The opinion
Arundell,
dissenting: I am unable to agree with the decision on the sixth point treated in the prevailing opinion. The conclusion is there reached that within the meaning of the revenue act the taxpayer and the trust created by him should be treated as substantially identical, and, inasmuch as the bonds sold by the taxpayer (Huntington) were reacquired by the trust within thirty days, the loss may not be deducted. Sec. 214 (a) (5), Revenue Act of 1926.
But the statute itself makes the distinction between trusts and individuals and it took special legislation, viz., subsections (g) and (h) of section 219, to tax the income of a revocable trust to the creator thereof. Valid trusts have long been recognized in this country. The law of trusts is well established. The creator of a trust parts with legal title to the trust property. He does not have legal title to any property acquired by the trust. Legal title to all trust property is in the trustees. They do not hold it as individuals as they would their own property, but only in a new fiduciary capacity which they have been given by the law and the trust deed. Henry E. Huntington was neither a trustee nor a beneficiary of the trust. A *321 trust, though revocable, is nevertheless a trust until it is revoked. Langley v. Commissioner, 61 Fed. (2d) 796. See also Hibbard, Spencer, Bartlett & Co., 5 B.T.A. 464 , where a number of authorities are cited. Likewise, the Henry E. Huntington Library and Art Gallery trust was a trust as long as the grantor did not destroy it by the exercise of his retained powers over it.
Distinctions between a trust and the grantor must be recognized except as the revenue act constitutionally provides otherwise. Cf. Warden v. Lederer, 24 Fed. (2d) 233; L.O. 1102, C.B. 1-2, p. 50. All of the income of this particular trust for the periods before us must be included in computing the income of the grantor because of specific provisions in the Revenue Act of 1926. These provisions do not require that for all purposes of the act the trust merge into the individual and lose the separate identity which it otherwise has. The distinction between the individual and the trust is recognized not only in the language of section 219, but in the very necessity for such statutory provisions as are contained in (g) and (h). In fact the language of (g) and (h) may deny to this taxpayer the benefit of a loss of this very trust where that loss exceeds all trust income. Trusts are taxpayers, potentially at least. Section 219 requires that trust income be separately computed. Many trusts pay tax. Others must file returns on which no tax is due. Losses of trusts frequently benefit no other taxpayer. Section 219. Section 214 (a) (5) allows a loss deduction except where the tampayer acquires and holds substantially identical property. The taxpayer here did not acquire or hold such property after the sale. The restriction contained in section 214 (a) (5) does not deal specifically with acquisition and holding by some other entity. A broader inhibition should not be read into the act.
Marquette and Leech agree with this dissent.