emergencies would arise, what the trustees, in such emergencies, would determine to be for the beneficiary's best interest or what the trustees would expend therefor. Comparable provisions existed in Gammons v. Hassett, 1 Cir., 1941, 121 F.2d 229; Industrial Trust Co. v. Commissioner, 1 Cir., 1945, 151 F.2d 592; De Castro's Estate v. Commissioner, 2 Cir., 1946, 155 F.2d 254; Newton Trust Co. v. Commissioner, 1 Cir., 1947, 160 F.2d 175; Seubert v. Shaughnessy, 2 Cir., 1956, 233 F.2d 134.
The cases cited by plaintiffs are reasonably distinguishable. Lincoln Rochester Trust Co. v. McGowan, 2 Cir., 1954, 217 F.2d 287, 289, upon which plaintiffs most strongly rely, was decided by a divided court. There the authorized invasion was 'to meet any unusual demands, emergencies, requirements or expenses' for the beneficiary's personal needs. Moreover, the will expressly so defined and limited the emergencies intended to be provided for that the majority of the court held that the testator's purpose was merely to insure that the beneficiary would continue to enjoy her accustomed standard of living. The court said (at page 292):
'Patently subjective criteria such as 'happiness' and 'pleasure,' which would render the standard too indefinite * * * are noticeably absent here.'
To these patently subjective criteria may be added 'best interest'. We hold, therefore, that the extent of the invasion of the trust principal under the power granted by this decedent's will was not measurable by any standard ascertainable at her death and that the Commissioner correctly disallowed the deduction.
The Commissioner disallowed a further deduction of $ 1,336.50 for claimed administration expenses. The parties have stipulated that this sum was expended by plaintiffs for broker's commissions and appraisers' fees in the sales of certain of decedent's real estate by the plaintiffs. The parties also agree that these sales were made by the plaintiffs in exercise of the general power of sale given to the plaintiffs by the express terms of the decedent's will. There is neither stipulation nor evidence of the reasons for any of the sales.
of the Internal Revenue Code of 1939 authorizes deduction from the value of the gross estate of such amounts for administration expenses as are allowed by the jurisdiction under which the estate is administered. Section 81.32 of Treasury Regulation 105 defines administration expenses to include expenses actually and necessarily incurred, inter alia, in the payment of debts. Section 81.35 of the same regulation provides that miscellaneous administration expenses include appraisers' fees, and that brokerage fees and other reasonably necessary expenses attending a sale are deductible if the sale is necessary to pay decedent's debts.
In Pennsylvania there is a conclusive presumption that a general power of sale in a will is for the payment of decedent's debts. From the exercise of such a power of sale arises the inference that the sale was for the purpose presumed by law. In re Shaffer's Estate, 1948, 360 Pa. 390, 61 A.2d 872. No evidence was here offered to overcome the inference. The expenses disallowed are such administration expenses as are allowed by the Commonwealth of Pennsylvania. The unchallenged inference is that the expenses are, as well, expenses of sales necessary to pay decedent's debts. Similar expenses were held to be deductible in Martha A. Allison Estate, 1946, 5 T.C.M. 992 and Estate of Louis Sternberger, 1952, 18 T.C. 836.
The Commissioner erred in disallowing the deduction for these expenses and, pursuant to their stipulation, the parties will compute, consistently with this opinion, the amount of refund due the plaintiffs and will submit an appropriate order for the entry of judgment in favor of the plaintiffs in the amount due, including interest.