Opinion of the Court

intended and sufficiently disclosed that intention in the directions to his executor and his sister that his residuary estate was being left and should go to charity and that this intention was adequately expressed in the fourth item of the will in language sufficiently clear to comply with the provisions of section 403 (a) (3) of the statute and to justify and require the deduction of the value of such residuary estate from the gross estate in determining the net estate subject to tax. The decedent made specific provision for his nephews, nieces, and sister, and no other specific bequests were made except to charity and worthy objects in the fourth item of the will. It is stipulated and agreed that all the corpus of the residuary estate was distributed to tax-exempt charitable or educational institutions. We think it is clear that this distribution to charities from the corpus and income of the estate was made pursuant to the terms of the will. The gift by decedent to charities is quite specific and we think it is clear that he directed that all his net residuary estate should be distributed and given to them. It is not important that the will did not specifically name the charities to which the estate should go, or the amount to which each charity should be entitled.

The defendant seeks to justify its contention that there was no definite and certain bequest to charity by pointing to the use by the decedent of the words "worthy objects" and "special friends" in the fourth item of the will. But it is clear, we think, that these words were used by the decedent in connection with and in the same sense in which he directed that the net proceeds of his estate be divided and given to "charities." The correctness of this interpretation is established by the fact that the decedent prior to his death did write a letter to his sister in England in which he indicated only certain "charitable objects" for which he desired her and the executor to make provision. In these circumstances it seems clear enough that the gifts to charity were pursuant to the terms of the will and not the result of the discretion of the executor as contended by the defendant. The executor's discretion and authority are derived from the terms of the will and we do not find in the will involved any grant of discretionary authority to the executor to dis

Opinion of the Court

tribute any part of the net proceeds of the estate to other than charities. The executor and the decedent's sister, who were in a position best to know and who did know the intentions and purposes of the decedent, carried out his intentions and purposes by distributing the entire residuary estate to charitable and educational institutions. The provisions of the taxing statutes exempting from tax gifts and bequests to charity are begotten from motives of public policy and are not to be narrowly construed. Y. M. C. A. v. Davis, 264 U. S. 47; U. S. v. Provident Trust Co., 291 U. S. 272, 285; Old Colony Trust Co. v. Commissioner of Internal Revenue, 301 U. S. 379; Brown v. Commissioner of Internal Revenue, 50 Fed. (2d) 842; St. Louis Union Trust Company v. Burnet, 59 Fed. (2d) 922; Helvering v. Bliss, 293 U. S. 144. A gift for a charitable use, which is sufficiently definite and certain as to purpose, is not void for uncertainty as to beneficiaries, where the power to select the beneficiary is given expressly or impliedly to the trustee or to other persons. Speer v. Colbert, 200 U. S. 130; Mississippi Valley Trust Co. v. Commissioner, 72 Fed. (2) 197. Inasmuch as the estate here involved went to charity under the authority of and pursuant to the terms of the will and not as a result of the absolute discretion of the executor, the value thereof was deductible from the gross estate and the estate is entitled to recover the additional estate tax of $109,577.74 assessed and collected by the defendant.

In view of the foregoing conclusion that the value of the residuary estate was deductible from the gross estate as a bequest to charity, the estate was entitled to a deduction from gross income for the years 1927 to 1931, inclusive, of the income therefrom which, likewise, was distributed under the terms of the will to charities. Although the fourth item of the will did not specifically mention income from the residuary estate during administration and distribution, this was not necessary to the right of the executor under section 219 (b) (1) of the Revenue Act of 1926 (44 Stat. 9, 32) to deduct such income for income tax purposes. Section 219 (b) (1) is as follows:

There shall be allowed as a deduction (in lieu of the deduction authorized by paragraph (10) of subdivision (a) of section 214) any part of the gross income,

Opinion of the Court

without limitation, which pursuant to the terms of the will or deed creating the trust, is during the taxable year paid or permanently set aside for the purposes and in the manner specified in paragraph (10) of subdivision (a) of section 214, or is to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, or for the establishment, acquisition, maintenance, or operation of a public cemetery not operated for profit;

The income derived by the executor during administration became a part of the corpus of the residuary estate, the net proceeds of which we have held were by the will bequeathed to charity and so distributed. As such income was received it was by the terms of the will permanently set aside and destined for charitable uses. Such income was clearly deductible. In Slocum et al., 6 B. T. A. 36, the United States Board of Tax Appeals held:

We think it was the intent and purpose of Congress that income of an estate which, in following out the provision of a will, could be shown to be certainly destined for uses specified in paragraph (11) of subdivision (a) [charitable uses, etc.] of section 214 should be allowed as a deduction in computing the net income of the estate,

This decision was affirmed in Bowers v. Slocum et al., 15 Fed. (2d) 400, 403, in which the court said that "The statute should be read, if possible, in such a way as to carry out this policy and not to make the result turn on accidental circumstances or legal technicalities." Affirmed 20 Fed. (2d) 350. See, also, Hepburn v. Commissioner, 8 B. T. A. 833.

