HELVERING V. CLIFFORD, 309 U. S. 331 (1940)

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U.S. Supreme Court

Helvering v. Clifford, 309 U.S. 331 (1940)

Helvering v. Clifford

No. 383

Argued February 5, 1940

Decided February 26, 1940

309 U.S. 331


1. A husband who declared himself trustee of certain securities for the term of five years, to pay to his wife the income accruing during that period, but retained in himself the right to accumulate income, and, with insignificant exceptions, the complete control over the principal fund -- its conversion, investment, reinvestment, etc. -- and the reversion of the Corpus at the end of the term, may properly be found by the federal taxing authorities to be owner of the fund, within the intent of § 22(a) of the Revenue Act of 1934, notwithstanding the trust, and taxable on the trust income as part of his personal income. P. 309 U. S. 335.

Where the benefits directly or indirectly retained blend so imperceptibly with the normal concepts of full ownership, it cannot be said that the triers of fact committed reversible error when they found that the husband was the owner of the corpus for the purposes of § 22(a). P. 309 U. S. 336.

2. The broad language of § 22(a) of the Revenue Act of 1934 indicates the purpose of Congress to use the full measure of its taxing power within the definable categories specified therein. P. 309 U. S. 337.

3. Whether the creator of a trust may still be treated under § 22(a) as the owner of the corpus is not determined by technicalities of the law of trusts and conveyances, but must depend on analysis of the terms of the trust and on all the circumstances attendant on its creation and operation. P. 309 U. S. 334.

Where the grantor is the trustee, and the beneficiaries members of his family group, special scrutiny is necessary, lest what is in reality but one economic unit be increased to two or more by devices which, though valid under state law, are not conclusive under § 22(a) of the Revenue Act. P. 309 U. S. 335.

4. The fact that Congress made specific provision in § 166 of the Revenue Act of 1934 for revocable trusts, but failed to adopt a Treasury recommendation that similar specific treatment should be given income from short term trusts, did not subtract the latter from § 22(a). P. 309 U. S. 337.

105 F.2d 586 reversed.

Page 309 U. S. 332

Certiorari, 308 U.S. 542, to review a judgment which reversed a decision of the Board of Tax Appeals (38 B.T.A. 1532) sustaining a deficiency assessment.

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