*252 Decision will be entered for the respondent.
Under decedent's will, his residuary estate was to be held in trust to provide annuities for two adult children. After the end of such life interests, the trust was to continue for the purpose of providing funds for church properties. All disbursements of trust corpus for such purposes were restricted to not more than 25 per cent of the cost of each church property. Held, under all of the facts and circumstances, the possibility that charity will not take the entire bequest is not so remote as to be either negligible or highly improbable and, therefore, the estate is not entitled to a deduction for a charitable bequest under section 812(d), 1939 Code, for the present value of the remainder interest.
*874 The Commissioner determined a deficiency in estate tax in the amount of $ 29,417.07. The question is whether a bequest to a religious organization qualifies for a deduction under section 812(d) of the 1939 Code.
FINDINGS OF FACT.
The petitioners are the executors of the estate of John C. Polster, who died, a resident of Baltimore, Maryland, on July 29, 1952. The estate tax return was filed with the district director of internal revenue for the district of Maryland.
The decedent was *254 survived by his wife, a son, Milton A. Polster, and a daughter, Helen G. Polster. At the time of decedent's death, Milton was 59 years old, and Helen was 52.
Decedent executed his last will and testament on March 8, 1946. Under his will, in the second article, he bequeathed one-third of all of his property, real and personal, to his wife, Anna; and by the third article he gave the remainder of all of his estate to two trustees, Milton A. Polster and J. Paul Rocklin, to hold in trust. The material provisions of the will are as follows:
Third: I give, devise and bequeath all of the rest, residue and remainder of my estate, real, personal and mixed, of every kind and description and wheresoever *875 the same may be situated, of which I may die seized and possessed or of which I may be in any manner entitled to dispose by Last Will and Testament (herein referred to as "Trust Estate") unto my son, Milton A. Polster, and my solicitor, J. Paul Rocklin, in trust and confidence, nevertheless, upon the trusts and for the uses and purposes hereinafter set forth:
(a) In trust, to pay, out of the net income of said Trust Estate, accounting from the time of my death, the sum of Two Hundred*255 Dollars ($ 200.00) per month, each to my son, Milton A. Polster, and my daughter, Helen G. Polster, for the balance of their respective lives. In the event the net income of said Trust Estate is insufficient to meet the monthly payments, as aforesaid, then the net income of said Trust Estate shall be divided equally between my son, Milton A. Polster, and my daughter, Helen G. Polster, and paid to them in equal monthly installments, for the balance of their respective lives. In no event shall the monthly payments, out of the net income of said Trust Estate, exceed two hundred ($ 200.00) dollars per month for either of my said son or daughter. The monthly payments; as aforesaid, shall be made to the said Milton A. Polster and Helen G. Polster, in their hands, and not to any other, whether claiming by his or her authority or in any other capacity.
(b) Upon the death of my son, Milton A. Polster and my daughter, Helen G. Polster, said surviving Trustee shall pay and transfer, absolutely and free of all trusts, the sum of Five Thousand ($ 5,000.00) Dollars to my grandson, Derward Polster, the son of Milton A. Polster.
(c) Upon the death of my son, Milton A. Polster and my daughter, *256 Helen G. Polster, in further trust, for the purchase, building and/or construction of church buildings and including locations and land for the building and/or construction of church buildings and structures for the Pentecostal Holiness Church, Inc., in the City of Baltimore and in the State of Maryland. The corpus of said Trust Estate shall be utilized for the above purposes; however, not to exceed twenty-five (25%) percent of the cost of each and every purchase and/or building or construction. None of the Trust Estate shall be used for the purpose of furnishing any of the furnishings of the Church buildings, nor for the purchase of organs or similar instruments, nor for the repair, beautification, maintenance, or support of any of said church buildings; nor for the maintenance and support of the minister or ministers of any of said churches.
There is no provision in the will for the distribution at any time of any of the corpus of the trust to any beneficiaries other than those specified in paragraphs (a), (b), and (c) of the third article of the will.
There is a corporation known as the Pentecostal Holiness Church located at 1249 East North Avenue, Baltimore 2, Maryland, which*257 was in existence at the time the decedent executed his will and when he died. It is now in existence. On July 26, 1957, the Commissioner issued a ruling to this corporation expressing the opinion that it is a tax-exempt corporation under the provisions of section 501(c)(3) of the 1954 Code, which corresponds to section 101(6) of the 1939 Code. At the present time, it is the only Pentecostal Holiness Church in Baltimore.
