Court Opinion

ID: 4614729
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:30:49.724055+00
Date Added: 2024-06-11T07:54:50.234318
License: Public Domain

Howard M. Kay, Petitioner, v. Commissioner of Internal Revenue, RespondentKay v. CommissionerDocket No. 14773United States Tax Court11 T.C. 471; 1948 U.S. Tax Ct. LEXIS 75; September 28, 1948, Promulgated *75 Decision will be entered for the respondent.  Petitioner set up two trusts, with his wife and children as beneficiaries, respectively, and himself as trustee.  Held, on the facts, that he retained such broad powers that he is taxable on the trust income, under Helvering v. Clifford, 309 U.S. 331">309 U.S. 331. James S. Y. Ivins, Esq., for the petitioner.Louis A. Boxleitner, Esq., for the respondent.  Disney, Judge.  DISNEY*472  This proceeding involves a deficiency in income and victory tax for the year 1943 in the amount of $ 36,569.15, computed by reference to the income for the years 1942 and 1943.The issues to be determined are: (1) Did the respondent err in his determination that petitioner is taxable on one-third of the income of the *76  undistributed estate of his father in the years 1942 and 1943, even though petitioner in a previous year had conveyed his anticipated interest in the estate to himself as trustee for his wife for life, with remainders to his children?  (2) Did the respondent err in his determination that petitioner is taxable on the income of three separate trusts in the year 1943, reported as distributable to him as trustee for the benefit of his children?The case was submitted on a stipulation of facts and oral and documentary evidence.  The facts as stipulated are so found.  Such part thereof as it is considered necessary to set forth are included with other facts found from evidence adduced in our findings of fact.FINDINGS OF FACT.Petitioner is an individual, residing at Youngsville, Pennsylvania.  His income tax returns for 1942 and 1943 were filed with the collector of internal revenue for the twenty-third district of Pennsylvania, at Pittsburgh.Petitioner's father, C. H. Kay, was a resident of Pennsylvania at the time of his death, November 1, 1935.  His heirs were petitioner, petitioner's stepmother, and petitioner's brother.  These three heirs were appointed administrators of the decedent's*77  estate on November 22, 1935.An inventory and appraisement of the estate was filed with the Register of Wills of Warren County, Pennsylvania, on January 31, 1936, which inventory and appraisement listed as assets of the estate the decedent's interests in the bakeries owned and operated by Anderson's Butter Krust Bakeries, the partnership in which the decedent had a one-third interest.  After decedent's death, the bakery business was continued as a partnership, with the estate of C. H. Kay being treated as having a one-third interest.  The profits of the partnership, reduced by the compensation of the two Andersons for their services, were distributed in three equal parts.  The one-third interest in the profits distributable to the estate of C. H. Kay was treated by the estate as distributable in three equal parts to petitioner, his stepmother, and his brother.On December 29, 1941, petitioner executed a trust instrument (hereinafter sometimes referred to as the wife's trust), by which he conveyed to himself, as trustee, his equitable interest in the Anderson's Butter Krust Bakeries (hereinafter sometimes referred to as the *473  bakery partnership).  The trustee was given full*78  power and authority to consent to and continue the baking business, to take part in the management, to sell or exchange any part of the business, and to take part in any merger, reorganization, extension, consolidation, or any other change in the business.  The trust instrument also contained the following:The donor hereby irrevocably conveys, transfers and assigns to the trustees all of his interest, in whatever form it may be, in and to said partnership, or partnerships, together with all income which may hereafter arise or accrue therefrom.This conveyance is made in trust, nevertheless, for the benefit of my wife, Esther Lucille Kay, during her lifetime, and, thereafter, for our descendants, and for the uses and purposes and upon the terms and conditions hereinafter described.The trust instrument made various provisions for successor trustee (or trustees), such as their removal from office.  The original trustee was not required to give bond, and was specifically excluded from the restrictions on the trustees to follow.  He was to invest and reinvest the trust fund and the character of investments made was wholly in his discretion.  He was not liable for any depreciation in*79  securities held, or for any losses, unless the losses occurred by reason of his own gross negligence or bad faith.  He was to determine whether money or property coming to his hands was principal or income.  He had authority to make advancements or to borrow money for such purposes as he deemed proper, could make notes for such purposes, and, as security therefor, could pledge or mortgage any part or all of the trust estate.  He had full power and authority to pay over to his wife (the primary beneficiary) any part of the corpus in case of sickness, educational requirement, emergency, or other needs.  The trustee was also to vote all stocks and securities.  