Clifford v. Helvering, No. 11431.

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Writing for the CourtStone, we said
PartiesCLIFFORD v. HELVERING, Commissioner of Internal Revenue.
Docket NumberNo. 11431.
Decision Date19 July 1939

105 F.2d 586 (1939)

CLIFFORD
v.
HELVERING, Commissioner of Internal Revenue.

No. 11431.

Circuit Court of Appeals, Eighth Circuit.

July 19, 1939.


105 F.2d 587
COPYRIGHT MATERIAL OMITTED
105 F.2d 588
Thomas P. Helmey and F. H. Stinchfield, both of Minneapolis, Minn. (Stinchfield, Mackall, Crounse, McNally & Moore and William W. Watson, all of Minneapolis, Minn., on the brief), for petitioner

S. Dee Hanson, Sp. Asst. to Atty. Gen. (Sewall Key, Sp. Asst. to Atty. Gen., and Mac Asbill, Sp. Asst. to Atty. Gen., on the brief), for respondent.

Before GARDNER and THOMAS, Circuit Judges, and WYMAN, District Judge.

GARDNER, Circuit Judge.

This is a petition to review a decision of the Board of Tax Appeals which sustained a redetermination by the Commissioner of individual income tax liability of petitioner, George B. Clifford, Jr., for 1934. The facts were stipulated, and hence are not in dispute. So far as here material, they are substantially as follows:

On June 20, 1934, petitioner executed a declaration of trust by which he acknowledged that he held certain securities as a trust estate, in trust for the uses and purposes and upon the terms and conditions set out in the trust instrument; that all the net income received from the estate during the continuance of the trust so declared, after payment of all necessary expenses of holding, managing, or administering the estate, including taxes that the trustee might be obliged to pay, should be held for the exclusive benefit of Virginia R. Clifford, petitioner's wife, for a period of five years from the date of the declaration of trust, unless the beneficiary or the settlor should die during that term. At the expiration of the term, or upon the earlier death of the beneficiary or the settlor, the trust should terminate; that the settlor as trustee might pay and distribute to the beneficiary quarterly, or at such other times as he might deem convenient during any calendar year, the whole or any part of the net income as he might in his discretion determine. At the termination of the trust, any and all accrued or undistributed net income, and any proceeds from the investment of such net income, should be deemed and treated as property owned absolutely by Virginia R. Clifford, the beneficiary, as of the time of the termination of the trust, and the remainder of the trust estate should be deemed and treated as property owned by the settlor; that the trustee should have full power and authority to do the following things: "(a) To exercise, or to appoint proxies to exercise, any and all voting powers under any certificates or shares of stock in the trust estate; (b) to retain, or to sell, exchange, mortgage, or pledge any certificates, shares of stock, securities or other items of property or any fractional interest in any of the same now or hereafter in the trust estate, whether as part of the corpus or principal thereof or as investments or proceeds and any income therefrom, upon such terms and for such

105 F.2d 589
consideration as I in my absolute discretion may deem fitting; (c) to invest any cash or money in the trust estate or any income therefrom by lending the same with or without security or by depositing the same in any bank, trust company or other similar institution, or by purchasing secured or unsecured notes or certificates of deposit or by purchasing any bonds, stocks, securities or other personal property of any description, without restriction because of the speculative character of the investment or the rate of return therefrom or any laws pertaining to the investment of trust funds; (d) to collect, receive and hold all dividends, interest, increment and income belonging or due to the trust estate; (e) to compromise, settle, or adjust or release any claims which I may hold as trustee; (f) to hold any securities or items of property or any fractional interest therein, which may be in the trust estate, in the names of other persons or in my own name as an individual except as in this agreement otherwise provided."

Since June 20, 1934, the date of the declaration of trust, petitioner has maintained a separate bank account as trustee, in which he has placed income and cash of the trust. He has, as trustee, issued checks against the trust account to his wife, which have been deposited in the personal bank account of his wife, Virginia R. Clifford. The income of the trust, when received by Mrs. Clifford, was deposited in and intermingled in the same account with income from other securities owned by her, and no separate record was kept by her of the use of the trust income. Since June 20, 1934, petitioner has not withdrawn nor used for his own property any part of the principal or income of the trust, but all of the net income received by him, amounting to $8,453.93, has been distributed to the beneficiary, Virginia R. Clifford, and was included in the income tax returns filed by her for the year. The petitioner filed his income tax return for the year 1934, but did not include any return from the trust. The Commissioner increased the petitioner's taxable income for the year 1934 by the amount of $10,111.23, the gross income of the trust, and upon review the Board of Tax Appeals affirmed the action of the Commissioner.

