[211]*211OPINION.
Trammell:
The portion of the deficiency for the calendar year 1925 which is in issue results from the inclusion in petitioner’s gross income of the whole amount of a dividend on Whitehouse-Drumheller Company stock (owned by the marital community) distributable by the company in that year. The deficiency for the calendar year 1927 results from the inclusion in petitioner’s gross income for that year of $33,886.24, representing one-half the income of the community estate of which Anna M. Drumheller, deceased wife of petitioner, and petitioner had been owners.
The basis of respondent’s determination for both years is that no separate books of account were kept and that the entire income of the estate was distributed to the petitioner.
The petitioner contends that only one-half of the income of the estate is taxable to him and that the other half was not distributed to him and could not be distributed to him because the estate was insolvent and still in the process of administration, and, under the laws of the State of Washington, where an estate is insolvent there can be no distribution in whole or in part to devisees or legatees until all the debts are paid and a final order is entered by the probate court.
We have considered the provisions of the statutes of Washington relative to probate law and procedure, Title X, Remington’s Compiled Statutes of Washington, 1922. Sections 1462, 1463 and 1464 provide for the settlement of estates without administration. These sections are quoted in part as follows:
§ 1462. Settlement Without Court Intervention-Order of Distribution — Management-Citation. In all cases where it is provided in the last will and testament of the deceased that the estate shall be settled in a manner provided in such last will dnd testament, and that such estate shall be settled without [212]*212the intervention of any court or courts, and where it duly appears to the court, by the inventory filed, and other proof, that the estate is fully solvent, which fact may be established by an order of the court on the filing of the inventory, it shall not be necessary to take out letters testamentary or of administration, except to admit the will to probate and to file a true inventory of all the property of such estate and give notice to creditors and to the state board or person having charge of the collection of inheritance tax, in the manner required by existing laws. After the probate of any such will and the filing of such inventory all such estates may be managed and settled without the intervention of the court, if the last will and testament shall so provide. But when the estate is ready to be closed the court, upon application, shall have authority and it shall be its duty, to make and cause to be entered a decree finding and adjudging that all debts have been paid, finding and adjudging also the heirs and those entitled to take under the will and distributing the property to the persons entitled to the same, such decree to be made after notice given as provided for like decrees in the estates of persons dying intestate: * * * (L. ’17, p. 666, § 92.)
§ 1463. Powers of Nonintervention Executors. Executors acting under wills such as are mentioned in the last preceding section shall have power, after the filing of an inventory of the estate, if the said estate has been adjudged solvent, to mortgage, lease, sell and convey the real and personal property of the testator without an order of the court for that purpose and without notice, approval or confirmation, and in all other respects administer and settle the estate without the intervention of the court. (L. ’17, p. 667, §93.)
§ 1464. Right to Possession and Management. Every executor or administrator shall, after having qualified, by giving bond as hereinbefore provided, have a right to the immediate possession of all the real as well as personal estate of the deceased, and may receive the rents and profits of the real estate until the estate shall be settled or delivered over, by order of the court, to the heirs or devisees, and shall keep in tenantable repair all houses, buildings and fixtures thereon, which are under his control. (L. ’17, p. 667, § 94.)
Section 1366 of the Washington statute provides that title to real estate shall vest immediately in the heir or devisee, subject to the debts of the decedent and any other charges for which such real estate is liable under the law, with the provision that no person shall be deemed a devisee until the will has been probated.
Under section 1439, the giving of a bond may be waived if the will expressly provides that no bond be required of the executor.
With respect to claims against an estate, section 1477 provides that every executor or administrator immediately after his appointment shall publish a notice of his appointment and qualification as executor or administrator, and a notice to the creditors of the deceased requiring all persons having claims to serve the same on the executor or administrator or his attorney of record and file with the clerk of the court, together with proof of such service, within six months after the date of the publication of such notice. Claims not filed within the six months are barred. This section also provides that where all the property is awarded to the widow, husband or children, the notice to creditors may be omitted.
