However, by section 502 of the Revenue Act of 1950 this subsection of the Internal Revenue Code was repealed. The report of the Senate Finance Committee with regard to the Revenue Act of 1950, dated August 22, 1950 (S. Rept. No. 2375, 81st Cong., 2d Sess., 1950-2 C. B. 483, 525), gives the following explanation of this action:

Section 812 (b) of the Code allows the gross estate of a decedent to be reduced for estate tax purposes by amounts "reasonably required and actually expended" for the support of the decedent's dependents during settlement of the estate to the extent that such expenses are allowed by State law. This deduction is inconsistent with the concept of the estate tax as a tax on all properties transferred at death. In practice it has discriminated in favor of estates located in States which authorize1958 U.S. Tax Ct. LEXIS 137">*144 liberal allowances for the support of dependents, and it has probably also tended to delay the settlement of estates.

Section 502 of your committee's bill repeals this particular feature of the estate tax law. This amendment will apply with respect to estates of decedents dying after the date of enactment of this bill.

It is estimated that this action will increase the revenues by about $ 3,000,000 annually.

The report of the Ways and Means Committee of the House of Representatives with regard to this Revenue Act, dated June 23, 1950 (H. Rept. No. 2319, 81st Cong., 2d Sess., 1950-2 C. B. 380, 478), gives the following explanation:

This section amends section 812 (b) of the Code (relating to deductions from gross estate of a decedent) to eliminate, effective with respect to estates of decedents dying after the date of enactment of the bill, the deduction for amounts expended for the support, during the settlement of the estate, of dependents of the decedent.

Under existing law amounts expended in accordance with the local law for support of the surviving spouse of the decedent are, by reason of their deductibility under section 812 (b), not allowable as 1958 U.S. Tax Ct. LEXIS 137">*145 a marital deduction under section 812 (e) of the Code. However, as a result of the amendment made by this section, such amounts heretofore deductible under section 812 (b) will be allowable as a marital deduction subject to the conditions and limitations of section 812 (e).

Petitioner, being foreclosed by the Revenue Act of 1950 from deducting this payment to the widow as a part of "Expenses, Losses, Indebtedness and Taxes" deductible under section 812 (b), seeks to deduct it under section 812 (e) (1) providing for the deduction of "Allowance of Marital Deduction."

The narrow question then is whether the widow's allowance is an interest which will "terminate or fail." The nature of the allowance depends upon State law. See Rensenhouse, supra, and Estate of Harriet C. Evilsizor, 27 T.C. 710.

30 T.C. 812">*816 The applicable sections of the California Probate Code follow:

Sec. 680. (Right to allowance: Who entitled: Necessity: Duration: Preference: Time of taking effect.) The widow, widower and minor children are entitled to such reasonable allowance out of the estate as shall be necessary for their maintenance according to their1958 U.S. Tax Ct. LEXIS 137">*146 circumstances, during the progress of the settlement of the estate, which in the case of an insolvent estate, must not continue longer than one year after granting letters. Such allowance must be paid in preference to all other charges, except funeral charges, expenses of the last illness and expenses of administration, and may, in the discretion of the court or judge granting it, take effect from the death of the decedent.

Sec. 681. When may be granted: (Power of court: Granting prior to inventory: Subsequent granting or modification: Hearing: Notice.) Such allowance may be granted before the inventory is filed, either by the court or a judge thereof; in which case it shall continue until modified by the court. After the inventory is filed the court may grant such allowance, or may modify any allowance made before the filing of the inventory, upon the petition of any person interested and a hearing after notice given for the period and in the manner required by section 1200 of this code.

Sec. 682. (Where parties have other support: Need for allowance as affecting granting thereof.) If the widow, widower, or any minor child has a reasonable maintenance derived from other property, 1958 U.S. Tax Ct. LEXIS 137">*147 and there are other persons entitled to a family allowance, the allowance shall be granted only to those who have not such maintenance.

The Commissioner acknowledges that if under the applicable State statutes the widow's allowance is a vested right of property which is not divested by her death or other contingency so that any unpaid part would become an asset of her estate, the interest would be properly deductible in computing the marital deduction. Rev. Rul. 53-83, 1953-1 C. B. 395. But he points out that the California courts have held that the widow's allowance terminates or abates upon her death or remarriage and petitioner concedes this to be the effect of In re Blair's Estate, 42 Cal. 2d 728">42 Cal. 2d 728, 269 P.2d 612. We so read that case.

Petitioner seems to argue, however, that in this case the allowance was a vested interest and since the estate has been settled and the allowance has all been paid, there is no interest which would terminate or abate. We think that this approach would be tantamount to interpreting the applicable sections of the Internal Revenue Code by hindsight, by waiting to1958 U.S. Tax Ct. LEXIS 137">*148 see what happens in a particular case, and that this is not proper. Rather, we think, we must examine the widow's interest at the time that interest arose to determine whether it is terminable and that is at the time the Probate Court entered its order granting the allowance. At that time the right, as we see it, was subject to termination in the event of her death or remarriage and so was a terminable interest in property passing to the widow from her husband. The allowance was thus an interest for which, in the words of section 812 (e) (1), "no deduction shall be allowed." We uphold the Commissioner's action.

Decision will be entered for the respondent.