Respondent's regulations (as amended) pursuant to the above legislation read in part as follows:

26 T.C. 694">*698 Regulations 105:

Sec. 81.24. Property Subject to Power of Appointment by Decedent. -- (a) General. * * *

(2) Power of appointment. -- The term "power of appointment" includes all powers which are in substance and effect powers of appointment regardless of the nomenclature used in creating the power and regardless of local property law connotations. For example, if a transfer in trust provides that the beneficiary1956 U.S. Tax Ct. LEXIS 141">*149 may appropriate or consume the principal of the trust, such power to consume or appropriate is a power of appointment. * * *

(3) General power of appointment. -- For purposes of this section, the term "general power of appointment", except as limited in paragraph (b), means any power of appointment exercisable in favor of the decedent, his estate, his creditors, or the creditors of his estate. * * *

A power to consume, invade, or appropriate property for the benefit of the decedent which is limited by an ascertainable standard * * * shall not be deemed a general power of appointment. * * * A power to consume, invade, or appropriate property for comfort, pleasure, desire, or happiness, is not a power limited by an ascertainable standard. [Italics supplied.]

With respect to section 812 (e) (1) (F), the applicable regulations, as amended, provide in part as follows:

Regulations 105:

Sec. 81.47a. Bequests, Etc., to Surviving Spouse. --

* * * *

(c) Trust with power of appointment in surviving spouse. -- * * *

[The regulations set forth at this point certain conditions, five in number, prerequisite to the applicability of subparagraph (F). They are (1) the surviving1956 U.S. Tax Ct. LEXIS 141">*150 spouse must be entitled to all income of the trust corpus for life; (2) such income must be payable at annual or more frequent intervals; (3) the spouse must have the power to appoint the entire corpus free of the trust, exercisable in her own favor or that of her estate; (4) the power must be exercisable by her alone, and in all events; and (5) such power must not be subject to a power in any other person to appoint any part of the corpus of the trust to anyone other than such surviving spouse.]

In order to satisfy conditions (3) and (4), the power of the surviving spouse * * * must fall within one of the following categories:

(i) a power so to appoint fully exercisable in her own favor at any time following the decedent's death (as, for example, an unlimited power to invade). [Italics supplied.]

Petitioners urge that the value of any part of the trust corpus unconsumed at the death of the widow in the instant case would, under the applicable statutes and regulations, be includible as a part of her estate for purposes of the estate tax. Respondent does not meet petitioners' contention on this point, and we think that petitioners are clearly correct therein. The power 1956 U.S. Tax Ct. LEXIS 141">*151 to invade corpus given to the wife by the will of her husband is not limited by any ascertainable standard. The will provides simply that should the wife "require" any amount in excess of $ 5,000 a year, "she, and she alone" should be the judge of how much should be required, and the same should be paid over to her monthly. We interpret these provisions as giving the wife an unlimited power to consume the corpus.

26 T.C. 694">*699 The above-quoted excerpts from the committee report convince us that it was the intent of Congress to permit the deduction sought in just such cases as the one before us. The language of the applicable statute is consistent with such intent, and the regulations under section 812 (e) (1) (F) expressly set forth as an example of a power coming within its meaning an unlimited power to invade corpus. Further, the respondent has recently ruled, in a case which in our view closely parallels the one now before us, that the unconsumed principal of the trust is part of the taxable estate of the surviving spouse, and that the value of such bequest as of the date of its creation qualifies for the marital deduction. Rev. Rul. 518, 1955-2 C. B. 384.1956 U.S. Tax Ct. LEXIS 141">*152

Cases cited by the respondent are distinguishable. In Estate of Louis B. Hoffenberg, 22 T.C. 1185, affirmed 223 F.2d 470 (C. A. 2), we held that a devise failed to qualify for the marital deduction where the power given to the widow applied to only two-thirds of the principal, whereas section 812 (e) (1) (F) requires that the power extend to the "entire corpus." Cf. sec. 2056 (b) (5), I. R. C. 1954. Estate of Arthur Sweet, 24 T.C. 488, appeal pending (C. A. 10), and Harrison P. Shedd, 23 T.C. 41, appeal pending (C. A. 9), are distinguishable for similar reasons. In addition, the surviving spouse in the Shedd case was entitled to only two-thirds of the income during her lifetime. In Estate of Edward F. Pipe, 23 T.C. 99, appeal pending (C. A. 2), and Estate of Michael Melamid, 22 T.C. 966, the devises were direct, and not in trust, of legal life estates to the surviving widows. Section 812 (e) (1) (F) is clearly limited to trusts. Cf. sec. 2056 (b) (5), I. R. C. 1954. In Melamid1956 U.S. Tax Ct. LEXIS 141">*153 there was also an ascertainable standard limiting the extent to which the widow might invade principal. The question as to whether subparagraph (F) might apply does not appear to have been raised. In any event, it was clear that it could not. In Pipe the petitioner attempted to show that there was a trust, on the theory that in New York the legal life tenant is designated as a "trustee" of the remainderman's interest. The widow, however, had a power to consume principal, and it was held, without actually passing upon petitioner's contention that a trust existed, that even if there were such a trust, it would apply only to principal remaining unconsumed at the death of the life tenant, and that the principal of such "trust" is too indefinite to permit us to assign any value thereto for purposes of the marital deduction.