The headquarters of all of the Pentecostal Holiness Church organization is located in Franklin Springs, Georgia. Each church in the denomination is an independent organization which carries on its operations as an independent church. Some of the individual churches, but *876 not all, are incorporated as separate corporations. Each church belongs to a regional conference which is a governing organization of the church within the national organization. Each conference has a board of directors and officers. The regional conference which includes churches in Maryland is called The Maryland Conference, and its headquarters is located at 106 Patapsco Avenue, Baltimore.
At the time of the death of John C. Polster, there were three Pentecostal Holiness Churches*258 in Maryland, including the East North Avenue Church in Baltimore. The other two churches were located at South Lee Street, Cumberland, Maryland, and at 19 Jackson Street, Lonaconing, Maryland. In 1957, there were two more churches, one in Silver Spring, Maryland, and one in Daniels, Maryland.
The Maryland Conference of the Pentecostal Church, by its superintendent and chairman of the board, Harrison H. Valentine, accepted the bequest of John C. Polster, deceased. In a statement certifying such acceptance it is stated that, "This money will be used as partial payment in the building of new churches in the State of Maryland."
The Maryland Conference maintains its records on the basis of a fiscal year ending on May 31. As of May 31, 1952, the total number of members of the Pentecostal Holiness Churches in Maryland was 176. The membership of the three Pentecostal Holiness Churches in Maryland at the beginning and at the end of the fiscal year ended May 31, 1952, was as follows:
| Location of church | June 1, 1951 | May 31, 1952 |
| Baltimore, E. North Ave | 95 | 97 |
| Cumberland | 37 | 31 |
| Lonaconing | 53 | 48 |
| Total | 185 | 176 |
The membership in the churches is drawn chiefly from people*259 who may be described as working people in comparatively modest circumstances. Members are expected to make freewill offerings to the church when they become members and to pay tithes to the church.
In the financial report of The Maryland Conference for the fiscal year ended May 31, 1952, each of the churches located in Maryland was reported to have church property having the value, for the property and all of the furnishings, which is set forth below, against which there was outstanding indebtedness at the end of the fiscal year after payments made during the year on such property, as follows:
| Value of | Payments | Indebtedness | |
| Location of church | church | in year | |
| property | |||
| Baltimore, E. North Ave | $ 45,000 | $ 1,685.96 | $ 2,708.42 |
| Cumberland | 4,500 | 435.00 | 744.05 |
| Lonaconing | 15,000 | 422.07 | 166.80 |
*877 Each individual church must raise funds to pay for the purchase of its own church property and for the maintenance thereof. In so doing, it is allowed to borrow funds from banks or other sources. The Maryland Conference does not contribute any funds for any purpose to any individual church. Each individual church is self-supporting. On the other hand, each *260 individual church makes contributions out of its own funds to The Maryland Conference treasury and for other purposes.
The Baltimore church at 1249 East North Avenue maintains its fiscal records on the basis of a fiscal year ending on June 30. During the fiscal years ended June 30, 1951, 1952, and 1953, its total receipts, its total expenditures for its pastor's salary, payments on the church property mortgage, payments to The Maryland Conference, and expenditures for other purposes, and the balance at the end of each fiscal year out of current receipts were as follows:
| 1249 East North Ave., Baltimore | ||
| Fiscal year ending June 30 | Total | Total expenditures |
| receipts | ||
| 1951 | $ 18,300.65 | $ 16,692.13 |
| 1952 | 18,732.15 | 17,119.54 |
| 1953 | 21,847.60 | 18,727.26 |
| 1249 East North Ave., Baltimore | ||
| Fiscal year ending June 30 | Mortgage | Balance |
| payments | ||
| 1951 | $ 1,417.02 | $ 1,608.52 |
| 1952 | 1,850.20 | 1,612.61 |
| 1953 | 2,786.91 | 3,120.34 |
According to the financial report of The Maryland Conference for its fiscal year ended May 31, 1952, the total receipts for the year of the three churches in Maryland, and their expenditures, and the remaining balance of the current year's *261 receipts were as follows:
| All Churches In Maryland, Fiscal Year 1952 | |||
| Location | Total received | Total expended | Balance |
| Baltimore, E. North Ave | $ 18,732.15 | $ 17,119.54 | $ 1,612.61 |
| Cumberland | 5,273.34 | 5,218.41 | 54.93 |
| Lonaconing | 5,362.98 | 5,106.51 | 256.47 |
At the time of the decedent's death, there was another church in Baltimore called a Pentecostal Holiness Church, located on Montgomery Street, but this church was not a member of The Maryland Conference. The pastor, only, of the Montgomery Street church was a member of The Conference. Later he withdrew from The Conference, at some time after July 1952.
