Court Opinion

ID: 9636383
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:26:21.29814+00
Date Added: 2024-06-11T18:09:44.896883
License: Public Domain

McCORD, Circuit Judge
(dissenting).
Although the creation of the trust and partnership was legal in form, I am of opinion that there was but a re-shuffling of the family property for the purpose of reallocating family income to avoid federal tax consequences. The creation of the trust and limited partnership was part of a plan of taxpayers by which they sought *490through a multiplication of devices which, though valid under state law as between the parties, lacked substance for federal tax purposes. Certainly, the minor children contributed nothing to the management of the limited partnership. J. Feldman continued to be the dominant and driving force in the business just as he had been while the corporation was in existence. He was in fact the earner and producer of the income. Moreover, he was able to use the capital and income from the business as he had previously done; he could invest and use the property as he saw fit in running the business.
The trial court found the facts for taxpayers, but I feel as did Mr. Justice Rutledge in the Tower3 and Lusthaus4 cases that facts such as those in this record demand a finding of tax liability.
I respectfully dissent.

 Commissioner v. Tower, 66 S.Ct 532.

 Lusthaus v. Commissioner, 66 S.Ct. 539.