*119 Decision will be entered under Rule 50.
1. Payment received for miscellaneous, unconnected legal services, no one of which exceeded 36-month period held not qualified for reallocation to prior years under section 107 (a), Internal Revenue Code of 1939, notwithstanding that bill was rendered to cover all services performed over period in excess of 36 months.
2. Services performed as attorney by petitioner who was also trustee held severable for purposes of section 107 (a), Internal Revenue Code of 1939, under New York law. Rosalyne A. Lesser, 17 T.C. 1479">17 T. C. 1479, distinguished.
3. Half of income allocable to previous years under section 107 (a), Internal Revenue Code, held properly attributable in earlier years to wife as if joint returns had been filed. Ayers J. Stockly, 22 T. C. 28, followed.
*1101 Respondent determined deficiencies in petitioners' income taxes of $ 2,283.22 for the year 1948. Some of the adjustments are uncontested; others are conceded or have been settled by stipulation of the parties. The remaining questions are (1) whether certain amounts received in the year 1948 may properly be allocated over prior years under section 107 (a) of the Internal Revenue Code of 1939; and (2) if these amounts may be so allocated, whether they may be further allocated between the two parties in years prior to 1948, despite the fact that separate returns were filed by them during those prior years.
FINDINGS OF FACT.
Some of the facts have been stipulated and are found accordingly.
Petitioners are husband and wife and have been such throughout the periods involved herein.
Petitioners filed individual income tax returns for each of the years 1940 to 1947, inclusive. They filed a joint income tax return for the *1102 year 1948 with the collector of internal revenue for the fifth district of New Jersey.
Leon R. Jillson, hereinafter*121 called petitioner, is, and throughout the period involved herein was, an attorney at law. He resided in Englewood, New Jersey, and maintained his law offices in New York City.
In the year 1948, petitioner received commissions as executor of the estate of Minerva North Dana in the amount of $ 4,741.19 for services rendered during the period December 5, 1944, to January 22, 1948, inclusive. Petitioner elected to report such commissions under the provisions of section 107 (a) of the Internal Revenue Code of 1939.
In the year 1948, petitioner received fees and commissions as trustee of a trust under the will of Mary Mason Jones in the amount of $ 7,417.92 for the period April 26, 1943, to October 26, 1948. Petitioner elected to report such fees and commissions under the provisions of section 107 (a) of the Internal Revenue Code of 1939. Neither of the foregoing items is now in controversy.
On July 23, 1948, petitioner received the sum of $ 750 from the estate of Emily G. Coster for certain services performed on her behalf. This sum represented 100 per cent of the compensation received by petitioner for all professional legal services rendered to Emily G. Coster from the commencement*122 of his retainer until the termination thereof, covering a period of 54 months from March 11, 1940, to August 28, 1944. There was no particular service to Emily G. Coster that was continuous over a period of 36 months or more. The miscellaneous services consisted of advice on numerous unconnected matters. Petitioner did not bill Emily G. Coster for these services.
On July 23, 1948, petitioner also received his entire executor and trustee commissions of $ 2,996.79 and $ 327.45, respectively, from the estate of Emily G. Coster. Petitioner reported such commissions under the provisions of section 107 (a) of the Internal Revenue Code of 1939.
The Account of Proceedings "In the Matter of the Judicial Settlement of the Account of Proceedings of City Bank Farmers Trust Company and Leon R. Jillson as Executors of and Trustees under the Will of Emily G. Coster, Deceased," reads in part as follows:
a) Final Account of their proceedings as executors of the Will of Emily G. Coster, deceased, from the 8th day of October, 1944 to the first day of September 1947.
* * * *
c) Final Account of their proceedings as trustees of the Trust for the benefit of Gertrude O. Mitron under the Will of Emily*123 G. Coster to the first day of September 1947. On the 11th day of June 1945 letters of trusteeship were issued to the undersigned.
The word "undersigned" contained in c) of this paragraph refers to City Bank Farmers Trust Company and petitioner.
