1934 BTA LEXIS 1201 | B.T.A. | 1934
Lead Opinion
The respondent has treated the trust income as taxable to the settlor under Kevenue Act of 1928, section 167.
While, as respondent says, the settlor, being the mother of the beneficiaries, is with the father a joint natural guardian and jointly
It is also plain that the settlor had not, during the taxable years in question, the power to revest in herself any part of the corpus, and hence, that section 166
Reviewed by the Board.
Judgment will be entered tender Rule BO.
SEC. 167. INCOME FOR BENEFIT OF GRANTOR.
Where any part of the income of a trust may, in the discretion of the grantor of the trust, either alone or ill conjunction with any person not a beneficiary of the trust, be distributed to the grantor or be held or accumulated for future distribution to him, or where any part of the income of a trust is .or may be applied to the payment of premiums upon policies of insurance on the life of the grantor (except policies of insurance irrevocably payable for the purposes and in the manner specified in section 23 (n), relating to the so-called “charitable contribution” deduction), such part of the income of ti' t trust shall be included in computing the net income of the grantor.
SEC. ICO. REVOCABLE TRUSTS.
Where the grantor of a trust has, at any time during the taxable year, either alone or in conjunction with any person not a beneficiary of the trust, the power to revest in himself title to any part of the corpus of the trust, then the income of such part of the trust for such taxable year shall be included in computing the net income of the grantor.
Concurrence Opinion
concurring: I fully approve of the above opinion except for the reference to the case of Edmund O. Schweitzer, 30 B.T.A. 155. The present case and dissenting opinion in the Schweitzer case demonstrate that the latter case was incorrectly decided. The reasoning in the Schweitzer case was contrary to the Commissioner’s rulings and regulations (C.B. 3, p. 116, S.O. 14), and to prior decisions of the Board. Irene O'D. Ferrer, 20 B.T.A. 811; S. A. Lynch, 23 B.T.A. 435; Lilian K. Blake, 23 B.T.A. 554; John H. Stevens, 24 B.T.A. 52; Francis J. Stokes, 28 B.T.A. 1243. Cf. Frank P. Welch, 12 B.T.A. 800; Sidney R. Bliss, 26 B.T.A. 962; Edson v. Lucas, 40 Fed. (2d) 398. Where the statute provides that the income of a trust is taxable to the “ beneficiaries ” the word was intended to have the meaning which it always has in the law of trusts. It does not include one only indirectly benefited from income distributed for the benefit of those named in the trust instrument. The latter are the “beneficiaries.” Cf. concurring opinion Iola Wise Stetson, 27 B.T.A. 173. The only exceptions to this rule are by specific legislative provisions. Burnet v. Wells, 289 U.S. 670; Langley v. Commissioner, 61 Fed. (2d) 796; Mabel A. Ashforth et al., Executors, 26 B.T.A. 1188. I think the Schweitzer case should be overruled.