concurring: In my judgment, the results in connection with issues 3 and 4 are unfortunate; however, the Court was required to reach the conclusions adopted by the majority, and it will require the creative hand of the legislature to enact new laws that will bring about reasonable results in this situation.
In connection with issue 3, the conclusions are required not only because of the technicality that there has been no payment, but also because it is impossible in 1966 to know whether, or to what extent, the business expenses of the petitioner will ultimately be paid. The assets transferred by him to the trustee in bankruptcy may be used to pay personal obligations, and in any event the business expenses may be paid only in part. To allow a deduction in 1966 for all of the expenses would obviously be unjustifiable.
Similarly, in connection with issue 4, it is clear that the debtor is not a beneficiary of tlie estate, and when section 642(h) was enacted, there was no consideration of its applicability to a bankrupt estate.
Yet, these conclusions cause a distortion of income. In 1966, the petitioner earned income and incurred expenses in connection with the earning of that income. Eventually, some of those expenses may be paid, but they are never taken into consideration in computing the income of the petitioner which is subject to taxation. The bankrupt estate, when the expenses are paid, is entitled to deductions, but those deductions cannot be offset against the appropriate income and might bo of no use to the estate. A legislative solution might be to allow a special carryback of the loss sustained by the bankrupt estate. It is clear that the present tax laws do not bring about appropriate results in connection with a bankruptcy, and that this matter must be dealt with by legislation.
IRWIN and Hall, //., agree with this concurring opinion.