dissenting: The petitioners’ theory that they had a money claim against the estate and that the claims were paid out of “other property” of the estate is extremely artificial. The will must receive construction. Anderson v. Wilson, involved a will of quite different terms, and construction of that will does not suffice for construction of the will here. There was no bequest of any specific amount of money which would give rise to a money claim against the estate. The problem of will construction raises the question whether there was equitable conversion. Scholle v. Scholle, 113 N. Y. 261; 21 N. E. 84; and Chamberlain v. Taylor, 105 N. Y. 185; 11 N. E. 625, 628, and cited cases show that it is necessary to determine whether the provision in the will created a discretionary or imperative power in the executors. Equitable conversion will not be decreed unless there is an imperative direction for the sale of real estate under New York law according to the Scholle case. See Tiffany, Real Property, 3d Ed., pars. 296, 297, 682. The bequest to petitioners in the sixth clause of the will could be satisfied only from the Fulton Street property. For the legatees not to have any interest in the land, but to have only money legacies coming through the executors, there would have to be an equitable conversion of the real estate. Anderson v. Wilson does not serve to answer this question. It should be held that the real estate maintained its character until it was sold and that the legatees had interests in the real estate under the will until it was sold. The realty was never sold in any real sense.
There is also a question whether the executors and the legatees agreed not to follow the wish of the decedent expressed in the will that the property was to be sold. The property was held for 20 years. The executors made a transfer of title to a corporation formed to hold title 7 years after the date of death. Cash bequests of $7,000 were made to two institutions. The record does not show whether they have been paid. It is possible that the executors and legatees made some arrangement for the payment, perhaps out of rents.
The creation of the corporation and issuance of stock was merely form. The majority view exalts form above substance. The stock represented no more than what was behind it, which was the real property. Under the facts, the Anderson v. Wilson, Kenan, Eaton, and Matheson cases are not applicable to this case.
I believe respondent’s view is sound. The wish of the decedent that the property would be sold was never carried out. In reality the property passed to the four legatees in 1928. The intervening holding by the corporation did not effect any change in the basis of the property because of section 112 (b) (5). The record fails to show any reason for use of a corporate titleholder, but there could be no step-up of the basis until the corporation liquidated in 1941. The majority view permits an unaccounted for gap taxwise from the time the real estate passed from the decedent and was valued for estate tax purposes. This error stems from an erroneous construction of the will and the holding that the bequest was a money bequest. The question is controlled by Brewster v. Gage. See Griswold Co., 33 B. T. A. 537, 543. I believe the respondent correctly held that there was no change of basis resulting from any of the involvement of the corporation and that the basis for determining the gain in the taxable year was the value of the property at the date of the decedent’s death.
I respectfully dissent.
Turner and Disney, JJ., agree with this dissent.