Petitioner, the executor of the estate of the deceased taxpayer, seeks to take advantage of the provisions of Section 112(f) of the Internal Revenue Code.1 That section provides, so far as is relevant here, that no gain shall be recognized if property, as a result of an exercise of the power of condemnation, is involuntarily converted into money which is forthwith in good faith, under the Commissioner's regulations, expended in the acquisition of similar property. The Commissioner's ruling, sustained by the Tax Court,2 was that the reinvestment requirements of the section are satisfied only if carried out in the taxpayer's lifetime and that reinvestment by the executor of the estate of a deceased taxpayer, although satisfying all other requirements of the section, is not enough to enable the estate to claim the statutory benefit.

The stipulation of facts was adopted by the Tax Court, and the following brief statement is sufficient for an understanding of the problem presented.

Isaac Goodman, the decedent, owned an undivided one-half interest in a building in Philadelphia. The Commonwealth of Pennsylvania condemned the greater part of the building, and he received his share of the condemnation award on October 18, 1944. He died two days later, only a part of the award having been expended in the acquisition of property similar to that condemned. His executor continued the acquisition of such property and within sixteen months had exhausted the award. Although a substantial gain was realized from the award, in making decedent's final income tax return, the executor did not report that gain, justifying the omission by reliance on Section 112(f). The Commissioner's determination of a deficiency was upheld by the Tax Court, and this petition for review followed.

It is conceded that all but one of the statutory requirements have been satisfied.3 Thus, the only question is the novel and very narrow one of whether the statutory right to postpone recognition of gain dies with the taxpayer. We hold that it does not.

Our reading of Section 112(f) convinces us that its primary concern is the fact of reinvestment in the prescribed manner. There is not even a hint as to who must do the reinvesting. The entire section is stated in the passive voice, thus indicating that Congress was less concerned about the identity of the actor, so long as he acted on behalf of the taxpayer, than it was about whether he acted in the statutory fashion. We are not persuaded, therefore, that a literal interpretation of the section supports the Commissioner's position. In reply, the Commissioner points to Treasury Regulation 111, Section 29.112(f) (1) and (2)4 as the basis for the contention that reinvestment must be made during the taxpayer's lifetime. The argument is that the frequent repetition of the word "taxpayer" in the regulation shows that the benefits of Section 112(f) are available only if the required acts are performed during his lifetime. We cannot accept such a narrow interpretation of the word "taxpayer." As a matter of semantics, it would be difficult to talk for very long about paying taxes, and still make sense, without here and there using the word "taxpayer." Even the Commissioner admits that the word is sufficiently broad to permit the taxpayer's agent to perform the reinvestment duties.5 Petitioner further answers this argument of the Commissioner by showing the rather absurd result of its literal application. The regulations set out the many proofs which the taxpayer must establish to bring himself within Section 112(f). Suppose a taxpayer reinvests the proceeds of a condemnation award in compliance with the section, and then he dies before he, himself, can make the proofs. Surely, in that case, his estate would not be denied relief. Another instance may be cited to show the error of the Commissioner's position. Section 112(f) allows nonrecognition of the gain if the award is put into a replacement fund and later used in acquiring property similar to that condemned. The regulations require that the taxpayer obtain the Commissioner's permission to establish a replacement fund, and the application for permission must contain a declaration that the taxpayer will proceed as expeditiously as possible to replace the property condemned. Suppose the requisite permission is obtained, but, before the replacement fund can be expended, the taxpayer dies. We doubt that the Commissioner, faced with those facts, would seriously stand on the contention advanced here, that the executor could not make the reinvestment. We think that a fair reading of Section 112(f) allows postponement of recognition of the gain even though the reinvestment is made by the executor after the taxpayer's death, assuming, of course, satisfaction of all other requirements. Having so construed the section, we would be forced to declare the regulations invalid if they attempted to deny that right. We need not decide that question, however, for we are of the opinion that the regulations may be construed as being consistent with Section 112(f). As we have said, the recurring use of the word "taxpayer" in the regulations need not be read as meaning the taxpayer, during his lifetime. A construction more logical and more consonant with the purpose of the statute is that it means the taxpayer or one acting on his behalf, before or after his death.6

In further support of his view, the Commissioner argues that at the taxpayer's death his creditors, heirs, and legatees acquired rights in the fund used by petitioner in purchasing the property, thus showing that the right to make reinvestment ends with the taxpayer's death. The claims of creditors might be a complete bar to reinvestment when they so far consume the estate that there is nothing left to reinvest. But that is not this case. In any event, there is no attempt here to claim the benefit of Section 112(f) for creditors, heirs, or legatees. The taxpayer's estate is the beneficiary. Section 142(a) (2) of the Internal Revenue Code7 requires that the executor file a return for his decedent's final taxable period. We see no reason why the executor may not do what the taxpayer could have done to perfect a right which came into being in that final taxable period.

We have given careful consideration to the other points raised by the Commissioner and find them to be without merit.

For the reasons stated, the judgment of the Tax Court will be reversed.