BLAIR V. COMMISSIONER, 300 U. S. 5 (1937)

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U.S. Supreme Court

Blair v. Commissioner, 300 U.S. 5 (1937)

Blair v. Commissioner of Internal Revenue

No. 247

Argued January 5, 1937

Decided February 1, 1937

300 U.S. 5


1. A judgment of the Circuit Court of Appeals holding a beneficiary named in a trust taxable upon trust income notwithstanding assignments previously made by him, and basing this conclusion upon the ground that, under the local law, the trust was a spendthrift trust giving the beneficiary no power to assign, held inapplicable as res judicata in favor of the Government in proceedings to collect taxes from the same person, for subsequent years, the situation having been changed meanwhile by a decision of the state court construing the trust and upholding the assignments. Tait v. Western Maryland Ry. Co., 289 U. S. 620, distinguished. P. 300 U. S. 8.

2. Whether a testamentary trust is a spendthrift trust barring the voluntary alienation of his interest by the beneficiary depends

Page 300 U. S. 6

upon the law of the State in which the donor resided and in which the trust was created and the property situated. P. 300 U. S. 9.

3. A decision by the intermediate appellate court of Illinois upholding the right of the life beneficiary of a trust to assign parts of his interest, in suit brought by the trustees for instructions and impleading the beneficiary and his assignees, held conclusive of the validity of the assignments. P. 300 U. S. 10.

4. In the general application of the Revenue Acts, income tax liability is attached to ownership. P. 300 U. S. 11.

5. Provisions of the Revenue Acts (1921, § 219(a)(d); 1924 and 1926, § 219(a)(b); 1928, § 162(a)(b)) imposing upon the beneficiary of a trust liability for the tax upon the income "distributable" to him, refer to the owner of the beneficial interest, whether he was such initially or becomes such by an assignment valid under the local law governing the trust. P. 300 U. S. 12.

6. Assignments of interests, of specified amounts each year thereafter, in the net income which the assignor was then or might thereafter be entitled to receive during his life under a trust, held assignments not merely of the right to receive income, but of corresponding interests in the trust estate. P. 300 U. S. 12.

7. A beneficiary entitled during life to the income of property held in trust is the owner, not of a chose in action merely, but of an equitable interest in the corpus of the property, and that interest, in the absence of a valid restraint upon alienation, he may assign in part, or as a whole. P. 300 U. S. 13.

83 F.2d 655, 662, reversed.

Certiorari, 299 U.S. 527, to review a judgment which reversed a decision of the Board of Tax Appeals, 31 B.T.A. 1192, overruling income tax assessments.

Page 300 U. S. 7

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