In Starrett v. Commissioner, 223 F.2d 163 (C. A. 1), the power of the widow to invade corpus was by express provision to cease if she became legally incapacitated or if any sort of custodianship were appointed over her or her estate. The Court of Appeals held, in affirming our decision in Estate of Frank E. Tingley, 22 T.C. 402,1956 U.S. Tax Ct. LEXIS 141">*154 that as a result of the provisions terminating the power on such contingencies it was not exercisable "in all events." The affirming opinion 26 T.C. 694">*700 in the Starrett case also seems to suggest that where the testator, as far as he can, has given the surviving spouse an unlimited power, possible limitations upon such power arising only by operation of local law should not prevent the bequest from being held sufficient for purposes of section 812 (e) (1) (F). In that case, however, the decedent himself had seen fit to impose limitations in addition to those imposed by operation of law. Cf. 223 F. 2d at p. 167. Indeed, respondent himself seems to have recognized the distinction in Rev. Rul. 518, supra, in which he cites the Tingley case.

Our decision in Estate of Theodore Geddings Tarver, 26 T.C. 490, is distinguishable. There, the power to consume principal of a trust governed by South Carolina law, was interpreted, in the light of the instrument as a whole, as being subject to certain limitations. We do not so interpret the will in the present case, particularly in 1956 U.S. Tax Ct. LEXIS 141">*155 the light of the decisions of the Pennsylvania courts in respect of such powers. Under Pennsylvania law the only duty on the part of Mrs. Ellis in exercising her power is to exercise it "honestly." Cf. In re Tyson's Estate, 191 Pa. 218">191 Pa. 218, 43 A. 131; In re Davis' Estate, 72 Pa. Super. 332. This "restriction" is, however, more apparent than real. It does not limit her spending or restrict her to any objective standard of living, but means only that the widow may not so deal with the property as to leave it unconsumed and yet prevent it from passing to those chosen by the testator to receive any such unconsumed remainder. This is no restriction on the right to consume, but merely a reminder that it is a power to consume, and not to preserve, and then devise or donate the corpus. Cf. In re Brennan's Estate, 324 Pa. 410">324 Pa. 410, 324 Pa. 410">416, 188 A. 160, 162; Degenkolv v. Daube, 143 Pa. Super. 579, 18 A.2d 464.

In 191 Pa. 218">In re Tyson's Estate, supra, the court said (191 Pa. 218">191 Pa. at p. 226, 43 Atl. at p. 133):

1956 U.S. Tax Ct. LEXIS 141">*156 The extent of the widow's consumption of the estate was within her own control. Her decision was without appeal, but it must have been honestly reached in accordance with the purpose the testator intended, and not merely colorably to defeat his will. She had power to carry out his intentions by sale, transfer and consumption of the proceeds in such a way as to leave nothing at his death. But a transfer with intent not to consume * * * but to preserve for others * * * and change the beneficiaries after her * * * to others of her own selection would be a fraud on the testator and his will. * * *

This rule applies to every such power to invade or consume the principal, however broad. If its operation is to prevent a power subject thereto from being "unlimited" we must, in effect, hold that in Pennsylvania it is impossible to form a trust subject to a power to consume corpus which may qualify for the marital deduction under section 812 (e) (1) (F). This we are not prepared to do.

An unlimited power to consume principal of a trust satisfies the test of a power of appointment under section 812 (e) (1) (F). We 26 T.C. 694">*701 can find nothing either in the will or in applicable local 1956 U.S. Tax Ct. LEXIS 141">*157 law limiting the discretion of Mrs. Ellis, and we shall not supply one by conjecture. We are satisfied that she had an unlimited power to invade and consume principal to the extent, if she in her uncontrolled discretion so desired, of exhausting the trust corpus and thereby destroying the remainders over. Cf. In re Rumsey's Estate, 287 Pa. 448">287 Pa. 448, 135 A. 119; In re Arrott's Estate, 36 D. & C. 546.

For the foregoing reasons, we conclude that respondent erred in disallowing the marital deduction. Subject to the limitation set forth in section 812 (e) (1) (H), petitioners must prevail here.

The only remaining issue, not settled by the stipulation, relates to a deduction for legal expenses in resisting the deficiency. The Commissioner allowed a deduction in the amount of $ 1,000. The stipulation provides that "Subject to producing evidence that additional counsel fees and expenses have been incurred in resisting the imposition of the aforesaid deficiency, petitioners are also entitled to a deduction in such amount from total gross estate." The parties may, under Rule 50, reach an agreement as to such additional1956 U.S. Tax Ct. LEXIS 141">*158 amount, if any. If they should fail so to agree, the matter may be disposed of under Rule 51.

Decision will be entered under Rule 50.