TAXATION - FEDERAL ESTATE TAX - DEDUCTION ALLOWABLE FOR GIFTS TO CHARITY WHEN THERE HAS BEEN A COMPROMISE

The testator gave the residue of his estate to a charity. When the widow of the testator made known her intention to contest the will, the charity offered to give her "a sum equivalent to twenty-five per cent" of the amount it was to receive under the will. The widow then agreed to withdraw all objections to the probate of the will. The executors were not parties to the compromise agreement, nor was it incorporated in, or made a part of, the probate proceedings.

The executors filed an estate tax return in which a deduction from the testator's gross estate was claimed for the full amount of the residuary estate as a bequest to charity. The commissioner of internal revenue contended that the twenty-five per cent of the residue going to the widow by the terms of the compromise agreement was not deductible. Held, the amount received by the widow cannot be deducted from the gross estate since she took by "inheritance." The amount to be deducted for testamentary charitable gifts must be the amount the charity actually receives, and not the amount provided for in the decedent's will. In re Sage's Estate, (C. C. A. 3d, 1941) 122 F. (2d) 480.