Appeal from the Board of Tax Appeals.
Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
AUGUSTUS N. HAND, Circuit Judge.
This appeal is from an order of the Board of Tax Appeals dismissing for lack of jurisdiction a proceeding instituted before it by the executors of the will of William C. Orr, deceased, to obtain a determination that there was no deficiency in his income tax for the period from January 1, 1936, to April 5, 1936, the date of his death.
On January 6, 1937, the executors filed a prior-to-death return for the calendar year 1936, reporting income between January 1 and April 4, inclusive. The return showed a new tax liability of $62.29, which was paid at the time of filing the return. In a letter dated the same day and also in one dated January 26, 1937, they requested an early audit and assessment of a deficiency tax, if any. A revenue agent's report under date of March 29, 1937, disclosed a deficiency in income tax of $28,451.11. The executors paid such deficiency to the Collector on March 29 and a copy of the report was transmitted to the estate on or about March 31, 1937.
The deficiency disclosed by the agent's report was due almost entirely to the omission from income in the executors' return of $93,634.16 representing professional fees received by the estate of the decedent for services rendered by him prior to the date of his death. This amount the Department held to be taxable income at the date of death. Protests were filed by the executors on April 23 and May 19, 1937, to the determination of income tax liability as recommended by the revenue agent. On October 28, 1937, the Deputy Commissioner of Internal Revenue mailed a letter to the executors which, so far as material, read as follows:
"Further reference is made to your letter of January 26, 1937, requesting that prompt action be taken on the income tax return of William C. Orr for the taxable year ended December 31, 1936 (reporting income from January 1, 1936 to April 4, 1936, the date of death of the decedent).
"Evidence showing your authority to administer upon the Estate of William C. Orr is on file in this office.
"The above-mentioned return was made the subject of a revenue agent's report dated March 29, 1937, a copy of which was transmitted to you March 31, 1937. The report disclosed a deficiency in tax of $28,451.11, which was approved by this office.
"The collector of internal revenue, Second District of New York, advised this office that payment of the deficiency in tax was made March 29, 1937. Accordingly, the tax was assessed in this office, appearing on the April, 1937 list, page 6, line 4, #5.
"Under date of August 12, 1937, the internal revenue agent in charge, 17 Battery Place, New York, New York, forwarded to this office protests filed by you with his office under dates of April 23, 1937 and May 19, 1937, in which exception is taken to the determination of the income tax liability.
"The adjustment to which you take exception is the inclusion in income of an amount, $93,634.16, representing professional fees received by the estate of the decedent for services rendered by him prior to the date of his death. In this connection you are advised that careful consideration has been given the information contained in the protests and the information furnished at the conference held in the office of the internal revenue agent in charge August 9, 1937.
"However, the Bureau holds that the amount of $93,634.16 represents taxable income at the date of death, in accordance with the provisions of Section 42 of the Revenue Act of 1936, 49 Stat. 1666, 26 U.S.C.A. § 42, which provides, in part, as follows:
"'In the case of the death of a taxpayer there shall be included in computing net income for the taxable period in which falls the date of his death, amounts accrued up to the date of his death if not otherwise properly ...