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U.S. Supreme Court

United States Trust Co. v. Commissioner, 296 U.S. 481 (1936)

United States Trust Company of New York v.

Commissioner of Internal Revenue

No. 169

Argued December 17, 1935

Decided January 6, 1936

296 U.S. 481


A trust created by a father for his three children, providing, inter alia, that each of them should receive one-third of the net income and, upon termination of the trust, one-third of the principal of the trust estate, was amended, as permitted by the indenture, to declare that the estate should be divided into three separate and equal shares, to which might be assigned undivided interests in the whole or any part of it; that such shares should be designated by the respective names of the three beneficiaries, and that each of the beneficiaries should have the same rights, interest, and power in and over his share and the income thereof as was given to them, respectively, by the original trust instrument over one-third of the trust estate. The object of the amendment was to divide the trust into three separate trusts in order to reduce liability for income taxes. The cash and property of the trust were accordingly transferred on the books of the trustee, in equal shares, to three new accounts, one for each of the beneficiaries; income, disbursements, and new principal were entered in this same way, and the accounts of the single trust were closed.


1. That the single trust had been converted into three in accordance with the intention of the parties. P. 296 U. S. 486.

2. It was not necessary that the cash and securities should be physically divided. P. 296 U. S. 487.

Page 296 U. S. 482

3. Any vested property right, including an undivided interest, may constitute the corpus of a trust; a single fund may be held on several trusts. P. 296 U. S. 487.

75 F.2d 973 reversed.

Certiorari to review a judgment reversing an order of the Board of Tax Appeals which set aside an additional tax imposed on a trustee by the Commissioner of Internal Revenue.

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