Court Opinion

ID: 4594381
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:12:50.542439+00
Date Added: 2024-06-11T07:51:14.450634
License: Public Domain

LILIAN K. BLAKE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Blake v. CommissionerDocket No. 26374.United States Board of Tax Appeals23 B.T.A. 554; 1931 BTA LEXIS 1859; June 3, 1931, Promulgated *1859  The income upon shares of stock held in trust by the petitioner for her minor son is not taxable to her.  Henry F. Parmelee, Esq., Curtiss K. Thompson, Esq., and Barry Mohun, Esq., for the petitioner.  J. E. Marshall, Esq., for the respondent.  TRAMMELL *554  The petitioner seeks a redetermination of deficiencies in income tax for the years 1922 and 1923 amounting to $30,000.01 and $37,679.91, respectively.  *555  The sole issue raised by the pleadings is whether the respondent incorrectly included in gross income, for 1922 and 1923, $60,000 and $100,500, respectively, representing dividends upon 300 shares of stock of the T. Whitney Blake Company alleged to have been held in trust by the petitioner for her son, Kaisley Blake.  FINDINGS OF FACT.  T. Whitney Blake, deceased husband of the petitioner, died suddenly prior to the taxable years in controversy leaving a last will and testament executed by him on March 11, 1911, which provided as follows: 1.  I give, devise and bequeath to my wife, Lilian K. Blake, all of the estate and property, both real and personal, and wheresoever situated, which shall belong to me or be subject*1860  to my disposal at the time of my death.  2.  I make no separate provision for any children that I may have, because I know that my wife will herself make such provision for them out of my estate as I should approve and desire.  3.  I appoint my wife, Lilian K. Blake executrix of this my will, and direct that no bond or other security be required of her as such executrix.  Surviving the decedent were his wife, the petitioner herein, a daughter, Hayes Blake Hoyt, who became twenty-one years of age in October, 1922, and a minor son, Kaisley Blake, who was between the ages of ten and eleven in that year.  The petitioner and her husband had discussed the question of providing for their children on many occasions.  After her husband's sudden death she became quite concerned over the matter and began casting about for a method by which a certain sum might be set aside so that it could not be spent, and which might be a fixed provision for her children in the event of her death.  Her daughter having reached a mature age, they talked the matter over together and agreed between themselves what should be done, but with respect to the son, who was only ten years of age, it was a more difficult*1861  matter to solve.  The petitioner, having received 1,075 shares of the capital stock of the T. Whitney Blake Company from the estate of her deceased husband, surrendered the certificate therefor to the said company and had 650 shares transferred to her daughter and 425 shares to herself on December 27, 1921.  The transfer of the 650 shares to her daughter was pursuant to the plan they had agreed upon and it was with the oral understanding that the dividends as received thereon should be invested and the income from said investments should be paid to the petitioner.  Because of the approaching marriage of said daughter the effect of this oral understanding was incorporated in a formal trust indenture dated August 12, 1924.  *556  At or about the date aforesaid, to wit December 27, 1921, the petitioner made up her mind that about 300 shares of the said stock would be proper for her son Kaisley.  She did not consult a lawyer as to the proper legal method to pursue in accomplishing the desired result.  She and her daughter went to the bank on the date aforesaid, and the petitioner, in the presence of said daughter, placed a stock certificate for 425 shares of stock of the T. Whitney*1862  Blake Company in an envelope, upon which she wrote either "300 shares of this for Kaisley," or "300 shares of the W.B. stock for Kaisley," or "300 shares of this stock belong to Kaisley," or words of similar import, which said envelope she placed in her safe-deposit box at the bank.  The petitioner had consulted one Weaver, auditor for the T. Whitney Blake Company, in whom she had implicit confidence, about many of her problems and he advised her that what she had done was sufficient to establish a trust.  It was the petitioner's intention to make an irrevocable gift of those shares, but she did want some "strings" to it, consequently they were so put aside under a plan by which the dividends thereon were to be invested and the income therefrom used for the maintenance of the family, the same as the understanding had with the daughter respecting the 650 shares.  In or about March, 1922, or at any rate early in that year, the petitioner consulted W. Perry Curtiss, president of the Union & New Haven Trust Company, bankers for the Blake family for a number of years and at that time administrator under the will of Blake, and she took from her safe-deposit box the envelop marked as hereinabove*1863  described and told him that she had, acting upon the advice of the aforesaid Weaver, set aside the 300 shares of stock referred to.  She told him what she sought to accomplish with the said 300 shares of stock.  In fact, the matter had already been discussed with him theretofore.  