the personal debts of decedent, should not operate to deny a deduction to the trust estate of the estate tax paid by it, which was wholly duo to the inclusion of the trust estate in decedent’s gross estate.

It was held in Junius Beebe, Trustee, 26 B. T. A. 190; affd., 67 Fed. (2d) 662, that a testamentary trust is within the meaning of the term “estate” in section 23 (c). By a parity of reason, a trust which is testamentary in nature, as in the instant case, is also within the meaning of the word “estate.” I think the decision of the Board and the court in the Beebe case govern in this case and that the trust estate should be allo-wed the deduction claimed.

ÁeuNdell and Mellott agree with this dissent.

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