Case Name: Iola Wise Stetson, Petitioner, v. Commissioner of Internal Revenue, Respondent
Court: United States Board of Tax Appeals
Jurisdiction: United States
Decision Date: 1932-11-29
Citations: 27 B.T.A. 173
Docket Number: Docket No. 41743
Parties: Iola Wise Stetson, Petitioner, v. Commissioner of Internal Revenue, Respondent.
Judges: SteRNíiageN, Love, and Goodeigh agree with this concurring opinion.
Reporter: Reports of the United States Board of Tax Appeals
Volume: 27
Pages: 173–176

Head Matter:
Iola Wise Stetson, Petitioner, v. Commissioner of Internal Revenue, Respondent.
Docket No. 41743.
Promulgated November 29, 1932.
George S. Jones, Esq., Fred L. Van Dolsen, Esq., and Scott Russell, Esq., for the petitioner.
S. B. Anderson, Esq., for the respondent.

Opinion:
OPINION.
Seawell:
A report in this proceeding was promulgated on June 13,1932, (26 B. T. A. 390) and a decision therein, in conformity with the principles and reasoning enunciated in the case of Emma Louise Smith, 23 B. T. A. 631, was on June 14, 1932, entered in favor of the respondent.
On June 30, 1932, the petitioner filed a motion that the findings of fact and opinion promulgated as stated be reviewed by the entire Board for reasons set forth in the motion, which motion was on July 1, 1932, denied.
On May 31, 1932, the Circuit Court of Appeals for the First Circuit (59 Fed. (2d) 56) reversed the decision of the Board in the Smith case, supra. Based on this decision of the Circuit Court of Appeals, which was not available to us prior to the promulgation of our report, the petitioner in due season filed a motion with the Board to reconsider our report, which motion was heard September 29,1932.
In rendering its opinion reversing the Smith case, supra, the Circuit Court of Appeals said:
It would seem that Congress did not intend, by the use of the term " beneficiary " in Section 219 (g) only a beneficiary having a present vested interest, but intended to include within that term a beneficiary or beneficiaries having contingent interests as well as those having present or vested ones.
Undoubtedly Congress could have drawn a line between beneficiaries holding vested and contingent interests, or between those having contingent interests based on their respective degrees of remoteness, but it has done neither of these things. It is, therefore, far more reasonable to conclude that by the word " beneficiary " Congress intended to include persons or classes of persons designated, in the particular trust under consideration, entitled to take present or contingent interests thereunder.
In the Smith case, supra, the Board took the view that the word " beneficiary " in section 219 (g) of the Bevenue Acts of 1924 and 1926 has reference " to a present beneficiary of a trust, not to one who has only a remote possibility of becoming a beneficiary in the future," and because the likelihood of her husband ever taking a vested interest under the trust was remote, he was not a beneficiary in the sense of the statute.
We have fully and carefully considered the motion of the petitioner made herein and argument thereon, and the decision of the Circuit Court of Appeals in the Smith case, as well as our own report in the case of Joseph H. Bromley, 26 B. T. A. 878, in which reference is made to the Smith case, and conclude that the word "beneficiary," within the meaning of section 219 (g) of the Bevenue Acts of 1924 and 1926, includes one having either a present vested interest or a contingent interest under a trust of the character here involved. Cf. Reinecke v. Smith, 61 Fed. (2d) 324. We are of the opinion, therefore, and so hold, that the petitioner's husband, under the trust made by her, is a contingent beneficiary within the meaning of said section 219 (g), and hence said trust is, in the sense of the law, irrevocable and the income here in question from such trust is taxable equally to petitioner and her four stepchildren. The motion of the petitioner herein is accordingly granted, our decision heretofore entered vacated, and set aside, and our promulgated determination overruled.
Reviewed by the Board.
Judgment will be entered under Bule 50.