Thereupon Curtiss suggested to her that she might make an actual transfer of the stock, but she told him that she did not care to have the company or her associates therein know of the transfer.  Mrs. Blake was a majority stockholder, there being only two other stockholders, other than those holding qualifying shares, and was president of the company after her husband's death.  Curtiss suggested to her that she employ counsel in the matter, but she stated that she did not care to do so, whereupon he advised that she execute a power of attorney.  As a result of this consultation an irrevocable stock power of attorney, similar in form to the following, assigning 300 shares of the stock of the T. Whitney Blake Company, was executed by the petitioner: THE UNION & NEW HAVEN TRUST COMPANY Irrevocable Stock Power.  KNOW ALL MEN BY THESE PRESENTS that for Value Received, hand by these presents do bargain, *1864  sell, assign and transfer unto shares of the Stock of the now standing in name on the books of said AND do hereby constitute and appoint true and lawful Attorney, irrevocable for and in name and stead, but to use, to sell, assign, and transfer all or any part of the said and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, and hereby ratifying and confirming all that said Attorney or substitute or substitutes shall lawfully do by virtue hereof.  IN WITNESS WHEREOF have hereunto set hand and seal at the day of 192 .Signed, Sealed and delivered in the presence of  [L.S.] *557  The power executed by the petitioner was later destroyed when the certificate for the stock was actually transferred as stated hereafter, but it contained following the word "that," in the first blank space, the words "I, Lilian K. Blake," or some similar designation, and the space following the words "and transfer unto" was left blank.  In the blank preceding the words "shares of the" was inserted "300," and following those words the word "capital." Following the words "Stock of the" was*1865  the name "Whitney Blake Company," and after the words "now standing in" was the word "my," and following the words "on the books of said" the word "corporation," or "company." The power of attorney when executed was pinned to the stock certificate, placed in the envelope and returned to the safe-deposit box.  The petitioner instructed the said Curtiss that the dividends from the said 300 shares of stock should be invested separately and that the income from such investments should go to her.  At the time of the execution of the aforesaid power of attorney it was the policy of the Whitney Blake Company to declare its dividends twice annually, in February and in August, and it was the trust company's policy to purchase securities for the petitioner and her daughter and son with the said dividends.  Purchases were *558  made and the bonds were turned over to the petitioner.  There were three lots of securities labeled "Kaisley," "Mrs. Blake," and "Miss Hayes." Those were commonly unregistered municipal coupon bonds and were payable to bearer.  The purchases were usually made at or about the time the dividends were to be received, but occasionally if good municipal bonds were*1866  offered and the dividend date was approaching the trust company would advance Mrs. Blake the money to take care of them until dividend payments were received.  On February 15, 1922, the T. Whitney Blake Company declared a 60 per cent dividend, which was paid on February 20, and on August 4 it declared a dividend of 80 per cent, which was paid on August 15, making a total of 140 per cent for 1922.  The said Curtiss invested and allocated to Kaisley Blake $58,000 during 1922, which amount is excessive to the extent of $18,000, accounted for by reason of the fact that Curtiss miscalculated the amount to be set aside for Kaisley.  The correct amount of income attributable to those 300 shares was 140 per cent of said number of shares of Whitney Blake Company stock, or $42,000.  In 1923, the T. Whitney Blake Company declared a dividend of 100 per cent on February 14, which it paid on February 20; a dividend of 20 per cent on February 28, which it paid that same date; a dividend of 5 per cent on June 12, which it paid June 15; a dividend of 200 per cent on August 1, which it paid August 15; and a dividend of 10 per cent on October 10, which it paid October 11, making a total of 335 per*1867  cent for 1923.  It was discovered that the petitioner was not keeping as complete records of the transactions as necessary, and, therefore, in 1923 the records of allocating securities were more detailed in that year than in 1922.  Curtiss was dissatisfied with the informality of the arrangement and handling of these matters and he suggested that Mrs. Blake employ counsel, and for the first time she did so, in December, 1923.  Preparatory to the execution of a formal trust indenture, and as a protective measure in the event of her death before such an instrument could be prepared and executed, it being a matter of consideration that Kaisley might acquire the property free of trust in the event of her death, there was prepared by her attorney and signed by the petitioner, on December 12, 1923, the following memorandum of facts: Mrs. Blake, probably early in 1922, decided to set apart from her own property 300 shares of stock in the Whitney Blake Company for the benefit of Kaisley Blake, her minor son, reserving to herself the income derived from reinvestment of the dividends received, and any other funds realized from the Whitney Blake stock.  