He was to have the discretion to cause the stock and other securities held by him to be registered in the name of the trustee, or his nominee, or to keep them unregistered but in condition to pass by delivery.  The trustee could employ counsel and agents.  The trustee could distribute the principal of the trust fund in money or in kind, or partly in each, in his sole discretion.  He was to furnish, annually, the beneficiary a detailed account of his action.The donor could, at any time, add to the principal of the trust.The trust*80  instrument contained the following provisions as to disposition of income and principal.The trustee shall pay the net income from said trust to my wife, during her lifetime, at least semi-annually, and in more frequent payments provided dividends and income received permit of such a course.  In case of the illness or incapacity of said beneficiary, or other reasons which seem satsifactory [sic] to trustee, he may use and apply such income for the benefit, care, support, maintenance and advantage of my wife.  The income herein referred to shall not be *474  construed to mean or imply the entire earnings of the business in whatever form or under whatever management it is conducted, but shall mean only the amount paid over to the trustee from said business.  The trustee may consent and agree that such part of the earnings as seem proper, according to sound business practices and economic conditions, may be re-invested by the business in improvements, replacements, extensions or for other purposes, or may be retained therein as surplus, reserves, undivided profits or otherwise.On the death of my wife, my trustees shall pay over and distribute the then corpus of the trust fund, *81  in equal shares, to the three trusts which I have established, or am about to establish, for my three children, and such payments, so made, shall become a part of said trusts and be administered according to the terms thereof.The instrument also contained the following: "The interest herein given and granted shall not be construed to be a vested interest." The trust was to terminate at the death of petitioner's wife.  The reason given in the trust instrument for its creation was:Having in mind the uncertain and precarious economic, business and international conditions now prevailing, it is my wish, by this trust instrument, to provide a measure of security and independence for the beneficiaries hereof, in the event that business reverses and financial misfortunes should overtake me.Petitioner's father had not participated in the management of the bakery business.  The Andersons continued the management and operation of the bakery business after the death of petitioner's father as before.  The Andersons determined the distributions out of partnership profits.Fiduciary income tax returns for 1942 and 1943 were filed for the estate of C. H. Kay, in which one-third of the money received*82  by the estate from the bakery business was reported as distributable to "Howard M. Kay -- Trustee." The amounts reported as distributable were $ 14,435 for 1942 and $ 22,592.28 for 1943.  These amounts were reported as distributable to petitioner's wife in fiduciary income tax returns filed by "Howard M. Kay -- Trustee" for 1942 and 1943.  Individual income tax returns were filed by petitioner's wife for those years, in which the above amounts were reported (the 1942 return shows $ 14,635.86).The Youngsville Star Manufacturing Co., which manufactures furniture, was a partnership until 1936.  There were a number of partners, many of them with very small interests.  Petitioner was the partner having the largest interest.  During the depression the business was not showing profits.  In 1937 some of the small partners desired to sell out and petitioner agreed to buy their interests.  In order to work out the mechanics of the purchase of these interests, a corporation having the same name as the partnership was formed, and preferred stock and common stock were issued to the partners for their respective interests.  Petitioner became the owner of 13,875 shares, at or about the time of *83  the incorporation.  In addition, he acquired *475  191 shares of the preferred stock. In 1941 the petitioner acquired 105 additional shares of preferred stock.On December 29, 1941, petitioner executed three irrevocable trust instruments (hereinafter sometimes referred to as the children's trusts), one for the benefit of each of his three children.  The beneficiaries of the three trusts were Gordon M. Kay, born January 9, 1923; Barbara L. Kay, born August 2, 1926; and Thomas E. Kay, born January 12, 1929.  Except for the provisions as to what was to be included in corpus and the provisions relating to the beneficiaries, termination of the trusts and disposition of the corpus upon termination, the children's trusts were similar, in all material respects, to the wife's trust.  By the trust agreements petitioner conveyed to himself as trustee in each of the trusts 3,000 shares of common stock and 98 or 99 shares 1 of preferred stock of Youngsville Star Manufacturing Co.  The trust instrument creating Gordon's trust contains the following paragraphs:I have advanced for the education of my son, Gordon H. Kay, the beneficiary of this trust, $ 4500.00 and I have not made similar advances*84  for my other children.  