The Maryland Conference includes churches located in Washington, D.C., West Virginia, Pennsylvania, and New Jersey, as well as churches located in Maryland. As of May 31, 1952, the membership of all of the churches in The Maryland Conference aggregated 586, of which only 176 were members of the churches in Maryland.
*878 The Maryland Conference is not incorporated. It is an unincorporated organization or association. The individual Pentecostal Holiness Churches do not operate under one corporation charter, such as a charter granted to a national corporation*262 for a national church, or a charter granted to a conference as a whole. If an individual church is incorporated, it obtains its own individual corporate charter from a State and, accordingly, is a corporation separate and apart from other individual church corporations. The Pentecostal Holiness Church, Inc., 1249 East North Avenue, Baltimore 2, Maryland, is a corporation which is separate from any other incorporated Pentecostal Holiness Church.
After uncontested adjustments made by the respondent, the agreed value of the decedent's gross estate was $ 310,188.71. Debts of and charges against the estate, the allowable marital deduction, and the bequest of $ 5,000 to the decedent's grandson, total $ 124,917.84, and the value of the residuary estate is $ 185,270.87. The total amount required to provide the annuities for Milton A. Polster and Helen G. Polster (now Helen G. Polster Reed), devised to each of them under the decedent's will, is $ 139,323.42. The period during which the life interests of the decedent's son and daughter in his residuary estate, held in trust, will exist is 27 years from the time of decedent's death, computed under the applicable regulations and tables of*263 the Commissioner. After computing the amount required to provide the annuities for the decedent's son and daughter, the amount of decedent's residuary trust available for his charitable bequest is $ 45,947.45, which amount after 27 years will have a value of $ 114,868.62. Added to the latter amount, the principal required to provide the son's and daughter's annuities during their lives, namely, $ 139,323.42, the value of the residuary trust estate after the ending of the intervening life interests is $ 254,192.04, which is the value of the total amount of the residuary estate held in trust under the decedent's will which would be available for distribution by the trustees if devisees of the residuary estate received all of the bequest described in paragraph (c) of the third article of the will. In order for devisees to receive distribution of the entire amount of the value of the corpus of the residuary trust under paragraph (c), namely, $ 254,192.04, they would have to provide 3 times $ 254,192.04, or the total amount of $ 762,576.12, which amount would equal 75 per cent of the cost of church structures and locations. The following table summarizes and sets forth in tabular form*264 the above: *879
| Gross estate | $ 310,188.71 | |
| Debts and charges | $ 24,782.40 | |
| Marital deduction | 95,135.44 | |
| Bequest to grandson | 5,000.00 | 124,917.84 |
| Residue | 185,270.87 | |
| Amount required to provide annuities | 139,323.42 | |
| In trust for charity | 45,947.45 | |
| Value of $ 1 after 27 years at 3 1/2 per cent | ||
| interest | 2.50 | |
| Value of corpus 27 years | 114,868.62 | |
| Add: Amount required to provide annuities | 139,323.42 | |
| Value of trust estate after life estates | 254,192.04 | |
| Minimum investment required by church under the will | ||
| $ 254,192.04 X 3 | 762,576.12 |
In the estate tax return, the executors deducted $ 116,637.21, as the present value of the bequest of the residuary trust under paragraph (c) of the third article of decedent's will. The Commissioner disallowed the deduction for the following reason:
The bequest to the Pentecostal Holiness Church, Inc., under item Third of decedent's last will and testament, is a conditional bequest, which, inasmuch as the possibility that the beneficiary will not take is not so remote as to be negligible, does not qualify as a charitable deduction under Section 812(d) of the Internal Revenue Code of 1939.
OPINION.