Her intent was to make a definite*1868  final arrangement at a later date but in the meantime divested herself of the primary income *559  received from the said stock.  At this time she executed a blank power of attorney for the transfer of 300 shares and attached the same to a certificate for a larger amount, there being no designation of the transferee on the power.  Mrs. Blake kept this certificate with the power attached separate from her own funds.  She invested the amount of the dividends or the principal part thereof in bonds and has kept these bonds together apart from her own funds.  Mrs. Blake has received for her own use the income derived from these bonds.  For the year 1922 she returned as income as guardian of Kaisley Blake the dividends received from this stock.  She did not intend at the time of the above transaction to make an absolute irrevocable gift to Kaisley of the stock but set it apart for the purposes above indicated.  The return as guardian was made without legal advice.  Mrs. Blake has not parted with the possession or control of the stock or the bonds purchased with the dividends thereon but has at all times held them separate from her other funds as trustee for the above purposes, and*1869  she has not derived any benefit otherwise than as above stated from the stock; nor has it been received by her as her own income but has been accepted by her in trust as above indicated.  Mrs. Blake is now advised that the return of income with respect to trust for 1922 should have been as trustee and not as guardian, but since the result so far as payment of tax and amount thereof is the same, she will not at this time file an amended return but will make a return of income received by the trust above indicated for 1923 as trustee for Kaisley Blake and others.  The terms of the trust as at present existing will now be evidenced by the execution of an appropriate trust indenture and the funds representing the trust res to be transferred to the trustee designated.  [Signed] LILIAN K. BLAKE.  On December 26, 1923, the petitioner entered into a trust indenture with the Union & New Haven Trust Company, by which she assigned and transferred unto said trust company 300 shares of the capital stock of the T. Whitney Blake Company and certain municipal and Joint Stock Land Bank bonds, to hold in trust, the trustees to retain and reinvest such funds as may be derived from the stock of*1870  said company by way of liquidation or dividends or a sale or other disposition thereof, and it then provided that: * * * and after deducting therefrom all charges by way of taxes and costs and expenses of administration of this trust and otherwise, add such funds to the principal of the trust fund, and subject to the discretion of said trustees, said funds shall be invested in bonds or other property or securities, * * *.  Said trustees shall segregate and keep apart from the other funds and income from the trust fund such income as they may receive from investments, securities, bonds, stocks or other property acquired with the funds derived as aforesaid * * * and shall pay such specific segregated income * * * to the party of the first part [Lilian K. Blake], during the period of her life * * *.  The said indenture of trust further provided that upon the death of the petitioner the trustees should deliver the property so held, constituting the principal of the trust, to her son, Kaisley Blake, if then living, free from all trusts, and in the event of his death prior to such distribution, then to his heirs or assigns.  *560  The treatment of the income upon the shares*1871  of both the daughter and son was not materially changed after the formal trust indentures were entered into in 1923 in the case of the son and in 1924 in the case of the daughter.  On December 28, 1923, the certificate for 425 shares of the capital stock of the T. Whitney Blake Company was canceled and there was issued a certificate for 300 shares in the names of Lilian K. Blake and the Union & New Haven Trust Company, trustees for Kaisley Blake.  The petitioner has never derived any use from the dividends upon the said 300 shares of stock of the T. Whitney Blake Company since January, 1922, other than in the manner hereinbefore stated.  An individual income-tax return on Form 1040 was filed for Kaisley Blake, signed by his mother "Lilian K. Blake, Guardian," in which there were reported dividends on stock of domestic corporations of $60,330, of which $60,000 represented the dividends for that year upon the T. Whitney Blake Company stock and $330 represented dividends from other sources.  There was also filed for the calendar year 1922 a fiduciary return on Form 1041 by the Union & New Haven Trust Company, in which there was reported net income of $5,328.93, the said return*1872  designating "Lilian K. Blake, Guardian, Kaisley Blake," beneficiary of the trust, which amount of income was taken up and reported in the individual return filed for Kaisley Blake by the petitioner.  The income reported in that fiduciary return was by virtue of the terms of a deed of trust created by the petitioner for the benefit of her son Kaisley at a considerable period prior to the transaction in controversy.  After considering the petitioner's protest against the inclusion of the dividends of $60,000 and $100,500 upon the stock of the T. Whitney Blake Company for the years 1922 and 1923, respectively, the respondent held that because the trust indenture for her son Kaisley was not executed until December 26, 1923, those amounts were properly included in her taxable income.  