It is my purpose to provide equally for all my children, and to that end I provide that my Trustee shall pay one-half the income from this fund in equal parts to the Trustee of the trusts for the benefit of my other two children, until two-thirds of said amount of $ 4500.00 or $ 3000.00, has been so paid.  Such payments shall become part of the principal of said other trust funds.Should either of the other trust funds be terminated by the death of the beneficiary before said full amount shall have been paid, the subsequent payments shall be made, one-half to the Trustee, and one-half to the children of such deceased beneficiary, but if there be no such children, then the payments as to such one-half shall cease.The following summary of the provisions as to disposition of income and principal is from Gordon's trust, but the provisions are similar in all material respects to those in the other trusts, except for names.  The *85  trust instrument provided that until Gordon reached the age of 21 the trustee, as he determined to be wise, proper, and needful, could use the income of the trust for the son's education, benefit, and advantage.  The portion of the income not used for such purposes was to be accumulated.  After Gordon reached 21 years of age the income was to be paid to him.  The trustee in his discretion could use and apply the income to Gordon's benefit in case of his illness or incapacity "or for other reasons." The trustee was to pay and transfer the corpus and accumulated income to Gordon when he (the son) reached the age of 35 years.  The trustee could, in his own judgment, considering certain factors, pay over to Gordon the corpus of the trust after he (the son) reached the age of 25 years and before he reached 35 years.  The trustee also could consent and agree that part of the earnings, *476  as might seem proper, according to sound business practices be reinvested by the businesses.Each of the three trusts, in any event, was to terminate at the death of the beneficiary, or when he or she reached thirty-five years of age.On December 15, 1942, petitioner transferred 500 additional shares*86  of common stock of the Youngsville Star Manufacturing Co. to each of the aforementioned trusts for his children.  The company paid no dividends in 1942.In March 1943 one of the minority stockholders of Youngsville Star Manufacturing Co. indicated his desire to sell out his stock in the company.  Thereafter a plan was evolved for the acquisition by petitioner, the trusts he had created, and Mott Lawrence, the vice president and sales manager, to acquire all the stock of the company, and for the elimination of the corporate structure.On or about May 12, 1943, petitioner purchased for $ 40,075 the 5,865 shares of the outstanding common stock of the company other than those held by him personally and as trustee of the aforementioned purported trusts and held by Mott Lawrence, and he purchased 735 shares of preferred stock for $ 66,150.  Immediately after the acquisition of these shares petitioner sold 716 shares of the common stock and 176 shares of the preferred stock to Lawrence, which was a sufficient amount of the common stock to bring the latter's common stock holdings up to 25 per cent of the total outstanding.  At about the same time, petitioner transferred to each of the 3 purported*87  trusts for his children 305 additional shares of the common stock, thus bringing the common stock holdings of each of the purported trusts up to 15 per cent of the total common stock outstanding.  This left petitioner with 30 per cent of the outstanding common stock.The corporation was liquidated on or about May 15, 1943, by the process of redeeming the preferred stock for cash at par and distributing the remaining assets in kind.  The business was thereafter continued as a partnership.After the formation of the new partnership in May 1943, petitioner and Mott Lawrence took $ 1,000 a month each as compensation for their services in managing the business.  The Commissioner has determined that 75 per cent of the income of the partnership in 1943 is includible in petitioner's 1943 income.  The petitioner admits that 30 per cent of the partnership income should be included in his gross income for 1943.Shortly after the redemption of the 296 shares of preferred stock held by the 3 purported trusts for the children for the sum of $ 29,600, the trusts loaned $ 24,000 to the new partnership. In 1943 interest in the amount of $ 420 was received on this loan.  This amount was reported by*88  Howard M. Kay, trustee, in his fiduciary return for 1943 as *477  trust income.  The Commissioner has determined that this sum of $ 420 is includible in petitioner's gross income for 1943.During 1942 and 1943 petitioner maintained a bank account with the Youngsville National Bank, designated as the "H. M. Kay, Trustee" account.  Petitioner was president of this bank.  The sums deposited in this account were from the following sources and in the following amounts:1942Loan from H. M. Kay$ 1,000.00Part of corpus of one of the trusts100.00From estate of C. H. Kay7,828.00Total8,928.001943Loan from H. M. Kay2,000.00Unidentified250.00From estate of C. H. Kay17,000.00Liquidation of preferred stock of Youngsville Star Manufacturing Co29,600.00Interest from Youngsville Star Manufacturing Co., a partnership420.00Total49,270.00The sums designated as having been received from the estate of C. H. Kay were portions of the profits of the bakery partnership which had been distributed to the estate in the years 1942 and 1943.The children's trusts had no income in 1942.  