Court Opinion

ID: 9638303
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:40:11.726253+00
Date Added: 2024-06-11T18:10:05.425612
License: Public Domain

MARTIN, Circuit Judge
(dissenting).
I do not concur in this reversal of the decision of the Board of Tax Appeals (now the Tax Court of the United States) with respect to the deficiency assessment against the trustor under Sec. 22(a) of the Revenue Act upon the income of the three “Central Trusts."
As pointed :out by the tax tribunal, the trusts were short term trusts; the beneficiaries were the trustor’s children and therefore members of his intimate family group; reversionary interests were reserved by the trustor; and the right to advise the trustee concerning sales and investments of the trust property was coupled with the right to substitute another trustee. These elements ' were deemed sufficient to bring the case within the sweep of Helvering v. Clifford, 309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788. The Tax Court reasoned, moreover, that the trustee would be induced to adopt the advice of the grantor, inasmuch as, in doing so, it would be relieved of liability, except for neglect or wilful default; while, if it refused, the trustee could be supplanted by another, appointed by the grantor, and would be deprived thereby of commissions to the extent of at least 2% percent of the gross income of the trust.
The Tax Court found, as a fact, and held that during the taxable period in question, the grantor of the trust had retained an interest in the corpus of each trust substantially equivalent to continuing ownership for tax purposes. I think the reasoning of the Tax Court sound, and its decision correct.
In my judgment, the opinion in the present case departs from the rationale of several of our previous decisions since the promulgation of the doctrine of Helvering v. Clifford, supra. Our opinions interpreting this doctrine are collated up to February 19, 1943, in the per curiam opinion in Downie v. Commissioner of Internal Revenue, 6 Cir., 133 F.2d 899. In Price v. Commissioner of Internal Revenue, 6 Cir., 132 F.2d 95, 97, we said: “Under the doctrine of Helvering v. Clifford, supra, the income from a short-term trust is taxable to the settlor, where he retains the right to reversion of the corpus and where the income from the property placed in trust is retained ‘within an intimate family group,’ * * * even though the settlor fails to retain the right to remove or replace the trustee, to direct investments, or to revoke the trust prior to its fixed short-term termination.”
Earlier, the court had said in Commissioner of Internal Revenue v. Goulder, 6 Cir., 123 F.2d 686, 688: “The court in the *357Clifford case cast aside all technical considerations and the legal implications growing out of trust relations and brought within the ambit of Section 22(a) all income to a settlor of a trust where the trust was created to serve as a means for the transference of future income of the settlor to benefit his immediate relatives, and where the corpus and income were but temporarily-removed from his ownership.” Other expressions of similar import may be found in our opinions.
While the grounds stated are those upon which I rest my dissent, I think that the decision of the Supreme Court, in Dobson v. Commissioner, 64 S.Ct. 239, 246, indicates quite clearly that a Tax Court decision of the present character should be affirmed; for it could hardly be gainsaid that its decision in the instant controversy “[has] warrant in the record” and “a reasonable basis in the law.”