*252OPINION.
Smith:The single question presented by this proceeding is whether the petitioner is entitled to deduct from gross income in his tax returns for 1925 and 1926, $2,280 jiaid in each year to two employees who had been in his service during practically his entire business career. The respondent disallowed the deductions upon the ground that the petitioner was not in business during the taxable year and was under no obligation to pay the amounts in controversy and that the payments constituted gifts to the employees or were in the nature of personal expenditures.
Section 214(a) (1) of the Revenue Act of 1926 provides in part as follows:
(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, including a reasonable allowance for salaries or other compensation for personal services actually rendered; * * *
The evidence of record indicates that the petitioner was under no legal obligation to make the payments to the two employees in question, but that he had sold out his business at a good profit and voluntarily decided to pension these employees. We are of the opinion that they are not to be regarded as pensions paid by a going business, which are deductible from gross income as ordinary and necessary expenses.
Reviewed by the Board.
Judgment will be entered for the respondent.