The question to *265 be decided is whether the alleged value at the time of the decedent's death of the bequest to the Pentecostal Holiness Church, Inc., is deductible from the value of the gross estate under section 812(d) of the 1939 Code. 1 Allowance of the claimed deduction was denied by the respondent pursuant to section 81.46 of Regulations 105 which is as follows:
Sec. 81.46 Conditional bequests. --
If as of the date of decedent's death the transfer to charity is dependent upon the performance of some act or the happening of a precedent event in order that it might become effective, no deduction is allowable unless the possibility that charity will not take is so remote as to be negligible. If an estate or interest *880 has passed to or is vested in charity at the time of decedent's death and such right or interest would be defeated by the performance of some act or the happening of some event which appeared to have been highly improbable at the time of decedent's death, the deduction is allowable.
*266 The executors deducted in the estate tax return as the present value of the charitable bequest $ 116,637.21. Due to respondent's uncontested adjustments which have increased the value of the gross estate, the present value of the charitable bequest is computed by the executors in the amount of $ 122,211, for which deduction is claimed.
Whether or not the decedent's executors are entitled to a deduction of $ 122,211 for a charitable bequest depends upon whether the bequest set forth in paragraph (c) of the third article of the will satisfies the requirements of section 812(d). In considering the issue, the provisions of section 81.46 of Regulations 105, set forth above, must be taken into account, for the regulation implements the statutory provisions, it has been regarded as a valid interpretation of the statute, and it should not be disregarded. Commissioner v. Sternberger's Estate, 348 U.S. 189">348 U.S. 189. The principal meaning of section 81.46 of the regulations is stated in the case of Sternberger's Estate, supra, to be as follows:
The predecessor of § 81.46 confined charitable deductions to outright, unconditional bequests*267 to charity. It expressly excluded deductions for charitable bequests that were subject to conditions, either precedent or subsequent. While it encouraged assured bequests to charity, it offered no deductions for bequests that might never reach charity. Subsequent amendments have clarified and not changed that principle. Section 81.46(a) today yields to no condition unless the possibility that charity will not take is "negligible" or "highly improbable." * * *
Within the framework of the first part of section 81.46 of Regulations 105, it cannot be said that a deduction can never be allowed under section 812(d) of the 1939 Code for a bequest or transfer which in fact is conditional. However, where the bequest is conditional the inquiry must be whether the chance that the charity will not take is or is not so remote as to be negligible. Furthermore, the Supreme Court in the Sternberger case has rejected the view that the applicable regulations permit proportional deductions. As was observed in United States v. Dean, 224 F. 2d 26, 29:
The Court construed § 81.46 * * * as taking not a proportional but an all or nothing approach to the problem*268 of deductions on account of contingent bequests to charity. Thus the section either denies any deduction at all for a contingent bequest to charity, or else it permits the deduction of the present value of the entire contingent bequest, allowing the latter whenever "the possibility that charity will not take is so remote as to be negligible."
One of the respondent's contentions is that the bequest in dispute is clearly a conditional bequest, the enjoyment of which is contingent upon a devisee's putting up 75 per cent of the cost of a church structure (including the cost of the site of the structure, if that is to be acquired). *881 Thus, the respondent's contention falls within the first sentence of section 81.46. The petitioners, on the other hand, argue that at the time of the decedent's death the interest of the charity in the corpus of the residuary trust estate vested in the charity, that the possibility that such interest would be defeated by the performance of some act or the happening of some event appeared to be highly improbable at the time of the decedent's death, and that, therefore, deduction is allowable. Petitioners' contention lies within the second sentence*269 of section 81.46.
The respective contentions of the parties, above noted, appear to invite our undertaking to base our conclusions upon a determination of whether the charity involved here was given, under the decedent's will, a contingent or a vested remainder. At the outset we should make clear that in our opinion decision of the issue does not necessarily turn upon whether the charity received a contingent or a vested remainder. We recognize the admonition in Klein v. United States, 283 U.S. 231">283 U.S. 231, 234, which was reiterated in Helvering v. Hallock, 309 U.S. 106">309 U.S. 106, that in the field of Federal taxation "[nothing] is to be gained by multiplying words in respect of the various niceties of * * * the law of contingent and vested remainders." General and practical considerations may control decision of the issue, depending upon the facts of each particular case, rather than the nature of the interest embraced in a bequest, either vested or contingent. See, for example, Helvering v. Union Trust Co., 125 F.2d 401">125 F. 2d 401, 404. As was said in Pennsylvania Co. For Insurances, Etc. v. Brown, 6 F. Supp. 582">6 F. Supp. 582,*270 affd. 70 F. 2d 269 --
Questions of vested or contingent interests may be of the greatest importance in determining the alienability of the remainder or its liability to be subjected to the claims of creditors, but we are here construing a taxing statute and determining whether or not a deduction is allowable. * * * there is just as much uncertainty of amount involved in a vested remainder subject to being divested as in one which is contingent.
