Court Opinion

ID: 9652708
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:30:47.673677+00
Date Added: 2024-06-11T18:12:53.650523
License: Public Domain

SOPER, Circuit Judge
(dissenting).
Confining the discussion, as does the court, to § 166 of the Revenue Act of 1934, I am of the opinion that the decision of the Board should be sustained.* Congress has no power and doubtless had no intention arbitrarily to add the income of one person to the income of another, and to tax the latter upon the whole; and for the purposes of this case, with § 22(a) left out, husband and wife must be considered separate and unrelated persons. Corliss v. Bowers, 281 U.S. 376, 50 S.Ct. 336, 74 L.Ed. 916, involved a trust in which the tax-payer-grantor “fully reserved the power at any moment to abolish or change the trust at his will”, and thereby retained “actual command over the property taxed — the actual benefit for which the tax is paid”. Here the income in question for the year 1934 had been irrevocably transferred to the wife, and placed entirely beyond the domination of the taxpayer. If full significance is-given to' this. controlling fact, there is no occasion to indulge in the interesting speculation as to how long the term of a trust,, subject to a future power of revocation, must be in order to obtain the protection of the Federal Constitution.

On appeal to the Board of Tax Appeals in an earlier ease involving income from the same trusts for the year 1933, the Board held, 36 B.T.A. 1222, that the income was not taxable to the grantor on the theory that he had not divested himself of control over the securities transferred to the trusts. The government acquiesced in the decision.