1941 BTA LEXIS 1317 | B.T.A. | 1941
Lead Opinion
The single petitioner contends that the income of the trust may properly be divided into four parts and taxed accordingly on one of two alternative theories. It does not contend that this result should be reached under sections 161 and 162, Revenue Act of 1934, or that the four respective beneficiaries should pay the tax as upon income either distributed or currently distributable to them within the provisions of those sections. Apparently conceding that such a theory is not applicable because the income was accumulated pursuant to a discretion of the trustee, petitioner contends either that the beneficiaries were the grantors and that under sections 166, 167, or 22 (a) the trust income was taxable to them in the proportion that each of them created the trust; or, in the alternative, that petitioner, instead of being a single trust, is four trusts each of which should have filed
The first alternative urged refreshingly illustrates the impossibility of exhausting the novelty and variety of the law. That a taxpayer should invoke for his purposes the provisions of sections 166 and 167, safeguards created by Congress exclusively for the respondent’s comfort, see e. g. report of (1924) Senate Finance Committee, 68th Cong., 1st sess., S. Rept. No. 398, p. 25; C. B. 1939-1 (Part 2), p. 283; or of section 22 (a) on a theory similarly applied judicially to protect the revenue, see Helvering v. Clifford, 309 U. S. 331, affords merely another illustration of the wisdom of such proverbs as refer to the “ill wind” or “one man’s meat.”
However, ingenious and arresting as may be the concept, we can not agree that petitioner has here discovered the instrument for its application. What the theory requires at least is identity between beneficiaries and grantors. But the beneficiaries at no time obtained, with respect to corpus or income, any vestige of that legal title which would have enabled them to act as grantors in the sense that they had freedom of choice to create the trust or withhold it.
We find no error in respondent’s treatment.
Reviewed by the Board.
Decision will be entered for the respondent.
One of the father’s confidential advisers testified: * * I do know this : That Mr. MacManus would not have changed the beneficiary to John unless John had agreed to do as he stated in his declaration. * * *”
Emphasis added.