14 T.C. 1128">*1128 Respondent determined a deficiency in the amount of $ 26,660.54 in petitioners' income tax liability for the taxable year ended December 31, 1946.

The deficiency results from respondent's inclusion in petitioners' gross income for 1946 of the sum of $ 69,375 paid to petitioners, as the 1950 U.S. Tax Ct. LEXIS 175">*176 representatives of the decedent, Sarah L. Narischkine, in full settlement of alimony arrearages due the decedent.

FINDINGS OF FACT.

Petitioners are the executors of the estate of Sarah L. Narischkine, who died on May 10, 1944. The Federal income tax return of the estate for the calendar year 1946 was filed with the collector of internal revenue for the second district of New York.

On January 4, 1932, decedent and her then husband, Dudley Olcott, entered into a separation agreement by the terms of which Olcott promised to pay to decedent $ 15,000 a year in equal monthly installments so long as she lived, the payments beginning in January, 1932. This agreement was adopted in a divorce decree of the Second Judicial District Court of Nevada on February 29, 1932, granting Olcott an absolute divorce from decedent.

Olcott made the payments provided for in the agreement of January 4, 1932, until January, 1934. Thereafter payments were made of one-half the amount of each installment, or $ 625 a month, although no agreement was entered into modifying the agreement of January 4, 1932. The decedent never waived her rights to the unpaid balance of the payments due her.

14 T.C. 1128">*1129 On April 10, 1950 U.S. Tax Ct. LEXIS 175">*177 1946, William C. Breed and Central Hanover Bank & Trust Co. of New York, New York, as duly qualified executors of the estate of the decedent, made demand upon Olcott for sums due and owing under the agreement of January 4, 1932, in the amount of $ 69,375. On April 12, 1946, Olcott paid to petitioners the sum so demanded. Petitioners reported the receipt of the $ 69,375 payment in a rider attached to the estate's income tax return for 1946 and claimed that said sum was not includible in gross income.

OPINION.

The novel, if narrow, issue for decision here is whether the estate of the deceased divorced wife must include in its gross income an amount received as arrearages of periodic alimony payments due her.

Section 126 (a) (1) (A) of the Internal Revenue Code provides:

SEC. 126. INCOME IN RESPECT OF DECEDENTS.

(a) Inclusion in Gross Income. --

(1) * * * items of gross income in respect of a decedent which are not properly includible in respect of the taxable period in which falls the date of his death or a prior period shall be included in the gross income, for the taxable year when received, of:

(A) the estate of the decedent, if the right to receive the amount is acquired by1950 U.S. Tax Ct. LEXIS 175">*178 the decedent's estate from the decedent.

There is no question but that petitioners acquired the right to receive the payments here involved from the decedent. The only question then is whether the amount so received was "an item of gross income in respect of a decedent."

Petitioners on brief have not argued the point of whether the arrearages constituted a "principal sum" or "periodic" payment. Had the deceased wife received the arrearages prior to her death, they would have constituted taxable income to her if characterized as periodic payments, but would not have been taxed to her if characterized as a lump or principal sum payment. Sec. 22 (k), I. R. C.¹ To dispel any doubts about the grounds for petitioners' claim, we sustain the respondent's position that arrearages retain their original character. Since the arrears here would have constituted periodic payments had they been paid when due, the receipt of such arrears, even though in a lump 14 T.C. 1128">*1130 or aggregate sum, must be regarded as the receipt of a periodic payment. An example in respondent's regulations ² indicates that this view has been consistently followed by the Commissioner. It finds inferential support1950 U.S. Tax Ct. LEXIS 175">*179 in the statute, which expressly declares that payments may still be periodic even though they are not made at regular intervals. Sec. 22 (k), supra. Furthermore, our own decision in Elsie B. Gale, 13 T.C. 661, on appeal to the Circuit Court of Appeals for the Second Circuit, treated increased alimony payments for prior years as periodic payments, even though the entire amount was paid in the taxable year.

1950 U.S. Tax Ct. LEXIS 175">*180 The gravamen of petitioner's argument appears to be that alimony can constitute taxable income only when it is placed in the hands of the wife or is unqualifiedly subject to her demand, and, conversely, that when alimony is received by anyone else, as by petitioners here, it constitutes nontaxable income. In support of this argument petitioners stress the word "received" in the language of section 22 (k) -- "periodic payments * * * received * * * shall be includible in the gross income of such wife * * *." (Emphasis added.) We do not agree with petitioners' narrow construction of "received." The use of "received" in the statute in our opinion includes the right to receive such payments. The legislative history of the statute bears out our interpretation:

* * * *

These amendments are intended to treat such payments as income to the spouse actually receiving or actually entitled to receive them * * *. [Emphasis added.] S. Rept. No. 1631, 77th Cong., 2d sess. (1942-2 C. B. 504, 568).

The decedent here actually received for the years 1934 until her death in 1944 $ 7,500 of the $ 15,000 annual periodic payments due her under the divorce decree. 1950 U.S. Tax Ct. LEXIS 175">*181 She had a judicially enforceable right to receive the remaining $ 7,500 per annum owing to her. Upon her failure to exercise this right, it passed at her death to her estate, the petitioners herein. Petitioners proceeded to enforce this right and collected the arrears in full in 1946. Since the receipt of the arrears would have 14 T.C. 1128">*1131 constituted taxable income had the decedent collected same immediately prior to her death, we can perceive no logical reason why the right to receive such arrears does not constitute "an item of gross income in respect of a decedent" which is properly taxable under section 126, supra, to the petitioners, who succeeded to and exercised this right. In Estate of Edgar V. O'Daniel, 10 T.C. 631; affd., 173 Fed. (2d) 966, we held that a bonus which was not determined or ascertained for a decedent until several months after his death was properly taxable, under section 126, supra, to his estate, which received the bonus. In the O'Daniel case the decedent did not even possess a legally enforceable right to receive the income in question; yet his estate's acquisition of the right1950 U.S. Tax Ct. LEXIS 175">*182 to receive such income was held properly taxable within the purpose and meaning of section 126, supra. Here the petitioners acquired from the decedent a right to receive income which was income to which the decedent possessed a judicially enforceable right.

Although the right to receive the alimony arrears was included in the decedent's gross estate for estate tax purposes, section 126 (c) (1) of the Code ³ permits a deduction from petitioners' income tax for that portion of the estate tax which is attributable to the inclusion of such right in the decedent's estate. Respondent has made allowance for this deduction in his computation of the deficiency.

1950 U.S. Tax Ct. LEXIS 175">*183 For the reasons above stated, the respondent's determination is approved.

Decision will be entered for the respondent.