TAXATION - FEDERAL ESTATE TAX - SUBSCRIPTIONS TO CHARITABLE AND EDUCATIONAL INSTITUTIONS AS DEDUCTIONS FROM GROSS ESTATE

Decedent had promised to contribute funds to numerous educational, religious, and charitable institutions. Some of these pledges were conditioned on pledges of third parties to perform certain duties or to furnish subscriptions to equal amounts. In several instances the institutions, on fullfillment of the conditions, acted in reliance on these promises in a manner that made them enforceable against the estate under the state law. The executor had paid some of these claims.

In affirming the Board of Tax Appeals the court held that pledges, though later satisfied by the executor, cannot be deducted from the gross estate as "transfers" to charities as provided in section 303 (a) (3) of the Revenue Act of 1926. But because there is no requirement that the consideration be paid into the decedent's estate, those subscriptions conditioned on promises of third parties are proper deductions as claims against the estate when the conditions are satisfied under section 303 (a) (1). Taft v. Commissioner of Internal Revenue, (C. C. A. 6th, 1937) 92 F. (2d) 667, affd. (U.S. 1938) 58 S. Ct.

891.