Under the facts and circumstances of this case, it is necessary, if not preferable, to consider broadly whether, as of the time of the decedent's death, the chances that a charity would not take all of the decedent's bequest were "negligible" or "highly improbable."
It is necessary to ascertain first who is the devisee of the bequest, and whether there is one or several. It is provided, in part, in paragraph (c) of the third article of the will, that upon the death of the last surviving child of the decedent, the residuary trust is to be held in further trust for the purchase or construction of church buildings and structures, including the locations and land, "for the Pentecostal Holiness Church, Inc. in the*271 City of Baltimore and in the State of Maryland." The petitioners take the the position that the bequest of the decedent was made to the churches in the State of Maryland, as a class, belonging to The Maryland Conference of the Pentecostal Holiness *882 Church. We understand their contention to be, further, that the bequest was made to such churches, both those in existence at the time of the decedent's death and those to come into existence thereafter. Thus, on brief, the petitioners refer to the growth in the membership since 1952 of all of the Pentecostal Churches in the State of Maryland, and they refer, also, to "The Pentecostal Holiness Church, Inc., which has its headquarters in Franklin Springs, Georgia." At the trial, it was made clear that the respondent's position is that the provisions of the pertinent part of the will make the beneficiary of the entire bequest an individual and separate church, namely, the Pentecostal Holiness Church, Inc., in the city of Baltimore and in the State of Maryland. Respondent adheres to that position.
Under section 812(d), a deduction is allowable only if a bequest or transfer is made to or for the use of a "corporation organized and*272 operated exclusively for religious, charitable, scientific, literary or educational purposes." The petitioners' claim for a deduction for a charitable bequest must fail at the outset if the petitioners fail to prove that the beneficiary of the bequest is a corporation. With respect to this point, we turn to a discussion of the evidence.
There is in evidence the minutes of The Maryland Conference of the Pentecostal Holiness Church convened at the conference camp-ground near Frostburg, Maryland, on July 12, 1952, and a letter of the superintendent of The Maryland Conference, Harrison H. Valentine. These represent official documents of the church organization. In addition, the record contains testimony of Valentine, who, also, was the pastor of the Pentecostal Holiness Church, Inc., located at 1249 East North Avenue, Baltimore, from July 1, 1945, until sometime in the latter part of 1954. The evidence, taken as a whole, shows as follows: (1) The correct title of the religious sect, or denomination, having a common faith and form of worship and discipline, is the Pentecostal Holiness Church. That sect, or denomination, has its national headquarters in Franklin Springs, Georgia. *273 Its title, or name, is not the Pentecostal Holiness Church, Inc. (2) The national organization of this denomination is not incorporated; neither is The Maryland Conference. (3) The national denomination is a federation of individual churches having a common faith who have agreed to adhere to a common discipline and to conduct the operations of the individual churches according to certain rules. (4) The Maryland Conference is a local unincorporated organization within the national federation which represents the individual churches in a district, which comprises several States, including Maryland. Individual churches must be formally admitted to and enrolled in the conference. (5) Some, but not all, of the individual churches are incorporated. (6) The Pentecostal Holiness Church, Inc., 1249 East *883 North Avenue, Baltimore 2, Maryland, is a corporation; it was the only Pentecostal Holiness Church in Baltimore which, at the time of the decedent's death, was enrolled in The Maryland Conference; it now is the only such church in Baltimore which is enrolled in the conference. (7) Each individual church is self-supporting. Each one relies upon the contributions of its congregation. *274 None receives financial aid or contributions from the conference to which it belongs, or from the national organization. Each church acquires and purchases its own church property by using its own funds and, if necessary, funds borrowed from lending institutions. (8) The ruling given by the Commissioner of Internal Revenue by letter dated July 26, 1957, granted exemption from Federal income tax to the individual incorporated church located at 1249 East North Avenue, Baltimore 2, Maryland. That ruling was not a "blanket" ruling covering either The Maryland Conference or the national organization, and none could have been made because neither the conference nor the national organization is incorporated. Part of the letter ruling states that bequests to and for the use of the above-described individual church are deductible in computing the value of the taxable estate of a decedent for Federal estate tax purposes. Such ruling applies only to the incorporated church located at 1249 East North Avenue, Baltimore.
