Source: https://www.legalcrystal.com/case/95705/helvering-vs-butterworth
Timestamp: 2017-06-27 13:28:42
Document Index: 779969467

Matched Legal Cases: ['§ 219', '§ 161', '§ 219', '§ 219', '§ 960', '§ 219']

Helvering Vs Butterworth - Citation 95705 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize Helvering Vs. Butterworth - Court Judgment	LegalCrystal Citationlegalcrystal.com/95705CourtUS Supreme CourtDecided OnDec-11-1933Case Number290 U.S. 365AppellantHelveringRespondentButterworthExcerpt:.....purpose of
the congress to tax in some way the whole income of trust estates, and it was not intended that any income from a trust should escape taxation unless definitely exempted. p.
290 u. s. 360
2. a widow who elects to take under her husband's will, and receives part or all of the income from an established trust in lieu of her statutory rights, is a "beneficiary" within the meaning of § 219 of the revenue acts of 1924 and 1926 and §§ 161 and 162 of the revenue act of 1928, and, in computing the net income of the trust, the amounts paid to her are deductible as income distributed to beneficiaries.
15 f.2d 367;
united states v. bolster,
26 f.2d 760, and
alen v. brandeis,
29 f.2d 363, disapproved...... Judgment:
Helvering v. Butterworth - 290 U.S. 365 (1933)
29 F.2d 363, disapproved. P.
3. In computing the net income of an estate or trust under the Revenue Acts of 1924 and 1926, annuity payments made to a widow who elected to take under her husband's will in lieu of her statutory rights, the annuity being a charge upon the estate as a whole and not necessarily dependent upon income, are not deductible under § 219 as income distributed to a beneficiary.
Burnet v. Whitehouse,
283 U. S. 148
290 U. S. 370
Writs of certiorari, 289 U.S. 722, 723, to review judgments reversing decisions of the Board of Tax Appeals (23 B.T.A. 838, 846; 25
1359) which sustained the action of the Commissioner in disallowing deductions and assessing deficiency taxes in four cases involving income taxes.
These causes demand construction and application of the provisions of § 219, Revenue Act of 1924, c. 234, 43 Stat. 253, 275 (U.S.C., Title 26, § 960), copied in the margin,
15 F.2d 367,
Allen v. Brandeis,
29 F.2d 360, the Commissioner ruled that distributions from the income of a trust estate to the widow who elected to take under the husband's will in lieu of her statutory interest were taxable to her. These cases held that, by relinquishment of her rights, she came to occupy the position of the purchaser of an annuity. They decided that payments to her were not subject to taxation until her total receipts from the trust estate amounted to the value of what she relinquished -- her alleged capital. Thereafter, in similar cases, the Commissioner refused to give credit to the trustee for such payments, and thus the present causes arose.
but in discharge of a gift or legacy. The principle applied in
* Together with No. 76,
Helvering, Commissioner v. Fidelity-Philadelphia Trust Co., Trustee,
Helvering, Commissioner v. Pardee et al., Trustees,
certiorari to the Circuit Court of Appeals for the Third Circuit, and No. 78,
Helvering, Commissioner v. Title Guarantee Loan & Trust Co., Trustee,
I agree with the opinion of the Court in Nos. 75, 76, and 78. I am unable to agree with the opinion in No. 77. In that case, the testator created a trust for the benefit of his wife, children, and grandchildren. The income of the trust, by its express terms, was to be paid to his wife to the extent of $50,000 a year. While the payment of this annual amount was also charged on the principal of the estate, resort could not be had to the principal if the income of the trust was sufficient.
Johnston's Estate,
264 Pa. 71, 76, 107 A. 335. The widow was in every sense of the word a beneficiary of the trust, and the amounts paid to her out of the income of the trust were paid to her as a beneficiary. These amounts were thus deductible by the trustees, under the express provision of § 219(b)(2) of the Revenue Act of 1924, from the gross income of the trust. As to this, I think it makes no difference whether or not the widow was taxable on the amount of the income she received. The decision of the Circuit Court of Appeals should be affirmed.