Respondent admits that in form at least, a trust was created, but contends that for tax purposes the trust should be denied effect because (1) the petitioner possessed the "rights of possession, control and ultimate enjoyment;" (2) the trust instrument was but an assignment of future income from property retained by petitioner; and (3) the income was taxable under Section 166 of the 1934 Revenue Act, 26 U.S.C.A. § 166.

That an owner of property may declare himself trustee of his property is now well settled. St. Louis Union Trust Co. v. Becker, 8 Cir., 76 F.2d 851; Becker v. St. Louis Union Trust Co., 296 U.S. 48, 56 S. Ct. 78, 80 L.Ed. 35; Morsman v. Commissioner, 8 Cir., 90 F.2d 18, 113 A.L.R. 441. Thus, in Becker v. St. Louis Union Trust Company, supra, the court said 296 U.S. 48, 56 S.Ct. 79, 80 L.Ed. 35: "By the declaration of trust here under review, the legal title, possession, and control of the trust estate passed irrevocably from the grantor as an individual to himself as trustee. The effect is no different than if the trustee had been another person."

It is, however, contended by respondent that the trust instrument retained or conferred upon the petitioner as trustee such rights of possession, control and ultimate...

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10 practice notes
  • Rhodes v. Commissioner of Internal Revenue, No. 4594.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • April 10, 1940
    ...Helvering v. Salvage, 297 U.S. 106, 56 S.Ct. 375, 80 L.Ed. 511, is opposed to such procedure." 111 F.2d 57 Clifford v. Helvering, 8 Cir., 105 F.2d 586, page 591. In this case the court said, "This question was not passed upon by the Board of Tax Appeals, but it may nevertheless properly be ......
  • Helvering v. Hormel, No. 11565.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • April 25, 1940
    ...166, 167 and 22(a), considered together and read as a whole." Under point 2 the taxpayer cites the case of Clifford v. Helvering, 8 Cir., 105 F.2d 586, which involved a short-term family trust similar to those here in suit. This Court held in that case that the income from the trust there c......
  • Helvering v. Clifford, No. 383
    • United States
    • United States Supreme Court
    • February 26, 1940
    ...taxable to him. The Board of Tax Appeals sustained that redetermination. 38 B.T.A. 1532. The Circuit Court of Appeals reversed. 8 Cir., 105 F.2d 586. We granted certiorari because of the importance to the revenue of the use of such short term trusts in the reduction of surtaxes. 308 U.S. 54......
  • Mallinckrodt v. Nunan, No. 12915.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • January 29, 1945
    ...section 161 (a) (1), 26 U.S.C.A. Int.Rev.Code, § 161 (a) (1). Similar views were expressed by this Court in Clifford v. Helvering, 8 Cir., 105 F.2d 586, and by Mr. Justice Roberts in the dissenting opinion in Helvering v. Clifford, 309 U.S. 331, 338, 60 S.Ct. 554, 84 L.Ed. 788, in which cas......
  • Request a trial to view additional results
10 cases
  • Rhodes v. Commissioner of Internal Revenue, No. 4594.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • April 10, 1940
    ...Helvering v. Salvage, 297 U.S. 106, 56 S.Ct. 375, 80 L.Ed. 511, is opposed to such procedure." 111 F.2d 57 Clifford v. Helvering, 8 Cir., 105 F.2d 586, page 591. In this case the court said, "This question was not passed upon by the Board of Tax Appeals, but it may nevertheless properly be ......
  • Helvering v. Hormel, No. 11565.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • April 25, 1940
    ...166, 167 and 22(a), considered together and read as a whole." Under point 2 the taxpayer cites the case of Clifford v. Helvering, 8 Cir., 105 F.2d 586, which involved a short-term family trust similar to those here in suit. This Court held in that case that the income from the trust there c......
  • Helvering v. Clifford, No. 383
    • United States
    • United States Supreme Court
    • February 26, 1940
    ...taxable to him. The Board of Tax Appeals sustained that redetermination. 38 B.T.A. 1532. The Circuit Court of Appeals reversed. 8 Cir., 105 F.2d 586. We granted certiorari because of the importance to the revenue of the use of such short term trusts in the reduction of surtaxes. 308 U.S. 54......
  • Mallinckrodt v. Nunan, No. 12915.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • January 29, 1945
    ...section 161 (a) (1), 26 U.S.C.A. Int.Rev.Code, § 161 (a) (1). Similar views were expressed by this Court in Clifford v. Helvering, 8 Cir., 105 F.2d 586, and by Mr. Justice Roberts in the dissenting opinion in Helvering v. Clifford, 309 U.S. 331, 338, 60 S.Ct. 554, 84 L.Ed. 788, in which cas......
  • Request a trial to view additional results

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