*1103 The last person interested in this account examined and accepted it as final and conclusive as to the matters contained therein on the first day of July 1948.
The Final Account, which states the period during which the executors of and trustees under the will of Emily G. Coster rendered their services as executors and trustees, was prepared by petitioner. It provides that this was a final accounting of their proceedings as executors and trustees to September 1, 1947.
Petitioner was retained by and served as counsel to the trustees of a trust created under the will of one George D. Cochran. Petitioner also served as one of its three trustees. In the years 1942 to 1947, inclusive, he received the following amounts:
| Kind of income | Date paid | Amount |
| Commission on principal | Oct. 22, 1942 | $ 1,432.75 |
| Commission on income | Oct. 22, 1942 | 87.34 |
| Professional services (on October 22, 1942, | ||
| petitioner received one check for the above | ||
| amounts) | Oct. 22, 1942 | 500.00 |
| Commission on income | 1944 | 560.76 |
| Commission on income | Dec. 4, 1946 | 313.76 |
| Commission on income | Nov. 13, 1947 | 189.98 |
| Amount paid prior to 1948 | $ 3,084.59 |
*124 In the year 1948 he received the following:
| Kind of income | Date paid | Amount |
| Commission on principal | July 23, 1948 | $ 1,956.62 |
| Commission on income | July 23, 1948 | 210.32 |
| Professional services (on July 23, 1948, petitioner | ||
| received a check in the amount of $ 4,166.94) | July 23, 1948 | 2,000.00 |
| Total paid in 1948 | $ 4,166.94 |
There is contained in Schedule C of the final accounting of the trustees of the trust under the will of George D. Cochran the following items:
| 1942: | |||
| Oct. 22 -- To Leon R. Jillson, as directed by decree of | |||
| Surrogate's Court dated 1/13/42 on settlement | |||
| of Trustees' intermediate account: | |||
| Professional services | $ 500.00 | ||
| Trustee's commissions on principal | 1,432.75 | ||
| $ 1,932.75 | |||
| 1947: | |||
| July 29 -- Leon R. Jillson, for professional legal services from | |||
| the date of the intermediate account through final | |||
| distribution | 2,000.00 |
*1104 In a statement of cash transactions subsequent to those reflected in their final accounting dated July 30, 1947, and which was approved by instrument of receipt, release, and indemnification dated April 30, 1948, there are contained the following items:
| 1948: | |
| July 21 -- Annual principal commission for final period Leon R. | |
| Jillson | $ 1,956.62 |
| 1948: | |
| July 21 -- Leon R. Jillson, commission on income | 210.32 |
*125 The total fees received by petitioner for professional legal services rendered to the trustees under the will of George D. Cochran were $ 2,500, of which $ 2,000 or 80 per cent thereof was received in the year 1948. These services were performed over a period of 70 months from October 13, 1942, to July 23, 1948. Petitioner was also one of the trustees under the will of George D. Cochran, and received his statutory commissions for his services as trustee. The duties and services of petitioner as counsel to the trustees under the will of George D. Cochran were entirely separate and distinct from his duties and services as one of those trustees.
OPINION.
What were the "services" for which petitioner received compensation after the death of his client, Emily Coster? If they were separated into various matters so that the "completion" of each individual item is not shown to have been more than 36 months from the beginning of those specific "services" it seems clear section 107 by its terms would be inapplicable. 1 We think this follows for the general services of an attorney where, as here, for all that appears the items handled were various, different, and unconnected, and "the *126 client is able to pay and could have paid at any time payment was required." Julia C. Nast, 7 T.C. 433">7 T. C. 433, 435. That was not the case in Jarman v. Jones, (W. D., Okla.) 84 F. Supp. 18">84 F. Supp. 18.