It is stipulated that if, as a matter of law, plaintiff is entitled to recover, the overpayments of income tax and interest are $1,175.32 for 1927, $2,078.98 for 1928, $5,604.47 for 1929, $6,741.57 for 1930, and $3,574.89 for 1931, totaling $19,175.23. Judgment will therefore be entered in favor of the executor for $128,752.97 with interest as provided by law. It is so ordered.

WHALEY, Judge; WILLIAMS, Judge; GREEN, Judge; and BOOTH, Chief Justice, concur.

Syllabus

BOHEMIAN BREWERIES, INC., FORMERLY INLAND PRODUCTS CO., v. THE UNITED STATES

[No. 42585. Decided May 29, 1939]

On the Proofs

Income tax; deduction for excise tax refunded as illegally collected.— Where in 1919 and 1920 plaintiff paid certain excise taxes on sweet apple cider pursuant to the regulations and the decisions of the Bureau of Internal Revenue then in effect, which excise taxes so paid were deducted by plaintiff from gross income in its income-tax return for said years; and where, before the plaintiff's tax liability for the said years had been finally determined by the Commissioner, it was judicially determined that the excise tax paid in 1919 and 1920 and deducted as aforesaid had not been imposed by the Revenue Act of 1918 and had therefore been illegally collected, and said excise tax was accordingly refunded to plaintiff, it is held that the Commissioner correctly held in his final determination of plaintiff's income-tax liability for 1919 and 1920 that since the excise tax paid was not due and had been refunded, the deductions which had been taken in the returns for 1919 and 1920 should not be allowed.

Same; duty of Commissioner.—So long as a case involving the audit and determination of the correct tax liability of a taxpayer is open and under consideration by the Commissioner of Internal Revenue, it is his duty to determine the income of the taxpayer and deductions to which the taxpayer is entitled. Same; recovery barred by statute of limitations.—The conclusion that in the instant case the plaintiff cannot recover because of the exclusion of deductions previously allowed is not inconsistent with the rule that an amount deducted and allowed from income in a certain year must be included in income when collected or recovered in a subsequent year if the correction of the return and the tax liability in a prior year is barred by the statute of limitations.

Same; items and deductions in final determination of Commissioner.— Wherever it is possible to do so, the taxing statutes require that the items of income subject to tax and the deductions to which the taxpayer is legally entitled for the years under consideration be correctly and legally determined by the Commissioner in his final decision, notwithstanding such decision may be made several years after the returns for the particular years involved were filed.

Jurisdiction.-The Court of Claims has jurisdiction of the subject matter and the parties in the instant case.

Reporter's Statement of the Case

The Reporter's statement of the case:

Mr.

Mr. Clarence F. Rothenburg for the plaintiff. Charles D. Hamel, Mr. John Enrietto, and Hamel, Park & Saunders were on the brief.

Mr. J. H. Sheppard, with whom was Mr. Assistant Attorney General James W. Morris, for the defendant. Mr. Robert N. Anderson and Mr. Fred K. Dyar were on the brief.

Plaintiff seeks to recover alleged overpayments of income and profits taxes of $5,017.63 for 1919, and $1,159.50 for 1920, totalling $6,177.13, with interest on the first-mentioned amount from August 27, 1929, and on the second amount from August 28, 1929.

The court, having made the foregoing introductory statement, entered special findings of fact as follows:

1. Plaintiff is a corporation of the State of Washington. It was originally organized under the name of Inland Products Company, but in 1933 its name was changed by appropriate amendment to Bohemian Breweries, Inc. During 1919 and 1920 the Inland Products Company was engaged in the manufacture and sale, among other products, of sweet apple cider.

2. March 15, 1920, the company filed its income and profits tax return for 1919 with the collector for the District of Washington, at Tacoma, Washington, in which it disclosed a tax of $8,699.25, which was paid to the collector in installments of $2,174.81 each on March 15, June 17, and September 18, 1920, and of $2,174.82 on December 18, 1920.

3. March 15, 1921, the company filed its income and profits tax return for 1920 with the collector at Tacoma, Washington, disclosing a tax of $614.01, which was paid in the amounts of $153.51 on March 15, 1921, and of $153.50 each on June 15, September 15, and December 15, 1921.

4. During 1919 and 1920 the Inland Products Company paid to the collector for the District of Washington excise taxes upon the manufacture and sale of sweet apple cider in the respective amounts of $14,841.12 and $9,604.79. These payments were made voluntarily without protest, without