1. Executors, in caring for securities and investments in order
to conserve and protect the estate pending final distribution, are
not carrying on business within the meaning of §§ 23(a), 161, and
162 of the Revenue Act of 1934, whatever the size of the estate or
the number of those whose services are required in its
conservation, and fees paid to an attorney for advice on legal and
economic question arising in the course of administration of the
estate are not deductible in computing their income tax under that
Act. Pp. 313 U. S. 129
313 U. S. 132
Therefore, a finding of the Court of Claims that the executors
continued to conserve the decedent's estate as he had when he was
himself "a financier and investor" falls short of a finding that
they were entitled to a deduction accorded by Congress only to
those "carrying on . . . business."
2. This Court will not weigh the facts set out in subsidiary
finding of the Court of Claims to supply an ultimate and
determinative finding which that court failed to make, but which is
necessary to support the judgment. P. 313 U. S.
92 Ct.Cls. 44; 3 F. Supp. 81, reversed.
Certiorari, 312 U.S. 672, to review a judgment allowing a claim
for a refund of money exacted, and paid under protest, as an income
Page 313 U. S. 128
MR. JUSTICE BLACK delivered the opinion of the Court.
The question presented is whether, upon this record, the Court
of Claims [Footnote 1
committed error in concluding that respondents, as executors, were,
in computing their federal income tax, entitled to deduct expenses
properly incurred in the administration of an estate, Congress
having provided that such a deduction could be taken only by
individuals, estates, or trusts engaged in "carrying on . . .
business." Revenue Act of 1934, §§ 23(a), 161, 162. Compare
City Bank Farmers Trust Co. v. Helvering, ante,
313 U. S. 121
In computing the 1934 net income of the estate, respondents
claimed a deduction of $40,000 for fees paid to the estate's
attorney during the taxable year. The Commissioner
Page 313 U. S. 129
of Internal Revenue disallowed the deduction; the respondents
paid under protest, and filed suit for refund in the Court of
Claims. Their complaint alleged that
"The payment of attorney's fees and the claim for allowance
thereof as a deduction from gross income is predicated upon the
contention that the tremendous size of the corpus of the estate and
the proper administration thereof constituted the operation of a
business, and the employment of an attorney as counsel to guide the
executors in the handling of the affairs of the estate was just as
much a necessary expense of the estate as is incurred in the
operation of any commercial business engaged in the manufacturing
or selling of commodities."
The court made detailed findings of fact, and, as its single
conclusion of law, stated that the respondents should recover.
We recently stated, in Higgins v. Commissioner,
312 U. S. 212
that determination of what amounts to carrying on business requires
examination of the facts in each case. In this case, the record
before us contains the findings of the Court of Claims, a
conclusion of law, and an opinion summarizing the findings of fact
and indicating the reasons which prompted the court to reach its
conclusion of law. The most that can be said of the findings of
fact is that the court was of the opinion that the facts found
showed that the activities of the executors were such as to meet
certain criteria set out in the opinion as determinative of what
constituted carrying on business. For what the court found as a
fact was that the decedent, prior to his death
"was engaged in business as a financier and investor,
maintaining an office where he employed an office manager and an
average of six clerks. . . . In general, the operations of the
estate continued in substantially the same manner after the
decedent's death as before. . . ."
In addition, the court found that the attorney employed by the
"was called upon to advise them with reference to matters
Page 313 U. S. 130
both legal and economic that arose in the business activities of
the estate, with reference to federal estate and state inheritance
taxes, and also in regard to the acquisition and disposal of the
estate's securities and in regard to various matters pertaining to
companies in which the estate held investments."
But the executors might do all the things that the court found
that they did and still not be engaged in "carrying on . . .
business" within the meaning of the Revenue Act. For, as we said in
case, "[a]ll expenses of every business
transaction are not deductible. Only those are deductible which
relate to carrying on a business." Also, we there sustained a
holding that an individual who was engaged in financial and
investing activities in all ways similar to those of the decedent
and his executors in this case was not entitled to a deduction such
as that sought by respondents. Therefore, the finding of the Court
of Claims that the executors continued to conserve the decedent's
estate as he had when he was himself "a financier and investor"
falls far short of a finding that the executors were entitled to a
deduction accorded by Congress only to those "carrying on . . .
business." Failure of the Court of Claims to make a specific
finding on this ultimate and determinative issue deprives that
court's judgment of support. Under such circumstances, we are not
called upon to weigh the different facts set out in the subsidiary
findings in order to determine whether or not they would support a
conclusion that the executors were "carrying on . . . business"
within the meaning of the statute. [Footnote 2
When we turn to the opinion of the Court of Claims, [Footnote 3
] it is made clear that
absence of such a specific finding
Page 313 U. S. 131
was the result of the court's adoption of criteria of "carrying
on . . . business" inconsistent with our holding in the
case. Since the judgment must be vacated because
not supported by adequate findings, it is appropriate that we point
out this inconsistency. Accepting as true the statement of the
Court of Claims that a broad definition of "business" might be that
it is "whatever engages the time, attention, and labor of men in
order to conserve what they have or to avoid loss," it does not
follow at all that this is synonymous with the statutory language,
"carrying on . . . business." This definition of "business" stems
in part from the case of Flint v. Stone Tracy Co.,
220 U. S. 107
220 U. S. 171
upon which the Court of Claims relied. But, however applicable that
definition may have been to the case there under consideration, it
cannot be accepted as a guide in the present case. The reasons why
it is not applicable to the statutory provision now under
consideration were given in our opinion in the Higgins
case; its nonapplicability to specific situations has also been
explained in a number of other opinions of this Court. [Footnote 4
Nor can the judgment of the Court of Claims be supported by that
court's statement that the executors were engaged "in the business
of conserving the estate and protecting its income." Such
activities are the traditional duty of executors. Executors who
engage actively in trade and business are the exception, and not
the rule. Rather obviously, there could be clear cases where
executors "carry on . . . business" by continuing to operate a
store, a factory, or some other well known, well marked type of
business activity. But, in the absence of evidence showing
activities coming within the general acceptation of the concept of
carrying on a trade or business,
Page 313 U. S. 132
it cannot be said as a matter of law that an executor comes into
this category merely because he conserves the estate by marshalling
and gathering the assets as a mere conduit for ultimate
distribution. And determination of what constitutes "carrying on .
. . business" under the Revenue Act does not depend upon the size
of the estate or the number of people whose services are required
in order properly to conserve it.
The judgment of the Court of Claims is vacated, and the cause is
remanded to that court for proceedings in accordance with the views
35 F. Supp. 81.
United States v. Esnault-Pelterie, 299 U.
, 299 U. S.
Cf. Chippewa Indians v. United States, 305 U.
, 305 U. S. 481
American Propeller & Mfg. Co. v. United States,
300 U. S. 475
300 U. S.
See, e.g., Von Baumbach v. Sargent Land Co.,
242 U. S. 503
242 U. S.
-515; McCoach v. Minehill & Schuylkill Haven
R. Co., 228 U. S. 295
228 U. S. 303
Zonne v. Minneapolis Syndicate, 220 U.
, 220 U. S.