Court Opinion

ID: 9637713
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:16:40.419704+00
Date Added: 2024-06-11T18:09:59.526425
License: Public Domain

BRATTON, Circuit Judge
(dissenting in part).
The Copley Trust and the Three Trust were irrevocable trusts. The trust instrument in each instance provided that petitioner should manage the trust estate, and he did devote part of his time and efforts to their management. But that was not enough to warrant a division of the realized gain into two parts, one taxable to the beneficiaries of the trust and the other to petitioner. In recent cases of this kind where the instrument creating an irrevocable trust provided that the settlor should manage the trust estate, it was held by this court and others that the entire realized gain should be treated as income of the trust estate. Jones v. Norris, 10 Cir., 122 F.2d 6; Commissioner of Internal Revenue v. Branch, 1 Cir., 114 F.2d 985; Commissioner of Internal Revenue v. Armour, 7 Cir., 125 F.2d 467. True, the question of dividing the gain into two parts, one representing income of the beneficiaries of the trust and the other income of the settlor, was not discussed in any of those cases. But there is nothing in any of them which indicates that the court entertained the view even remotely that authority for such a division is to be found in any mandate of Congress. And in the more recent case of Helvering v. Stuart, 63 S.Ct. 140, 87 L.Ed. -, it was said that economic gain realized or realizable by the taxpayer is essential to produce a taxable income; that such gain need not be actually collected by him; and that he may give away the right to receive it. By each of these trust instruments, petitioner gave to the trust estate the right to receive and enjoy the economic gain realized from his time and efforts devoted to its management. All of the taxable income of each trust should be taxed to the estate or the beneficiaries. None of it should be taxed against petitioner, except that part which accrued to the individual share of George H. Hogle in the Three Trust during his minority.