The cash income in 1943 was $ 420.In 1942 and 1943 petitioner*89  made the following payments out of the H. M. Kay, trustee, account:1942To Gordon H. Kay$ 1,455.00To Grier School700.00To Esther L. Kay5,725.001943To Gordon H. Kay1,500.00To Grier School1,687.35To Brokenstraw Flying School88.00To Esther L. Kay8,603.00To Esther L. Kay, special account7,000.00Gordon H. Kay attended the Cleveland School of Art during the years 1942 and 1943.  Barbara L. Kay attended the Grier School during these years.  In 1942 and 1943 only the petitioner, his wife, and his son Thomas regularly lived at home.The payments made to Gordon in 1942 and 1943 out of the H. M. Kay, trustee, account were for Gordon's education and maintenance.The payments made to the Grier School in 1942 and 1943 out of the H. M. Kay, trustee, account were for Barbara's education and board.  *478  The sum of $ 88 paid out of this account to the Brokenstraw Flying School was for flying lessons for Barbara.Payments made for the education and support of Gordon and Barbara out of the H. M. Kay, trustee, account at a time when there were not sufficient funds in the children's trusts account to cover the withdrawals were in amount of $ 2,155.  Petitioner*90  had personally loaned the H. M. Kay, trustee, account $ 1,000.Prior to 1942 petitioner paid all expenses incurred in the operation of his household and for the support of his family.  In this connection he furnished money to his wife, which she deposited in her so-called regular account, a checking account, with the Youngsville National Bank.  She then drew checks on this account in payment of the various expenses of the household.Total deposits of $ 6,143 were made in the Esther L. Kay regular account in 1942, of which sum $ 5,725 was received from H. M. Kay, trustee.  Checks totaling $ 5,711.15 were drawn on this account in 1942, the majority of the checks being drawn in payment of various household expenses.  These payments included, among others, payments for household help, dry cleaning, newspaper subscriptions, including the Wall Street Journal, electrical, gas, telephone, and garbage disposal service, clothing, furniture, medical care, insurance on household effects, etc.  In addition, petitioner's wife made payments totaling $ 241.34 for the repair and maintenance of the automobile owned by the petitioner, as well as paying for the license plates in the amount of $ 15.20. *91  On February 26, 1943, petitioner's wife opened a checking account with the Youngsville National Bank designated as the "Esther L. Kay Special Account." All of the deposits in this account were moneys received from H. M. Kay, trustee.  A check for $ 700 drawn on this special account on June 16, 1943, was in payment of vacation accommodations at Atlantic City for the members of petitioner's family, petitioner being there on week ends.In 1943 total deposits of $ 5,703 were made in the Esther L. Kay regular account.  The funds so deposited were received from H. M. Kay, trustee; in some instances the funds came directly from the H. M. Kay, trustee, account and in other instances they came indirectly from that account through her special account.  Disbursements amounting to $ 5,597.46 were made out of the Esther Kay regular account in the year 1943.  The majority of this amount was in payment of various household expenses.OPINION.The respondent contends that petitioner is taxable on one-third of the income from his deceased father's estate in the years 1942 and 1943, even though in a previous year he had purportedly *479  conveyed a portion of his anticipated interest in the estate*92  to himself as trustee for his wife and children.  His argument is that petitioner is taxable on the one-third interest, above mentioned, "In transferring to himself as trustee a portion of his anticipated share in the estate of his deceased father, petitioner granted to himself (and exercised) such extensive powers of administrative authority and control over the income and corpus of the alleged trust as to remain the real owner of the interest purportedly conveyed and petitioner is, therefore, taxable upon the income arising therefrom." Respondent here relies upon the provisions of section 22 (a) of the Internal Revenue Code, 2 as construed by Helvering v. Clifford, 309 U.S. 331">309 U.S. 331, and the many decided cases which have followed it.*93 It is well established that each case, involving the Clifford doctrine, must be decided upon its own particular facts; further, that no one fact is normally decisive.  Belknap v. Glenn, 55 Fed. Supp. 631, and cases cited therein.  Whayne v. Glenn, 59 Fed. Supp. 517, pointedly states the three dominant considerations to be considered where the Clifford doctrine is to be applied are as follows:* * * (1) whether the trust was a long or short term trust, (2) the control of the creator over the trustee and the reserved power to manage the trust either by the terms of the trust instrument or such control over the trustee, and (3) the relationship of the beneficiaries to the settlor with particular reference to the family unit and the obligation of the settlor to support such beneficiary within that economic unit.  * * *and cites as authority the Belknap case.The fact of whether the trust is of long or short duration is not of itself controlling.  There can be no doubt, in the light of cases decided by this as well as other courts, that this fact can weigh heavily as to the taxability of a trust to the*94  grantor under the so-called Clifford doctrine, but the mere fact that the trust in question is of long duration does not control the taxability of the income.  The income of a long term trust, as of a short term trust, may be taxable to the grantor. Commissioner v. Buck, 120 Fed. (2d) 775; Warren v. Commissioner, 133 Fed. (2d) 312, affirming 45 B. T. A. 379.We first dispose of the relationship of the beneficiaries to the settlor. The instant trust involves a complete family group and, therefore, the arrangement should be subjected to careful scrutiny in determining *480  whether the income is taxable to the settlor or the beneficiaries. Cox v. Commissioner, 110 Fed. (2d) 934. The arrangement comes, in this respect, within the doctrine of the Clifford case, where the Court was considering the basic question of whether one economic unit could be multiplied into two or more by valid trust arrangements.The second consideration is the control the grantor reserved over the trust either by the trust instrument or by control over the trustee. *95  As was pointed out in Suhr v. Commissioner, 126 Fed. (2d) 283, the decision in each case must depend upon an analysis of the terms of the trust in each instance and of all the circumstances attendant upon its creation and operation.  Considering the trust instrument in its entirety, we think the grantor could hardly have reserved more control over the corpus than he did.  In the first place he appointed himself sole trustee and provided that he could not be removed except by his own act.  He further gave himself authority to appoint his own successor and to appoint cotrustees.  As trustee, he was given full authority to consent to and continue the baking business, to take part in the management, to sell or exchange any part of the business, and to take part in any merger, reorganization, extension, consolidation, or any other change in the business.  He was not required to give bond.  He could use his own discretion as to investing or reinvesting the trust fund. He was not liable for any depreciation in securities held, or for any losses, unless the losses occurred by reason of his own gross negligence or bad faith.  He was to determine whether*96  money or property coming to his hands was principal or income.  He had authority to make advancements or to borrow money for such purposes as he deemed proper, could make notes for such purposes, and, as security therefor, could pledge or mortgage any part or all of the trust estate.  He had full power and authority to pay over to his wife (the primary beneficiary) any part of the corpus in case of sickness, educational requirement, emergency, or other needs.  He was also to vote all stocks and securities.  He was to have the discretion to cause the stock and other securities held by him to be registered in the name of the trustee, or his nominee, or to keep them unregistered but in condition to pass by delivery.  He could employ counsel and agents.  He could distribute the principal of the trust fund in money or in kind, or partly in each, in his sole discretion.  He was to furnish, annually, the beneficiary a detailed account of his action.  The instrument is vague as to the amount that he (as trustee) was required to pay to his wife.  Certain moneys coming into his hands were required to be paid to his wife, but it is apparent that petitioner, as trustee, considered this requirement*97  very lightly.  He commingled the money received from this trust with the money received from three trusts set up for the benefit of his children, and, from the evidence before us, it is apparent that he disbursed money, indiscriminately, to any of the *481  four, wherever he thought there was need, not considering whether the particular trust fund had sufficient cash for such a distribution.  We also conclude from the evidence that the petitioner, as trustee, did not distribute all the net income of the trust to his wife, for more money came into his hands as trustee than was distributed to her.  Further, though petitioner's father did not take part in the management of the bakery business, by the trust instrument petitioner was authorized to take part in its management, thereby giving him an added control over the amount of money to be turned over to himself as income to be distributed to his wife, as beneficiary. As is seen by this resume of the powers and duties of petitioner-grantor-trustee, it is evident that he relinquished very little control over the property that he turned over to the trustee.  As was said in the Clifford case, supra:* * * It is hard to imagine*98  that respondent [taxpayer] felt himself the poorer after this trust had been executed or, if he did, that it had any rational foundation in fact.  For as a result of the terms of the trust and the intimacy of the familial relationship, respondent retained the substance of full enjoyment of all the rights which previously he had in the property.  