Scott, Robert H., Jr.

English

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BOOK REVIEWFEDERAL INCOME TAXATION OF ESTATES AND BENEFICIARIES. By M.Carr Ferguson, James G. Freeland & Richard B. Stephens. Boston:Little, Brown and Company, 1970. Pp. 749. 1971 Supplement. Pp. 67.As its length indicates, Federal Income Taxation of Estates andBeneficiaries is a technical, in-depth treatment of a very narrow areaof tax law. Fortunately, the authors chose to ignore taxation of trustsand trust beneficiaries, and to deal exclusively with the taxation ofestates. Thus, they avoided the very thorny tax problems created bythe Tax Reform Act of 1969, such as the trust throwback rules andthe problems of charitable remainder trusts. The authors have, fur-thermore, narrowed their scope to include only income taxation, andhave not attempted to deal with estate or inheritance taxes paid byestates, thus avoiding yet another set of problems. As a result, the TaxReform Act left the authors' work virtually unscathed.The text, hardbound, is to be supplemented annually-not bypocket part, but by separate pamphlet. This is unfortunate, since thetext and supplement can become easily separated. Ample footnoteswill be of assistance to many tax practitioners seeking authority.Judges and other law interpreters will find the discussions of theoryand purpose helpful as well. Excellent tables of cases, regulations andstatutory materials, as well as a detailed subject index, greatly en-hance the value of the text.The text is current to September 1, 1968. The 1971 Supplementis in large print and consists of only 67 pages, indicating that this areaof tax law is evolving slowly and that this text will be of value formany years to come-a factor for those weary of purchasing textsvirtually out of date by press time.Turning to the text itself, the authors have chosen to discuss theirsubject chronologically through the life of an estate. This is accom-plished in nine chapters, beginning with Chapter 1, "The Income TaxMeaning of Estates," and ending with Chapter 9, "The Executor'sPersonal Liability for Federal Taxes of the Decedent and his Estate,"which is sure to chill the marrow of even the most intrepid lawyer-executor, and send him checking both his insurance and procedures.As for his procedures, Messrs. Ferguson, Freeland and Stephens ren-der able assistance with several suggestions on how to minimize, shift1253DUKE LAW JOURNALor terminate the financial threat to the fiduciary. These include arequest for prompt assessment under IRC section 6501(d), writtenapplication for discharge under IRC section 2204, and indemnifica-tion by distributees. The more experienced executor will find nothingnew here, but the less experienced should find the suggestions enlight-ening.In between the first and last chapters the authors discuss the effectof local law on estate cases (Chapter 2), the tax liability for the yearof death (Chapter 3), and income in respect of a decedent (Chapter4). Chapter 4 also deals admirably with the "gray area" when makingthe difficult and often important transition from income of a decedentto income of the estate. Separate chapters are devoted to distributablenet income (Chapter 5) and the charitable deduction (Chapter 6).The longest chapter in the book is Chapter 7, entitled "Distribu-tions," which deals with the transition from income of the estate toincome of the distributees. The authors have endeavored in this chap-ter to simplify the task of determining that portion of a distributionwhich is taxable and that portion which is not. In general, they havesucceeded. Part of their success is due to the authors' election to usepictorial "slang"-that is, "first tier" distributions-as a substitutefor the incredibly dry, mind-twisting verbiage of the Code. Footnoteshelp to tie the authors' "slang" translation to the Code sections andregulations involved, and permit the reader to check the authors'interpretation. Sensible and realistic examples punctuate the explana-tion, as do occasional references to legislative history. The authors arequite successful in their effort to light the path through the many stepstoward determining each beneficiary's taxable portion of a distribu-tion.The next to the last chapter in the book discusses estate termina-tion (Chapter 8). This is a short, but important chapter, designed toaid in making those all important-that is, tax-saving-decisions onwhen and how to make the final distribution.The text is quite well written, incredibly so for a law text and evenmore incredibly, for a tax law text. In short, it is readable. In thisregard, it is reminiscent of Bittker & Eustice, Federal Income Taxa-tion of Corporations and Shareholders, which, in the reviewer's opin-ion, is as readable a text on tax law as there is.On balance, this one volume work will be a welcome and valuableaddition to the libraries of tax practitioners, judges, government em-ployees, trust officers and others who work with taxation of estates.Robert H. Scott, Jr.* Member, Missouri Bar. A.B. Kenyon College 1963; J.D. Duke University 1966.[Vol. 1971:12531254

Federal Income Taxation of Estates and Beneficiaries. By M. Carr Ferguson, James G. Freeland, Richard B. Stephens

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Federal Income Taxation of Estates and Beneficiaries. By M. Carr Ferguson, James G. Freeland, Richard B. Stephens

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