[213]*213Section 1529 provides that within thirty days after the expiration of the time for filing of claims of creditors, the executor or administrator shall make, verify by his oath and file with the clerk of the court a report of the affairs of the estate; such report shall contain a statement of the claims filed and allowed and all those rejected, and, if it be necessary to sell or mortgage any property for the purpose of paying the debts or settling any obligations against the estate, he may in such report set out the facts, showing such necessity, and ask for such sale or mortgage; such report shall likewise state the amount of property, real and personal, which has come into his hands and give a detailed statement of all sums collected by him and all sums paid out.
Section 1531 provides that, when the estate shall be ready to be closed, the executor shall make, verify and file with the court his final report and petition for distribution.
Section 1543 provides that no claim against the estate shall be paid until the same shall have been allowed by both the executor or administrator and the court.
Section 1462 provides that the court has power, upon application, to enter an order of distribution in the case of a nonintervention will. In the case of Schirmer v. Nethercutt, 288 Pac. 265, the court held that under a nonintervention will no final decree of distribution is necessary for the persons entitled to the estate to take possession thereof. See also State ex rel Johnson v. Superior Court for Walla Walla County, 131 Wash. 264; 230 Pac. 434.
In the instant proceeding it is the petitioner’s contention that the estate was insolvent, and, therefore, it did not come within the provisions of section 1462, but is subject to the provisions of the statute applicable to other estates.
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[211]*211OPINION.
Trammell:
The portion of the deficiency for the calendar year 1925 which is in issue results from the inclusion in petitioner’s gross income of the whole amount of a dividend on Whitehouse-Drumheller Company stock (owned by the marital community) distributable by the company in that year. The deficiency for the calendar year 1927 results from the inclusion in petitioner’s gross income for that year of $33,886.24, representing one-half the income of the community estate of which Anna M. Drumheller, deceased wife of petitioner, and petitioner had been owners.
The basis of respondent’s determination for both years is that no separate books of account were kept and that the entire income of the estate was distributed to the petitioner.
The petitioner contends that only one-half of the income of the estate is taxable to him and that the other half was not distributed to him and could not be distributed to him because the estate was insolvent and still in the process of administration, and, under the laws of the State of Washington, where an estate is insolvent there can be no distribution in whole or in part to devisees or legatees until all the debts are paid and a final order is entered by the probate court.
We have considered the provisions of the statutes of Washington relative to probate law and procedure, Title X, Remington’s Compiled Statutes of Washington, 1922. Sections 1462, 1463 and 1464 provide for the settlement of estates without administration. These sections are quoted in part as follows:
§ 1462. Settlement Without Court Intervention-Order of Distribution — Management-Citation. In all cases where it is provided in the last will and testament of the deceased that the estate shall be settled in a manner provided in such last will dnd testament, and that such estate shall be settled without [212]*212the intervention of any court or courts, and where it duly appears to the court, by the inventory filed, and other proof, that the estate is fully solvent, which fact may be established by an order of the court on the filing of the inventory, it shall not be necessary to take out letters testamentary or of administration, except to admit the will to probate and to file a true inventory of all the property of such estate and give notice to creditors and to the state board or person having charge of the collection of inheritance tax, in the manner required by existing laws. After the probate of any such will and the filing of such inventory all such estates may be managed and settled without the intervention of the court, if the last will and testament shall so provide. But when the estate is ready to be closed the court, upon application, shall have authority and it shall be its duty, to make and cause to be entered a decree finding and adjudging that all debts have been paid, finding and adjudging also the heirs and those entitled to take under the will and distributing the property to the persons entitled to the same, such decree to be made after notice given as provided for like decrees in the estates of persons dying intestate: * * * (L. ’17, p. 666, § 92.)
§ 1463. Powers of Nonintervention Executors. Executors acting under wills such as are mentioned in the last preceding section shall have power, after the filing of an inventory of the estate, if the said estate has been adjudged solvent, to mortgage, lease, sell and convey the real and personal property of the testator without an order of the court for that purpose and without notice, approval or confirmation, and in all other respects administer and settle the estate without the intervention of the court. (L. ’17, p. 667, §93.)