OPINION.  TRAMMELL: The sole issue as defined by the pleadings has been stated in the introductory paragraphs of this opinion and need not be repeated here.  The petitioner relies upon two separate points in support of her contention that 300 shares of capital stock of the T. Whitney Blake Company were held in trust by her for her son Kaisley: (1) that a trust was created for the benefit of Kaisley*1873  by the provisions contained in her husband's last will and testament; and (2) that she *561  effectually parted with the equitable ownership of the trust res, thereafter deriving no income therefrom taxable to her as such, (a) by her compliance with the requirement of her husband's will, and (b) by designating and setting apart the trust res, and (c) determining and declaring the terms of the trust, and (d) thereafter by way of further assurance executing a transfer, and (e) by carrying out the terms of the trust.  In Hughes v. Fitzgerald et al.,78 Conn. 4">78 Conn. 4; 60 Atl. 694, the Supreme Court of Errors of Connecticut, considering whether a trust had been created by use of the words in a will "to dispose of as she may deem best for the benefit of my daughters, Mary, Johanna, Elizabeth, or either of them," the court said: * * * Whether a trust has been created becomes, therefore, often a question of intention, "to be gathered from the general purpose and scope of the instrument." Colton v. Colton,127 U.S. 300">127 U.S. 300-310, 8 Sup.Ct. 1164, 32 L. Ed. 138">32 L.Ed. 138. In determining from particular words and terms of a will whether a certain*1874  gift was intended to be made in trust, there are, however, some well-established rules which should be considered; and among those applicable to the present case is the settled law in this state that a trust will not be raised by expressions in a will importing recommendation, confidence, or desire, unless it clearly appears that they were intended to be used in an imperative sense.  Bristol v. Austin,40 Conn. 438">40 Conn. 438-447; Harper v. Phelps,21 Conn. 257">21 Conn. 257-269; Gilbert v. Chapin,19 Conn. 342">19 Conn. 342-351. * * * From all the language of the will, we are satisfied that the testator did not intend to use the words "to dispose of as she may deem best for the benefit of my daughters," etc., in a mandatory sense; that it was intended that in so far as Johanna and Elizabeth were to be beneficiaries, they were to be beneficiaries of Mary, rather than of the testator; and that it was the testator's intention to give his daughter Mary an absolute estate in fee simple in the land, and an absolute title to all the property left her by the will.  Considering the will in its entirety, we are satisfied that the words, "I know that my wife will*1875  herself make such provision for them out of my estate as I should approve and desire," were not intended by the testator as mandatory, but merely declaratory of his confident feeling that his wife would make ample provision for his children.  Indeed the statement of the testator that, "I make no separate provision for any children that I may have," definitely negatives any intention on his part to use those words in the imperative sense.  Therefore, we shall consider whether the things done by the petitioner respecting the subject matter were sufficient under the law to create a trust.  Perry on Trusts, Vol. I, 6th Ed., at page 95, says, in discussing the creation of trusts in personalty: When a person sui juris orally or in writing explicitly or impliedly declares that he holds personal property in praesenti for another, he thereby constitutes himself an express trustee.  Under these decisions trusts may be created by parol in any mere personal property, as in the shares of corporation, although the corporations themselves own real estate.  *562  The Supreme Court of Errors of Connecticut, in *1876 Plum Trees Lime Co. v. Keeler,101 Atl. 509, cites with approval the following definition of a trust: Where there are rights, titles, and interests in property distinct from the legal ownership.  In such cases, the legal title, in the eye of the law, carries with it, to the holder, absolute dominion, but behind it lie beneficial rights and interests in the same property belonging to another.  These rights, to the extent to which they exist, are a charge upon the property, and constitute an equity which a court of equity will protect and enforce, whenever its aid for that purpose is * * * invoked.  In another Connecticut case, McDonald v. Hartford Trust Co.,132 Atl. 902, the court says: Trusts of personal property may be created verbally, by direct and express statements, or by implication from the circumstances, where the objects and purposes of the transfer may be held to express the true intention of the transferor to be the creation of a trust.  In Estate of Robert L. Holt,14 B.T.A. 564">14 B.T.A. 564, the decedent had acquired certain bonds, which were placed in a safe-deposit box in the bank used jointly by him and his brother*1877  for the safe keeping of papers relating to their father's estate, of which they were trustees.  Each held a key to the box.  Those bonds were placed in an envelope marked, "This package contains," then the contents were listed, with the further words, "and is the personal property of Mrs. Daisie Holt Green, Charleston, S.C., R. L. Holt." The endorsement was in the handwriting of the decedent.  