Mr. Frederick R. Gibbs, of Washington, D.C., for petitioner. [295 U.S. 112, 113] The Attorney General and Mr. Angus D. MacLean, Asst. Sol. Gen., of Washington, D.C., for respondent.
Mr. Justice McREYNOLDS delivered the opinion of the Court.
The sole question for determination is whether an attorney's fee paid by the guardian for conducting litiga- [295 U.S. 112, 114] tion to secure income for his ward was a business expense within section 214(a)(1), Revenue Act 1924 (26 USCA 955(a)(1) and therefore deductible from the minor's gross income. The facts, as stated by the court below (C. C.A.) 69 F.(2d) 299, were these:
Pertinent provisions of the Revenue Act of 1924 are in the margin.
The Board of Tax Appeals held the attorney's fee was deductible as an ordinary and necessary expense in carrying on business. Section 214(a)(1), 26 USCA 955(a)(1). The Commissioner claimed it was personal expense of the minor taxpayer, excluded from deduction by section 215(a)(1), 26 USCA 956(a)(1), and the court below upheld this view. It declined to follow Commissioner v. Wurts-Dundas, Circuit Court of Appeals, Second Circuit, 54 F.(2d) 515. Because of this conflict the cause is here.
We agree with the conclusion that the ward, not the guardian, was the taxpayer. The return was filed by him in her behalf; the taxable income was hers, not his. The [295 U.S. 112, 116] attorney's fee arose out of litigation conducted in the name of the ward. It was paid for her benefit out of her income.
In freuler v. Helvering, 291 U.S. 35, 44 , 54 S.Ct. 308, 311, we said: 'The whole of a minor's income received by his guardian is taxable to the minor irrespective of its accumulation in the guardian's hands, distribution to the minor or payment for his support or education . ... Either the minor or his guardian must make the return, but in either case it embraces all the income and is the minor's individual return, not that of the guardian or the trust.'
The ward was not engaged in any business. So far as appears, the same thing is true of the guardian. See Kornhauser v. United States, 276 U.S. 145 , 48 S.Ct. 219; Commissioner v. Field (C.C.A.) 42 F.(2d) 820; Hutchings v. Burnet, 61 App.D.C. 109, 58 F.(2d) 514; Walker v. Commissioner (C.C.A.) 63 F.(2d) 351; Lindley v. Commissioner (C.C.A.) 63 F.( 2d) 807. Moreover, guardianship is not recognized by the statute as a taxable entity.
The judgment under review must be affirmed.
[ Footnote * ] Revenue Act of 1924, c. 234, 43 Stat. 253:
Sec. 2(a) When used in this Act (title)-
(1) The term 'person' means an individual, a trust or estate, a partnership, or a corporation. ...
(9) The term 'taxpayer' means any person subject to a tax imposed by this Act (title). 26 USCA 1262(a)(1, 9)
Sec. 214(a) In computing net income there shall be allowed as deductions:
(1) All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. ... 26 USCA 955( a)(1)
Sec. 215(a) In computing net income no deduction shall in any case be allowed in respect of-
(1) Personal, living, or family expenses. 26 USCA 956(a)(1)
Sec. 225(a) Every fiduciary (except a receiver appointed by authority of law in possession of part only of the property of an individual) shall make under oath a return for any of the following individuals, estates, or trusts for which he acts, stating specifically the items of gross income thereof and the deductions and credits allowed under this title (chapter)-
(1) Every individual having a net income for the taxable year of $1, 000 or over, if single, or if married and not living with husband or wife. 26 USCA 966 and note.