The dispute about the beneficiary designated in paragraph (c) of the third article of the will presents the problem whether the provisions of paragraph (c) are ambiguous. *275 Evidence showing what was the intention of the testator is needed to determine properly this question. There is no evidence before us which establishes that the decedent intended to make a bequest either to The Maryland Conference of Pentecostal Holiness Churches, or to all of the Pentecostal Holiness Churches in Maryland, in existence, or in existence and to come into existence. Valentine testified that the decedent desired to provide funds for churches in Maryland, but not outside of that State. Giving whatever weight properly may be accorded to this testimony, it is not entirely helpful, because it might be possible for the Baltimore church on East North Avenue to acquire and construct church buildings, and the land therefor, at places in Maryland other than Baltimore. However, there is no evidence here that under the rules of The Maryland Conference and of the national organization an individual church is allowed to have various and sundry church structures located in different cities and towns.
If it was the intention of the testator to make a bequest to the several and various, independent churches in the State of Maryland, the petitioners would be entitled to a deduction*276 under section 812(d), if all other requirements were satisfied (which we do not now decide, *884 at this point), only for a bequest to corporations. The evidence does not show that the two other churches in Maryland which were in existence at the time of decedent's death, the churches in Cumberland and Lonaconing, were incorporated, or that the two churches established in 1957, in Silver Spring and Daniels, were incorporated. As far as the record shows, only the East North Avenue church in Baltimore was incorporated.
The petitioners have taken the position that the bequest was made to all of the churches in Maryland, as a class, in existence and to be established. The deduction claimed under section 812(d) would not be allowable under this broad contention because the petitioners have failed to show that all of the churches in such class have qualified, or would qualify, as the type of corporation specified in section 812(d). With respect to this condition which is in the statutory provision itself, and giving consideration to section 81.46 of the regulations, we cannot say that as of the date of decedent's death, the possibility that church corporations would not take the*277 bequest was "negligible" or "highly improbable."
The decedent's will named a beneficiary which was in existence at the time of his death, the Pentecostal Holiness Church, Inc., in the city of Baltimore. It is, of course, also in the State of Maryland. Legal draftsmen sometimes refer to a location in terms of both the city and State where it is located. That church is a corporation which meets the specifications contained in section 812(d). At the very least, the bequest was made to the above-named incorporated church. Absent adequate evidence to which full weight can be given, and on the entire record before us, we are obliged to construe the pertinent provisions in the will as constituting a bequest to the church in Baltimore at 1249 East North Avenue. We recognize that by the time any distribution can be made under paragraph (c) by the trustees of the residuary trust, which will be 27 years after the decedent's death, all of the churches in Maryland might become incorporated, but whether each one would qualify under section 812(d) is speculative and uncertain, for to so qualify a corporation must not only be organized and operated exclusively for charitable purposes but, also, *278 no part of its earnings can inure to the benefit of any individual, and no substantial part of its activities may be carrying on propaganda, or otherwise attempting, to influence legislation.
