Commissioner of Internal Revenue v. Brown

MARIS, Circuit Judge

(dissenting).

I think that the decision of the Board of Tax Appeals was right in all respects and should be affirmed. Since that decision was in favor of the respondent I see no need to afford her a further hearing befort the Board.

The only point on which I differ with the majority of the court is- as to the tax-ability of the trust income to the respondent as in fact her income under the broad definition of Section 22(a) of the Revenue Act and the rule of Helvering v. Clifford, 309 U.S. 331 , 60 S.Ct. 554 , 84 L.Ed. 788 . The Board held that the Commissioner failed to make a case under Section 22(a). My brethren say that they cannot agree with this conclusion. I think it was right.

The trust which the respondent created was to continue in all events until her death. She reserved no power to revoke it and although she might change the beneficiaries she was expressly precluded from ever receiving any benefit herself. Her only other power was to change the trustee *804 at her pleasure. As a matter of fact the respondent did not exercise any of these rights until after the taxable year with which we are concerned. During that year and at all times previously the beneficiary of all but a very small part of the income was a person unrelated to the respondent.

The Clifford case, and the cases which have followed it in the Supreme Court, involved and emphasized situations in which surplus income was distributed among the members of an intimate family group by the trusts held invalid for income tax purposes. I agree with the Circuit Court of Appeals for the Second Circuit that this is the significant distinction between those cases and cases like the one now before us. See Commissioner v. Chamberlain, 121 F. 2d 765 , and compare Commissioner v. Buck, 120 F.2d 775 . Certainly there is a clear distinction based upon the deepest and most primitive of the emotions which motivate human behavior between the transfer of income to members of the donor’s intimate family circle for whose support he has strong legal and moral obligation and the transfer of income to those for whose support no such obligation exists.

’ Furthermore, I think that the Supreme Court in the Clifford case indicated that the question whether a donor had retained such control over and benefits under a trust fund as to render its income his within the definition of Section 22(a), was a question of fact to be found by the triers of fact. It would follow under settled principles that the finding of the Board of Tax Appeals upon this question should not be reversed by us if supported by substantial evidence.