The several questions raised by the special guardian in his report herein are disposed of in the following manner: (1) The objection to payment of the income taxes for the year 1925 out of capital and not out of income is overruled. Income taxes paid on the income of an estate are properly charged against principal in so far as they are imposed upon profits made by the estate not distributed or distributable to the life beneficiary as income. (2) The contention that the exchange of all . the stock of J. B. King & Co. for stock in the two companies in question was in the nature of a sale and that the entire profits should be determined to be principal and the property of the remaindermen is overruled. The exchange was not a sale but in effect a liquidation. *297In any event in the exchanges there were included accumulated earnings or profits of J. B. King & Co. Therefore, so much of the securities of said two companies as represented earnings of J. B. King & Co. was income and goes to the life beneficiaries. (U. S. Trust Co. v. Heye, 224 N. Y. 242; Matter of Schaefer, 178 App. Div. 117; affd., 222 N. Y. 533; Matter of U. S. Trust Co., 190 App. Div. 494; affd., 229 N. Y. 598.) (3) These securities which now constitute the trust fund are non-legal investments and are held by the trustees at their own risk. They should be disposed of in the manner indicated by the court. Submit decree on notice settling the account as filed.