The chief question is whether the decedent's bequest in its entirety will ever reach a charity. At the outset, it is concluded that under the provisions of paragraph (c) of the third article of the will, the trustees are restricted as to the amount of each and every distribution out of the trust corpus. The amount of each distribution may *885 not exceed 25 per cent of the cost of every construction, building, or purchase. This being true, the prospective distributee must provide at least 75 per cent of such cost. We must apply practical considerations in our determination of the issue and they dictate the further conclusion that the trustees, in fulfilling their fiduciary duties and obligations and in preventing waste of the trust funds and frustration of the testator's intent, would necessarily be obligated to ascertain, before they made any distribution of trust funds, that a project involving the purchase or construction of a church building or of the site for a church structure *279 would be carried out and completed. It would be incumbent on the trustees to determine that a prospective distributee actually had obtained a firm commitment from a lending institution for any loan needed to provide either the entire 75 per cent share of costs or such amount as would enable such distributee to complete its 75 per cent share. We think it is reasonable, therefore, to regard the terms of the decedent's bequest as containing the condition that before a distribution of trust funds could be made by the trustees to a distributee who applied for funds, such applicant would have to establish that 75 per cent of the cost of a project was in fact available. The applicant's obligation to establish that fact constitutes a contingency upon which a distribution of trust funds would depend. Cf. United States v. Fourth Nat. Bank in Wichita, Kan., 85">83 F. 2d 85, 91. The inability on the applicant's part to provide 75 per cent of cost would prevent a distribution by the trustees of an amount equal to 25 per cent of cost.
The next inquiry must be into the matter of the total amount which the trustees of the residuary trust will have on hand after 27*280 years from the time of the decedent's death, which is the agreed period during which there will exist the life interests in annuities to be provided by the trust estate. The petitioners have not taken any exception to the respondent's computation of that amount, which he has calculated will be $ 254,192.04. This is the total amount of the trust estate, after the life estates, which will be available for distribution. Petitioners have not shown that such fund will be a lesser amount. In order that a fund of $ 254,192.04 may be fully distributed, a prospective distributee, or distributees, must be able to provide the total amount of $ 762,576.12. As was pointed out in United States v. Dean, supra, section 81.46 of the regulations has been construed by the Supreme Court to permit only a deduction of the present value of the entire contingent bequest, and no less, provided the possibility that charity will not take all of the bequest is either "negligible" or "highly improbable." We must determine whether, on the above basis, the claimed deduction is allowable.
*886 Where a bequest is not outright in the sense of being wholly unconditional, *281 there are various difficulties which must be dealt with in determining whether a deduction therefor is allowable, and among them are these: Is the contingency, upon the happening of which the bequest is to go to the charitable purpose, such that the supposed bequest may never become effective in possession or enjoyment so that the bequest is too uncertain, contingent, and remote to be taken into account in determining the value of the net estate for the purpose of the estate tax? Cf. Mitchell v. United States, 63 Ct. Cl. 613">63 Ct. Cl. 613, affirmed sub nom. Humes v. United States, 276 U.S. 487">276 U.S. 487. Is the contingency, not resolved at the testator's death, one which permits computation of the present worth of deferred uses with certainty upon some reasonable basis without resorting to completely speculative factors? See Humes v. United States, supra;Merchants Bank v. Commissioner, 320 U.S. 256">320 U.S. 256.
There is set forth in the Findings of Fact all of the facts pertaining to the financial condition of each of the three churches which were located in Maryland at the time *282 of the decedent's death. Assuming, arguendo, that all of these churches are corporations within the scope of section 812(d), and assuming that in 27 years they will own their property outright, their known assets had a total value of $ 64,500 at the time of the decedent's death. The evidence shows, further, that in their fiscal year 1952, the expenditures of each church in Maryland closely approximated total receipts, leaving an unexpended balance of current receipts, for the three churches, of only about $ 2,925. If we add to that some figure for mortgage payments made in 1952 (which we must estimate for the churches in Cumberland and Lonaconing) on the assumption that no mortgage payments will be owing in 27 years, such as $ 2,400, the annual surplus over current expenses for the three churches is about $ 5,325. If we assume, arguendo, that the three churches should save such estimated surplus for 27 years, then their savings would amount to about $ 143,748, to which we can add the total value of their church properties (without any allowance for depreciation, however), namely, $ 64,500, to arrive at a total worth of around $ 208,248 at the end of 27 years. Can it be*283 assumed, on the basis of the record before us, that the charity designated in the decedent's will can meet the condition of providing $ 762,576, in order to receive distribution of $ 254,192?
Petitioners have the burden of establishing that the Commissioner's denial of their claimed deduction is in error. Their burden includes proving that the possibility that the charity will not take all of the contingent bequest is either "negligible" or "highly improbable." Upon consideration of all of the evidence, our conclusion is that they have failed in their burden of proof.
