Court Opinion

ID: 9638581
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:47:57.937192+00
Date Added: 2024-06-11T18:10:08.063076
License: Public Domain

L. HAND, Circuit Judge
(dissenting in part).
The statute (Revenue Act 1928, § 167, 26 U.S.C.A. § 167 note) declares that “where any part of the income of a trust may, in the discretion of the grantor of the trust, either alone or in conjunction with any person not a beneficiary of the trust, be distributed to the grantor,” it shall be taxed against him. The question is whether this language covers a case where the deed gave part of the income to the grantor outright. I cannot see that the canon of interpretation which bears against the Treasury in tax statutes should influence us; it so happens that Mr. Morris will have a deficiency to pay in this case, but it is impossible to say that either interpretation will in the end favor taxpayers; sometimes they will gain, sometimes they will not. The section means to tax against the grantor everything which He has power to distribute to himself — even when he must get another’s assent. If the limitations of this deed had read that the profits of the trust should be distributed to the grantor “in his discretion,” the tax would have been good without question. Yet those words would not have limited his power in the least; when no other person’s assent is necessary, they only mean that he will have the property if he decides to take it; and that is equally a condition upon an outright gift. It is true that the law recognizes differences between title and a general, beneficial power, but always in favor *965of title, which is regarded as more comprehensive dominion, though really it is not. But here the statute extends the grantor’s liability to such powers, and yet we exclude title, the completest of all powers; we insist upon an oasis of immunity far back of the border. I do not even see that we can rest upon literal adherence to the text; the section does not suggest that “discretion” must appear in the deed; it speaks of the, effect of the limitations, not of their form. I dissent upon the second point.