That might not be true if only strictly legal rights were considered.  But when the benefits flowing to him indirectly through the wife are added to the legal rights he retained, the aggregate may be said to be a fair equivalent of what he previously had * * *.This is particularly true here when we observe the trustee's operation of the trust fund's income account.  We note that he had one account for the income of the wife's trust and the three children's trust.  From this one account he (the trustee) directed the money to respective members of the family, apparently without regard to the amount of money that could be distributed from a particular trust, whenever the need appeared, i. e., if one of the children needed funds for his or her education, a check was drawn on the account for the amount.  The overdrafts carry much more meaning*99  to us than to petitioner's counsel, who attempts to explain the overdrafts as a mere oversight on the part of the trustee.  We do not so regard them.  To us it appears that petitioner set up these trusts for the maintenance of his family, i. e., to provide a separate income from which the expenses of the family would be drawn, and also to set up separate incomes to educate his children.  The actual operation of the trust fund account so indicates.  All the money used for the maintenance of the family came from this account and, by the same token, even though the children's trust did not have sufficient funds to provide for their education, when money was needed for this purpose it was checked out of the account.After examining the facts before us, and the many authorities cited by both parties, which need not be discussed, we conclude that petitioner, on all of the facts, retained such control over the corpus of the trust, both by the trust instrument and by the actual operation of the trust, that the income therefrom remained, in substance, that of petitioner and he is taxable thereon.*482  Consideration of all the facts involved in this matter convinces us that the trusts *100  were intended to serve and did serve to provide for the petitioner's family responsibilities, and that they should not be recognized as separate entities.Deciding this issue as we have makes it unnecessary to consider the other grounds suggested by respondent on brief.The next issue to be considered is whether the respondent erred in his determination that petitioner is taxable on the income of three separate trusts in the year 1943, reported as distributable to him as trustee for the benefit of his children.  It is the respondent's contention that, "In transferring to himself as trustee certain shares of the preferred and common stock of the Youngsville Star Manufacturing Company, petitioner granted to himself (and exercised) such extensive powers of administrative control and authority over the income and corpus of the respective trusts as to leave him the real owner of the property purportedly held in trust, and he is, therefore, taxable on all income and gains arising therefrom * * *." We see no material difference in the phraseology of the powers and duties delegated to the trustee in the wife's trust or the three trusts for the children.  In fact, both the respondent and petitioner*101  concede this point on brief.  This being true, we consider it unnecessary to examine further petitioner's argument on this point.  We have held the petitioner taxable on the income of the wife's trust, and reach the same conclusion concerning the children's trusts.  We see no material difference in the control reserved by the grantor in either of the trusts (i. e., the wife's trust or the children's trusts) and consider it unnecessary to repeat our reasoning here.  As to the operation of the children's trusts, it appears to us that petitioner is in a less favorable position than in regard to the wife's trust.  It is evident that the trusts were created for the express purpose to provide separate income, distributable to the children.  This is particularly emphasized in the fact that petitioner had already spent $ 4,500 on Gordon's education and the trusts of the other two children were to benefit to two-thirds of this amount before Gordon's trust was to receive income, and yet even in the face of this provision Gordon and Barbara received substantial sums from their trusts before this $ 3,000 was distributed. In fact, they received money before the trusts had sufficient funds to *102  pay anyone anything.  We sustain the respondent on this issue.Needless to say, the question of the $ 420 interest payment on the loan will also follow this same reasoning, for, in holding that petitioner retained such control over the property of the trusts as to make him taxable thereon, it would follow that a loan made to his business from the trust would be like his making himself a loan.Decision will be entered for the respondent.  Footnotes1. 98 to Gordon's trust, 99 to each of those for Barbara and Thomas.↩2. SEC. 22. GROSS INCOME.(a) General Definition.  -- "Gross income" includes gains, profits, and income derived from salaries, wages, or compensation for personal service (including personal service as an officer or employee of a State, or any political subdivision thereof, or any agency or instrumentality of any one or more of the foregoing), or whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever.  * * *↩