*887 The factors upon which petitioners rely in support of their contention that the chances that charity will not take all of the bequest is either "negligible" or "highly improbable" are as follows: First, they assume that the charity to which the bequest was made is a multiplicity of incorporated Pentecostal Holiness Churches to be established in Maryland which will satisfy the requirements of section 812(d). Next, it is assumed that the congregations of such churches will increase, bringing a corresponding increase in the funds of the churches. It is assumed that the churches will be able to borrow from lending*284 institutions amounts which, when added to their accumulated savings, will be sufficient to provide $ 762,576, 75 per cent of the cost of structures. It is also assumed that the churches will certainly acquire, purchase, or construct properties having a total cost of $ 1,016,768 (of which amount $ 254,192 is 25 per cent).
Petitioners' assumptions are speculative and wholly uncertain. Cf. Delaware Trust Co. v. Handy, 53 F. 2d 1042, 1049; St. Louis Union Trust Co. v. Burnet, 59 F.2d 922">59 F. 2d 922, 926; Helvering v. Union Trust Co., supra;Churchill v. United States, 68 F. Supp. 267">68 F. Supp. 267. Furthermore, certain principles must be taken into account. For example: A settlor may make a gift to charity upon a condition, and unless a certain event happens or a certain act is performed, the gift to charity does not vest and the settlor or his estate remains the owner of the property. 2A Bogert, Trusts and Trustees sec. 420. A testator can postpone the period of vesting by making it depend upon a contingency and if he does so, the estate will not vest until the happening*285 of such contingency. Cherbonnier v. Goodwin, 79 Md. 55">79 Md. 55, 58, 28 Atl. 894, 895 (1894). A gift to charity at a remote date, following gifts to private persons, is subject to the rule against perpetuities. 2 Bogert, Trusts and Trustees sec. 345p. The rule has been defined in Gray, Rule Against Perpetuities sec. 201 (4th ed.) as: "No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest." This rule has long been applied in Maryland in instances of private gifts with a gift over to charity. See Missionary Society v. Humphreys, 91 Md. 131">91 Md. 131, 46 Atl. 320 (1900).
Since there is no time limit fixed in the decedent's will as to when charity can fulfill the conditions which are incumbent on a charity, there exists here the possibility that the prescribed conditions will not be fulfilled within the period fixed by the rule against perpetuities. The bequest may violate the rule against perpetuities and, therefore, be void.
A further contention of the petitioners is that, in effect, a ruling under Maryland law has*286 been made that there was an effective vesting in charity of an interest in the remainder because the executors' first administration account was approved by the Orphans' Court in which *888 no inheritance, or estate, tax of Maryland was reported as due for the bequest to charity. The approval of an uncontested administration account of the executors by the Orphans' Court does not constitute a judicial determination under the law of Maryland relating to the vesting of any interest in a charity at the time of the decedent's death, or of the validity of the charitable bequest, which is binding upon this Court, or controlling, in deciding the issue which here involves application of a provision of the Federal estate tax statutes. Mississippi Valley Trust Co. v. Commissioner, 72 F. 2d 197, 200, certiorari denied 293 U.S. 604">293 U.S. 604; Burnet v. Harmel, 287 U.S. 103">287 U.S. 103, 110.
Under the facts and circumstances of this case, there is no reliable criteria upon which it can be held that the possibility that charity will not take all or some determinable part of the bequest is merely negligible or highly*287 improbable. Cf. Estate of Jean S. Alexander, 25 T.C. 600">25 T.C. 600; Estate of George M. Moffett, 31 T.C. 541">31 T.C. 541; Newton Trust Co. v. Commissioner, 160 F.2d 175">160 F. 2d 175, 181, affirming 5 T.C. 1304">5 T.C. 1304; Henslee v. Union Planters Bank, 335 U.S. 595">335 U.S. 595, 598-600. Our conclusion is that the possibility that charity will not take the bequest is not so remote as to be negligible, and that at the time of the decedent's death the defeat of an interest in the remainder was not highly improbable. Therefore, the petitioners are not entitled to the claimed deduction under section 812(d).
Decision will be entered for the respondent.
Footnotes
1. SEC. 812. NET ESTATE.
For the purpose of the tax the value of the net estate shall be determined, in the case of a citizen or resident of the United States by deducting from the value of the gross estate --
* * * *
(d) Transfers for Public, Charitable, and Religious Uses. -- The amount of all bequests, legacies, devises, or transfers * * * to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes * * *↩