In holding that the decedent created a present trust for his sister, becoming a voluntary trustee for the purpose of the trust, the Board said: It is well settled that one may create a trust in his own property by constituting himself trustee, provided his words or acts clearly and unequivocally denote an intention to hold henceforth as trustee for the benefit of another.  As the nature and effect of a transaction of this charicter is that the legal title remains in the donor for the benefit of the donee, no transfer or assignment of legal title is necessary.  39 Cyc. 66, 67.  And in such case no further delivery is necessary.  39 Cyc. 641.  No formal, technical, or particular words are necessary to create such a trust, provided the circumstances show beyond a reasonable doubt that such a trust*1878  was intended.  39 Cyc. 57; Witherington v. Herring,140 N.C. 495">140 N.C. 495; 53 S.E. 303">53 S.E. 303; Blackburn v. Blackburn (N.C.), 13 S.E. 937">13 S.E. 937. This trust, the evidence shows, gave to the sister an immediate beneficial interest.  It was not intended to take effect after Holt's death.  He contemplated that she should have, and she did have, the present enjoyment of the property.  In our opinion the equitable title to said bonds was in Holt's sister both at the time of his death and continuously from some time prior to November 22, 1920.  As Holt did not die until July, 1923, the two-year clause in section 402(c) of the Revenue Act of 1921 does not apply.  While the status of the alleged trust must be judged by the things done in the latter part of 1921 and early in 1922, and not by subsequent happenings and events, we must take into consideration all of the circumstances, beginning with the will of the testator down *563  to the time when a formal trust indenture was executed by the petitioner in December, 1923, in order to establish her real intention, for after all the intention is the vital element with which we are here concerned.  See *1879 Colton v. Colton, supra.The record shows that the petitioner and her husband had discussed ways and means of providing for their children many times.  They no doubt had reached some sort of understanding with respect to the matter for in the decedent's will he expressed perfect confidence in his wife.  He made no provision for his children knowing, as he said, that his wife would do so out of his estate in a manner which he himself would approve and desire, indicating very clearly that they had in fact reached a satisfactory understanding before his death.  After the death of the petitioner's husband, she and her daughter, her daughter then being of mature age, talked the matter over and reached an understanding.  With respect to the boy, who was then only ten years of age, the petitioner at first was somewhat undecided as to the precise method of carrying out the arrangement.  On December 27, 1921, the petitioner surrendered 1,075 shares of capital stock of the T. Whitney Blake Company which she had received from her husband's estate, and had transferred to her daughter 650 shares thereof, receiving in her name a certificate for 425 shares.  The shares so*1880  transferred to her daughter were with the understanding that the dividends as received thereon should be invested, and the income from said investments paid to the petitioner that she might maintain the family therewith.  On the same date aforesaid, that is, December 27, 1921, petitioner, having decided the proper provision to be made for her son, in the presence of her daughter, placed the stock certificate for 425 shares just referred to in an envelope, writing thereon, "300 shares of this for Kaisley," or words of similar import, which envelope she placed in her safe-deposit box at the bank.  The petitioner had been advised by a man in whom she had implicit confidence that her act was sufficient to establish a trust for Kaisley.  The petitioner testified that it was her intention to make an irrevocable gift of those shares, but naturally, because of Kaisley's tender years and because the family necessarily had to be maintained and supported, she did not care to do so without, as she expressed it, some "strings" to it.  Her intention was that the shares should be put aside under a plan similar to that understanding which she had with her daughter, that is, the dividends were*1881  to be invested and the income therefrom used for the maintenance of the family.  Still seeking to make certain that what she had done was sufficient to establish a trust, the petitioner early in 1922 consulted one Curtiss, *564  the president of the Union & New Haven Trust Company, bankers for the Blake family and also administrators under the will of the decedent, and she exhibited the envelope to him, marked as has been described, and explained what she had done and what she sought to accomplish thereby.  Curtiss made several suggestions which finally resulted in the execution of an irrevocable stock power of attorney, assigning and transferring 300 of the 425 shares of stock of the T. Whitney Blake Company in blank, which said power was pinned to the certificate, put back into the envelope and then returned to the safe-deposit box.  Upon the execution of said power petitioner instructed that the dividends from the said 300 shares should be invested separately and that the income from such investments should go to her.  