§ 1464. Right to Possession and Management. Every executor or administrator shall, after having qualified, by giving bond as hereinbefore provided, have a right to the immediate possession of all the real as well as personal estate of the deceased, and may receive the rents and profits of the real estate until the estate shall be settled or delivered over, by order of the court, to the heirs or devisees, and shall keep in tenantable repair all houses, buildings and fixtures thereon, which are under his control. (L. ’17, p. 667, § 94.)
Section 1366 of the Washington statute provides that title to real estate shall vest immediately in the heir or devisee, subject to the debts of the decedent and any other charges for which such real estate is liable under the law, with the provision that no person shall be deemed a devisee until the will has been probated.
Under section 1439, the giving of a bond may be waived if the will expressly provides that no bond be required of the executor.
With respect to claims against an estate, section 1477 provides that every executor or administrator immediately after his appointment shall publish a notice of his appointment and qualification as executor or administrator, and a notice to the creditors of the deceased requiring all persons having claims to serve the same on the executor or administrator or his attorney of record and file with the clerk of the court, together with proof of such service, within six months after the date of the publication of such notice. Claims not filed within the six months are barred. This section also provides that where all the property is awarded to the widow, husband or children, the notice to creditors may be omitted.
[213]*213Section 1529 provides that within thirty days after the expiration of the time for filing of claims of creditors, the executor or administrator shall make, verify by his oath and file with the clerk of the court a report of the affairs of the estate; such report shall contain a statement of the claims filed and allowed and all those rejected, and, if it be necessary to sell or mortgage any property for the purpose of paying the debts or settling any obligations against the estate, he may in such report set out the facts, showing such necessity, and ask for such sale or mortgage; such report shall likewise state the amount of property, real and personal, which has come into his hands and give a detailed statement of all sums collected by him and all sums paid out.
Section 1531 provides that, when the estate shall be ready to be closed, the executor shall make, verify and file with the court his final report and petition for distribution.
Section 1543 provides that no claim against the estate shall be paid until the same shall have been allowed by both the executor or administrator and the court.
Section 1462 provides that the court has power, upon application, to enter an order of distribution in the case of a nonintervention will. In the case of Schirmer v. Nethercutt, 288 Pac. 265, the court held that under a nonintervention will no final decree of distribution is necessary for the persons entitled to the estate to take possession thereof. See also State ex rel Johnson v. Superior Court for Walla Walla County, 131 Wash. 264; 230 Pac. 434.
In the instant proceeding it is the petitioner’s contention that the estate was insolvent, and, therefore, it did not come within the provisions of section 1462, but is subject to the provisions of the statute applicable to other estates. While it does not appear that the petitioner has complied with the provisions of the statute applicable in the case of an estate under an ordinary will or of an intestate, it is clear that the estate was insolvent, and does not come under the provisions of section 1462, which relate only to solvent estates. There were debts in an amount in excess of the value of the estate. The administration on the estate had not been completed and no distribution had been ordered. The petitioner was acting in a fiduciary capacity for the estate of his deceased wife in so far as her .interest in the property and income was concerned. We, therefore, are of the opinion that under the decisions in J. H. Tippett, Administrator,, 25 B. T. A. 69, and J. B. Brewer, Administrator, 17 B. T. A. 704, half of the community income should be taxable to the petitioner, and the other half to the estate of his deceased wife.
We do not see any merit in the petitioner’s contention that, since the crediting of the dividend by the companv resulted in a reduction [214]*214of indebtedness to the company, which was incurred in community business of farming and which would have been deductible as business expenses, no part of the dividend constitutes taxable income. We think that the dividends on the community stock should be treated as other community income without any reduction on account of the offsetting indebtedness. The evidence is not sufficient to show that the indebtedness at the store was with respect to items which would be deductible as expense.
Reviewed by the Board.
Judgment will be entered under Rule 50.