Commissioner of Internal Revenue v. Barbour
| Decision Date | 08 December 1941 |
| Docket Number | No. 359.,359. |
| Citation | 122 F.2d 165 |
| Parties | COMMISSIONER OF INTERNAL REVENUE v. BARBOUR. |
| Court | U.S. Court of Appeals — Second Circuit |
Samuel O. Clark, Jr., Asst. Atty. Gen., and Sewall Key and Harry Marselli, Sp. Assts. to Atty. Gen., for the Commissioner of Internal Revenue, petitioner.
Charles S. McVeigh, of New York City (George M. Wolfson, Joseph W. Goodwin, John A. Lyon, and Cuthbert B. Caton, all of New York City, of counsel), for Frederick K. Barbour, respondent.
Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
Writ of Certiorari Denied December 8, 1941. See 62 S.Ct. 361, 86 L.Ed. ___.
The taxpayer, Frederick K. Barbour, executed a deed of trust on October 29, 1931, wherein he assigned certain shares of corporate stock to Lewis Spencer Morris and Charles S. McVeigh, as trustees, with directions to collect the income therefrom and, after paying out of it the interest accruing upon a loan to him of $100,000 by the Central Hanover Bank & Trust Company secured by the assigned shares, to pay over the net income as follows: 4/10 to the taxpayer's wife, Helen Barbour; 1/10 to each of their three minor children, and 3/10 to her mother. If any beneficiary other than the wife should die during the life of the trust the income payable to such deceased beneficiary should be payable to the wife. The trustees were authorized in their discretion to pay over the net income of any of the children to their mother. Their shares of the net income for the years 1934 and 1935 were thus distributed. The trustees named were given wide powers of investment but the taxpayer reserved no power to revoke or modify the terms of the trust, or to control the trust property or its management. His wife likewise had no such power.
Under the provisions of the trust it was to terminate upon the happening of any of the following events: (1) the death of Helen Barbour; (2) her attainment of the age of 34 years, 11 months and 12 days, which, if she lived, would occur on December 31, 1932; (3) the death of the settlor. It was provided that upon the happening of any of the foregoing three events the trusts should at once terminate and the trustees should pay over the trust property to the grantor, or, if the trusts should have terminated because of the death of the grantor, they should pay over the trust estate as the grantor might by will appoint and, in default of appointment, should pay it over to the grantor's children who survived him, or their heirs.
On March 11, 1932, and December 15, 1934, the taxpayer executed further instruments whereby in the first instrument he extended the duration of the original trust until Helen Barbour should attain the age of 37 years, 11 months and 12 days, which would be on December 31, 1935, and by the second instrument he extended the duration until she should attain the age of 42 years, 11 months and 12 days, which would be on December 31, 1940.
It is apparent from the foregoing that after the first extension made on March 11, 1932, the trust would have a duration of 3 years, 9 months and 20 days, and after the second extension made on December 14, 1934, the trust would have a duration of 6 years and 16 days; in other words, the income payable during 1934 was derived up to December 15 of that year from a trust for 3 years, 9 months and 20 days, and the income payable during the last 16 days of the year 1934 and during the entire year 1935 was derived from a trust having a duration of 6 years and 16 days.
On November 20, 1934, the taxpayer executed a second deed of trust naming the same trustees as in the first, and upon like terms except as to the years of duration. This trust was to terminate when Helen Barbour attained the age of 41 years, 11 months and 12 days, which would be December 31, 1939. Its duration, therefore, was limited by its terms to 5 years, 1 month and 11 days. But on December 15, 1934, the taxpayer increased the corpus by an assignment to the trustees of additional securities, and by an agreement extended its duration by one year so that it would terminate upon the wife's attainment of the age of 42 years, 11 months and 12 days, which would be on December 31, 1940. Accordingly the term of the second trust would after the extension be 6 years and 16 days. The income payable during 1934 was derived up to December 15, 1934, from a trust for 5 years, 1 month and 11 days and that payable during the last 16 days of the year 1934 and during the entire year 1935 was derived from a trust having a duration of 6 years and 16 days.
The trustees administered the trusts according to their terms and paid the income thereon derived during the years 1934 or ...
To continue reading
Request your trial
-
Cushman v. Commissioner of Internal Revenue
...indication that the Clifford doctrine will apply. See Hormel v. Helvering, 312 U.S. 552, 61 S.Ct. 719, 85 L.Ed. 1037; Com'r v. Barbour, 2 Cir., 122 F.2d 165, 166, certiorari denied 314 U.S. 691, 62 S.Ct. 361, 86 L.Ed. 553; Helvering v. Elias, 2 Cir., 122 F.2d 171, certiorari denied 314 U.S.......
-
Commissioner of Internal Revenue v. Armour, 7576.
...Circuit extended the rule of the Clifford case to a ten-year trust. The same court, in the summer of 1941, in three cases, Commissioner v. Barbour, 122 F.2d 165, Commissioner v. Woolley, 122 F.2d 167, and Helvering v. Elias, 122 F.2d 171, likewise attributed great import to the short term. ......
-
Kohnstamm v. Pedrick
...trust is merely one of the elements to be considered by the Court. Helvering v. Elias, 2 Cir., 122 F.2d 171; Commissioner of Internal Revenue v. Barbour, 2 Cir., 122 F.2d 165; Commissioner of Internal Revenue v. Buck, 2 Cir., 120 F.2d 775, In McKnight v. Commissioner, supra, 123 F.2d 240, a......
-
Stuart v. Commissioner of Internal Revenue
...171. They are (a) close family relationship, (b) short trust term, and (c) reservation of powers of management. See also Commissioner v. Barbour, 2 Cir., 122 F.2d 165. Certiorari was denied in both of these cases. 62 S.Ct. 361, 86 L.Ed. ___. In the present case we have no short terms, nor p......