Thereafter, investments were made by the bank pursuant to that understanding and when made they were divided into three lots and labeled for "Kaisley," "Mrs. *1882  Blake," and "Miss Hayes," depending upon the account for which purchased.  At the suggestion of Curtiss the petitioner finally engaged counsel, in December, 1923.  Preparatory to the execution of a formal trust indenture and as a protective measure in the event the petitioner should die before such instrument could be prepared, her attorney prepared, and she executed on December 12, 1923, a statement of the facts for guidance in preparation of the formal trust indenture in which she recited substantially the same facts which we have dealt with somewhat at length hereinabove.  In said statement she recited that she had retained physical possession of the stock and the bonds purchased with the dividends, but that she has at all times kept them separate from her other funds, as trustee.  Thereafter, on December 26, 1923, the petitioner entered into a formal trust agreement with the Union & New Haven Trust Company, declaring a trust in said 300 shares of stock.  The terms of the formal trust indenture, except for the fact that they were more definite and specific, were substantially in accord with the treatment of the 300 shares of stock and the income therefrom during 1922 and 1923 before*1883  the said indenture was executed.  While the instant case differs somewhat from Estate of Robert L. Holt, supra, in facts, there is no material distinction in principle.  Of course it does not appear that petitioner here notified the beneficiary, as did the decedent there, but the reason therefor was that Kaisley was an infant, and to do so would have been useless.  But in the creation of a trust an actual delivery and acceptance by the beneficiary is not required as in the case of a gift.  It is simply a question of evidence as to whether a trust was actually created. Petitioner's daughter was fully conversant with the details of her plans, as was the auditor of the T. Whitney Blake Company whom *565  she consulted with respect thereto, and also Curtiss, and possibly other officers of the trust company of which he was president.  Another distinction to be found in the two cases is that, there, the income from the securities was turned over to the beneficiary, whereas the dividends from the 300 shares in the instant case were invested in other securities and made a part of his estate, the income from which investments, however, was used for the support of*1884  the petitioner and her family.  But here again it must be remembered that because of Kaisley's infancy the funds could not have been turned over to him and, furthermore, the petitioner no doubt needed some ivcome with which to educate and maintain her children.  The court said in Edson v. Lucas, 40 Fed.(2d) 398: * * * The retention by the donor of some beneficial interest in the property or some right to share in the income or proceeds therefrom, which is not inconsistent with the passing of the full legal title or with the immediate possession and control of the property by the donee, does not defeat the gift.  * * * In one important particular the instant case is stronger than the Holt case in the fact that here an irrevocable power of attorney assigning the 300 shares of stock was early in 1922, prior to the payments of any dividends herein involved, executed in addition to the writing on the envelope.  The petitioner had a perfect right to constitute herself a trustee and we believe all of the circumstances, beginning with the expression of the decedent in his will, which charged her with the moral obligation, at least, of providing for her children, *1885  and considering the acts done to set apart for her son, as she did in the case of her daughter, a certain portion of the estate left by her husband, and the fact that her original plan was carried out down through 1922 and 1923 until finally a formal trust indenture, embodying substantially the plan already in operation, was entered into, we believe her intention to create a trust has been clearly established.  There was a designated beneficiary, a trust res, and a trustee, the petitioner, all the essentials of a valid trust.  The income of this trust was invested in other securities for Kaisley and became a part of the corpus.  The income from investments of the dividends is the income which petitioner received, but that income is not here involved.  The income here in controversy is the dividends accruing to or received by the trust from the 300 shares of T. Whitney Blake Company stock, and not the income from the investments made therewith.  What the petitioner received and what she reserved for her own use was income from the investments of those dividends, not the dividends themselves.  The dividends themselves belonged to her son as beneficiary of the trust and were included*1886  and treated by all concerned as a part of the trust corpus.  They were received in trust for the son.  The *566  fact that any income actually received by the petitioner might be taxable to her does not affect the question as to the dividends not received by her but invested for her son.  We believe that the circumstances show beyond a reasonable doubt what the petitioner's intention was.  We think, therefore, the respondent erred in holding the petitioner taxable upon those dividends paid upon the 300 shares of stock set aside in trust for Kaisley.  Reviewed by the Board.  Judgment will be entered under Rule 50.MARQUETTE, STERNHAGEN, MURDOCK, AND MCMAHON dissent.