Court Opinion

ID: 4479346
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:13:37.012695+00
Date Added: 2024-06-11T12:50:05.563658
License: Public Domain

Atkins, J., dissenting: It is a well-settled principle of our income tax law that personal earnings are taxable to the earner, and that cases involving the taxation of personal earnings are not to be decided by attenuated subtleties. Lucas v. Earl, 281 U.S. Ill, in which the Supreme Court held an anticipatory assignment of future personal earnings to be ineffective to relieve the earner of tax. The Court stated: A very forcible argument is presented to the effect that the statute seeks to tax only income beneficially received, and that taking the question more technically the salary and fees became the joint property of Earl and his wife on the very first instant on which they were received. We well might hesitate upon the latter proposition, because however the matter might stand between husband and wife he was the only party to the contracts by which the salary and fees were earned, and it is somewhat hard to say that the last step in the performance of those contracts could be taken by anyone but himself alone. But this case is not to be decided by attenuated subtleties. It turns on the import and reasonable construction of the taxing act. There is no doubt that the statute could tax salaries to those who earned them and provide that the tax could not be escaped by anticipatory arrangements and contracts however skilfully devised to prevent the salary when paid from vesting even for a second in the man who earned it. That seems to us the import of the statute before us and we think that no distinction can be taken according to the motives leading to the arrangement by which the fruits are attributed to a different tree from that on which they grew. The annuity policy which Paul won resulted from his personal efforts. The fruit of his labor consisted of the payment of the award to his designee, his daughter. His efforts alone generated the income in question; and it is a matter of no consequence that, under the rules of the contest, such income could not be paid to him, for he had the power to control its disposition. He in fact exercised that power when he entered the contest, by designating the natural object of his bounty, his daughter, as the recipient of any prize which he might win. The exercise of such power, with resultant payment to the daughter, constituted the enjoyment and hence the realization of the income by Paul. In the circumstances he should be fully charged with the income. Cf. Helvering v. Horst, 311 U.S. 112, and Helvering v. Eubank, 311 U.S. 122. There is no more basis here for narrowing the broad scope of the holding in Lucas v. Earl than there was in the Horst and Eubank cases. The decision of the majority herein rests upon “attenuated subtleties” similar to those disapproved, first in Lucas v. Earl and then again in Burnet v. Leininger, 285 U.S. 136, Helvering v. Horst, Helvering v. Eubank, Harrison v. Schaffner, 312 U.S. 579, and Commissioner v. P. G. Lake, Inc., 356 U.S. 260. TietjeNS, Opper, Naum, Withey, Pierce, and Scott, JJ., agree with this dissent.