The rule seems to be not only that "unitary," "continuous," or *127 "homogeneous" services cannot be broken up for purposes of section 107, Smart v. Commissioner, (C. A. 2) 152 F.2d 333">152 F. 2d 333, certiorari denied 327 U.S. 804">327 U.S. 804; Harry Civiletti, 3 T. C. 1274, affd. (C. A. 2) 152 F. 2d 332, certiorari denied 327 U.S. 804">327 U.S. 804; Ralph E. Lum, 12 T. C. 375, but *1105 also that such "unity," "continuity," or "homogeneity" is necessary for its application. See D. G. Haley, 16 T. C. 1462; James D. Gordon, 10 T. C. 772, affirmed per curiam (C. A. 2) 172 F. 2d 864; Ralph E. Lum, supra. On the first issue respondent's action is approved.
Whether the same section is applicable to executor's and trustee's commissions received by petitioner upon the termination of proceedings in the Coster estate depends entirely on when those services terminated. The date of their commencement is stipulated. But they continued for the necessary 36 months, or not, according to when they ended. *128 Unfortunately, there is no evidence of the performance of any services after September 1, 1947, the date set out in petitioner's final account. This is some 40 days short. The mere continuation of petitioner's liability until approval of the accounting does not seem to us sufficient. It may be that services were performed in the interim in retaining, managing, or distributing the estate property. But this cannot be assumed. For all we know, all the assets may have been disposed of prior to submission of the account. It may even be that preparation and filing of the account itself was a service rendered late enough to encompass the 3-year period, at least as to the executor's fee. But without evidence of the date of filing, the record gives no foundation for such a conclusion. As to this issue also we find no error in respondent's action.
When it comes to petitioner's legal services in the Cochran estate, however, we think the section applies. Under New York law, a trustee may employ counsel, and such services are eligible for compensation entirely distinct from those of the trustee. New York State Surrogate's Court Act, secs. 231-a, 278. That petitioner happened also to*129 be the trustee seems to us immaterial. Unlike those in Rosalyne A. Lesser, 1479">17 T. C. 1479, petitioner's legal services were rendered and compensated separately, and only "in connection with his official duties" 2 just as any attorney's employment would be "in connection with" the official duties of the trustee. But his trustee's fee was allowed for his services "in such capacity"; that is, as trustee. We think there is sufficient distinction between the services rendered and the compensation paid in the two capacities so that the legal services can be considered as entirely severable. E. A. Terrell, 14 T. C. 572. So treated, the facts show that the requisite 80 per cent was paid in the year in controversy.
*130 *1106 Petitioner's computation under section 107 by "splitting" the income with his wife was clearly authorized by the principle of Ayers J. Stockly, 22 T.C. 28">22 T. C. 28. Respondent concedes the applicability of that case to these facts, but insists it was incorrectly decided. We see no reason to depart from it. On its authority, the determination must be disapproved as to that item.
Treatment of the Dana and Jones fees is stipulated to have been correct.
Decision will be entered under Rule 50.
Footnotes
1. SEC. 107. COMPENSATION FOR SERVICES RENDERED FOR A PERIOD OF THIRTY-SIX MONTHS OR MORE AND BACK PAY.
(a) Personal Services. -- If at least 80 per centum of the total compensation for personal services covering a period of thirty-six calendar months or more (from the beginning to the completion of such services) is received or accrued in one taxable year by an individual or a partnership, the tax attributable to any part thereof which is included in the gross income of any individual shall not be greater than the aggregate of the taxes attributable to such part had it been included in the gross income of such individual ratably over that part of the period which precedes the date of such receipt or accrual.↩
2. Sec. 285-a. Commissions of Testamentary Trustees.
On the settlement of the account of any testamentary trustee the surrogate must allow to him his just, reasonable and necessary expenses actually paid by him, and if he be an attorney and counselor-at-law of this state and shall have rendered legal services in connection with his official duties, such compensation for such legal services as shall appear to the surrogate to be just and reasonable; and in addition thereto the surrogate must allow to such trustee for his services in such official capacity, the following commissions from principal: [New York State Surrogate's Court Act.]↩