*790 The petitioner in 1933 was appointed referee in certain specific cases by the Supreme Court of the State of New York or by the City Court of New York City, and was appointed special guardian or guardian ad litem in other specific cases by the Surrogate's Court of New York County. The appointments were made pursuant to law to aid the courts in the discharge of their judicial functions. The petitioner accepted the appointments, took the necessary oath, and discharged the duties imposed. His compensation for services rendered was paid from funds involved in the litigation and not in any instance from the funds of the state or of any political subdivision thereof. Held, that the petitioner in the capacities in which he served as an aid to the courts was not, in the sense of the Federal income tax law here involved, an officer or employee of the state or any political subdivision thereof; held, further, that the compensation received by the petitioner, as above stated, is includable in petitioner's taxable income.
*791 *1090 The Commissioner has proposed a deficiency in income tax against the petitioner for the year 1933 in the amount of $2,248.24, which is controverted by petitioner.
FINDINGS OF FACT.
The petitioner is a lawyer, residing in New York City, and in active practice of the law since 1910. Since 1912 he has often served in the capacities of referee, special guardian, and guardian ad litem under appointments by various courts.
During the taxable year in issue, 1933, the petitioner received a number of appointments as referee by the Supreme Court of New York State, and his fees for services rendered therein in that year aggregated $22,825. Petitioner in the same year received several appointments as special guardian from the Surrogate's Court and for his services therein was paid in 1933 the amount of $5,650. In 1933 he was also several times appointed guardian ad litem by the Supreme Court of the State of New York and in that year received for his services fees aggregating $5,725. He, in the same year, also received one appointment as referee by the City Court of the City of New York and was in that year paid for his services therein a fee of $250.
All the*792 appointments above stated were made pursuant to law and in aid of the court making the same in the discharge of its judicial functions. The petitioner accepted the aforesaid appointments, took the necessary oath, and discharged the duties imposed. His compensation for services rendered in each specific case was paid from funds involved in the litigation in which suit he received his appointment. In no instance or case in which he received compensation for his said services was his compensation paid by the State of New York or by the County or City of New York, or from funds belonging to either of them.
During 1933 a law partnership existed between Frank Aranow (the petitioner), Harris Berlack, and Stanley H. Fuld. In that year two members of the partnership, Frank Aranow and Stanley H. Fuld, received fees from court appointments as referee or otherwise, as indicated *1091 herein. The total amount Frank Aranow admits he so received was $34,450, the amount being turned over to the partnership. In his income tax return for 1933 he reported $724.14 as taxable income from the partnership, having deducted from his distributive share of the partnership earnings for 1933 the*793 $34,450 as not subject to Federal income tax, as having been earned and received as compensation under appointments and circumstances heretofore herein set out. The Commissioner increased petitioner's taxable income from the partnership by $34,579.97, and the increase of the amount is excepted to by petitioner to the extent of $34,450, but not as to the sum of $129.97.
Stanley H. Fuld in 1933 received $3,500 for services rendered as referee under appointment by the Supreme Court of the State of New York and this amount was turned over to the partnership as tax exempt income, but the Commissioner considered and treated it as taxable income in his determination that the petitioner's distributive interest from the partnership should be increased by the amount of $34,579.97.
OPINION.
DISNEY: The sole issue raised by the errors assigned is whether or not the sum of $34,450 received by the petitioner as fees for his services as referee, special guardian, or guardian ad litem, under court appointments as set forth in our findings of fact, is exempt from Federal income tax.
In view of the circumstances and conditions under which the fees in question were earned by and paid*794 to the petitioner, there is in the instant case, in our opinion, no occasion or necessity for attempting to draw any distinction or difference between petitioner's fees as referee, special guardian, or guardian ad litem, since all are alike subject to, and controlled by, the principles enunciated and applied in court decisions to which we shall briefly refer, deeming it unnecessary to enter into a lengthy discussion of the cases which we consider are determinative and controlling of the issue in the instant case.
Notwithstanding the earnest insistence by counsel for the petitioner that the principles enunciated and applied in , have no bearing on the issue in the instant case, we can not accept that view. It is true the facts and circumstances shown in , and in cases cited and approved therein, are not identical with those in the instant case, but in that case there is laid down a principle that immunity is based upon an actual (and not merely conjectural) burden upon the state function.
In the instant case, it is apparent that the functions of government or any judicial*795 functions are not in fact burdened by the imposition of the Federal income tax upon the fees or compensation received by the petitioner as referee, special guardian, or guardian ad*1092 litem in the instances described in our findings of fact, for the compensation or fee was in no instance paid or borne by the state or by any of its political subdivisions, but was paid out of the funds involved in the litigation or from the estate or interest of the individual, for whom petitioner was serving as special guardian or guardian ad litem under appointment by some court.
In petitioner's reply brief herein it is stated that in the case of , a petition for a rehearing was filed, in which an argument is made that the change in the tax law effected by the decision in that case should not be applied retroactively. Petitioner insists that in the instant case, in view of the fact that the law at the time of the filing of the taxpayer's return was expressed by the decisions of this Board in the cases of *796 , and , the law as therein stated, if considered changed by the decision in , "Port Authority cases," should not be permitted to affect taxes accrued in 1933.
The Supreme Court on October 10, 1938, denied rehearing, the effect of which is also to deny the request that the decision therein be not applied retroactively.
In the case of , decided since the hearing herein, the identical question in issue in the instant case was before the court, under practically identical circumstances, and the same statutes (except that therein there was no appointment as guardian ad litem or by the City Court of New York City), and it was there decided that the fee or compensation received by the referee or special guardian was subject to Federal income taxation. The court follows and applies , saying:
This limiting principle we believe to be controlling of the case at bar. None of the appellant's compensation came from the state treasury; it was paid*797 by the parties litigant or out of an estate under the court's control. By no possibility can the imposition of the tax increase to the state the cost of administering justice. Conceivably an income tax upon the salary of a judge paid from the state treasury may require the official's salary to be correspondingly raised in order to obtain his consent to serve and thereby increase the cost to the state of its judicial department. Cf. [37-2 USTC Par. 9351] (C.C.A. 2). But this cannot happen in the case of a referee or special guardian whose compensation is paid by the litigants. The tax upon such compensation will be absorbed by the taxpayer without effect upon the state, as fully as the tax upon that part of his income arising from his professional employment as an attorney at law. In the light of the Gerhardt opinion we believe that the source of the appellant's compensation is alone enough to defeat his claim of constitutional immunity from federal income taxes, although prior to that decision the lower courts had expressed divergent views on this question. * * *
The case also considers the question as to whether*798 the petitioner as referee or special guardian was an officer or employee of the state or *1093 political subdivision thereof, under the statutory exemption of such officer or employee, under section 1211 of the Revenue Act of 1926. We do not have before us such statutory exemption, since the Revenue Act of 1932 did not contain same, but the regulations in effect during the taxable year herein did extend the immunity to such officer or employee. However, such regulations define officer as one whose tenure is continuous and not temporary, and define employee as one whose services are continuous, not occasional or temporary. The court in , therefore holds that petitioner there was not such officer. A regulation attempting to create an exemption is void. ; affd., ; certiorari denied, ; . Petitioner was, therefore, neither an officer nor an employee of the state or a political subdivision thereof.
The principles enunciated and applied in the decision of *799 , are in our opinion controlling in the instant case, and we therefore are of the opinion and hold that the compensation received by the petitioner as referee, special guardian, and guardian ad litem is subject to Federal taxation and the respondent did not err in his determination with respect thereto.
Decision will be entered for the respondent.