The opinion
Black,
concurring: I concur in the result reached in the majority opinion, but I do not agree with the reasoning by which such result is reached.
The majority opinion, in holding that Mary E. Fulham was not a person with a substantial adverse interest in the income or the principal of the Mary E. Fulham trust, in my judgment conflicts with our decision in Jane B. Shiverick, 37 B. T. A. 454. In that case, Jane B. Shiverick created a trust, reserving the power to revest in herself the corpus of the trust with the consent of her husband, Asa Shiverick, who was made cotrustee with the Cleveland Trust Co. Under the terms of the trust, after the decease of the settlor, in the event her husband was then living, so much of the income was to be paid him during his life as he might demand by a written instrument lodged with the trustee, and while he was the recipient of the income, the trustee was authorized to pay him from the principal of the trust such amounts as it should deem necessary or proper for his maintenance, support, and comfort.
Thus it will be seen that the right of the settlor’s husband in the Shiverick case to share in the income of the trust or any of the corpus thereof, was contingent upon his surviving the settlor. Even though the husband’s interest in the income and corpus of the trust was a contingent one, we held that such interest was “a substantia] adverse interest” within the meaning of section 166 of the Revenue Act of 1932. On that point we said:
While his interest was contingent upon the death of his wife occurring before his decease, he might reasonably be expected to object to any change in the assets of the estate which would be inimical to his rights under the trust instrument in the event he outlived her. To that extent, at least, his *54 interest was adverse. * * * The property placed in trust by the settlor was very substantial in amount — more than a half million dollars in bonds alone, half of which were Government bonds. The interest on the bonds was more than $20,000 a year. His right to receive this amount, contingent though it was, is sufficient,’we think, to justify us in holding that he had a substantial adverse interest.
In the Mary E. Fulham trust involved in the instant case the interest of Mary E. Fulham was contingent, but, in the light of what we said in the SMvericTc case, it was a very substantial one. The settlor provided that “During my wife’s life, the trustee may pay to her at any time or from time to time any part or parts of the whole of the principal and/or accumulated income of the trust fund.”
Therefore, for the reasons above stated, I do not agree with the majority holding that the interest of Mary E. Fulham was not a substantial adverse interest.
However, under the doctrine announced by the Board in Mary Byerson Frost, 38 B. T. A. 1402, it is my opinion that petitioner would be taxable on the income in question under section 16/ of the Revenue Act of 1934, and it would seem that the same reasoning used in the Frost case would be equally applicable to section 166. In the Frost case, the grantor of the trust (Mrs. Frost) reserved a power, first in conjunction with her husband and after his death alone, to require the trustee to distribute to herself the trust principal, including a portion of the income which was to be accumulated. We held that under these circumstances the income was taxable to the settlor, Mary Ryerson Frost, under section 167 of the Revenue Act of 1934.
In the instant case, the power to revoke the trust and revest the accumulated income and corpus in the settlor was placed in the hands of a committee by clause fifth of the trust instrument. This clause fifth was amended June 25, 1932, so as to take out the committee the power to alone revoke during the life of Mary E. Fulham and to confer upon her the power “to consent in writing” to a revocation of the trust. This power to consent to revocation by Mary E. Fulham, during her lifetime, was of course to cease at her death and the power to revoke was again to rest in the hands of the committee, the committee clearly not being an adverse interest.
These facts, it seems to me, bring the instant case within the rule of the Frost case. For this reason, I concur in the result reached by the majority opinion but not in the reasoning by which such result is reached.
HarroN agrees with the above.