Hubbell v. Helvering
| Citation | 70 F.2d 668 |
| Decision Date | 12 April 1934 |
| Docket Number | No. 9790.,9790. |
| Parties | HUBBELL v. HELVERING, Commissioner of Internal Revenue. |
| Court | United States Courts of Appeals. United States Court of Appeals (8th Circuit) |
Joseph G. Gamble, of Des Moines, Iowa (Joseph F. Rosenfield and Gamble, Read & Howland, all of Des Moines, Iowa, on the brief), for petitioner.
E. E. Angevine, Sp. Asst. to Atty. Gen. (Sewall Key and John G. Remey, Sp. Assts. to Atty. Gen., on the brief), for respondent.
Before STONE and SANBORN, Circuit Judges, and WYMAN, District Judge.
This is a petition to review orders of the Board of Tax Appeals redetermining the personal income taxes of petitioner and fixing deficiencies for the years 1924 to 1928, both inclusive.
The facts are stipulated. Frederick M. Hubbell and wife created a trust. In each of the above years, the trustees charged upon the books of the trust estate stated amounts (differing in each year) for depreciation upon depreciable property belonging to the estate and covering the items of buildings, furniture and fixtures, renewals and replacements, paving and sidewalk assessments, and automobiles. Also, in the years 1924, 1925, 1926, and 1928, the trustees made similar charges covering the undepreciated cost of obsolete buildings demolished or abandoned by orders of the trustees. After the deduction of the above and other items (of expense not here in question), the trustees distributed the net income (so ascertained) of the estate to the beneficiaries, of whom this petitioner is one. None of the amounts so charged and set aside have been distributed to the beneficiaries. Deeming these amounts as constituting income "distributable" to the beneficiaries, the Commissioner assessed taxes against each beneficiary for his or her allocate part thereof as income "distributable" to the particular beneficiary and taxable to him. The taxes so assessed thereon to the petitioner, as a beneficiary, are the subject of this controversy.
The broad question thus presented is whether amounts retained by these trustees out of the gross receipts from the trust estate for the above years to maintain a reserve for depreciation of trust assets, and to offset the undepreciated cost of obsolete buildings abandoned, constitute income distributable to the beneficiaries and, as such, taxable to them.
The taxing statutes governing the years involved here are sections 219 (a) (b) and (c) and 214 (a) (8) of the Revenue Act of 1924 (43 Stat. 253, 275, 276, 270) and of the Revenue Act of 1926 (44 Stat. 9, 32, 33, 27, 26 USCA §§ 960 note and 955 (a) (8) and note), and sections 23 (k), 143 (c), 161 (a) (4) and (b) and 162 (b) of the Revenue Act of 1928 (45 Stat. 791, 800, 833, 838, 26 USCA § 2023 (k), 2143 (c), 2161 (a) (4), (b), 2162 (b). As applicable to the issue here, the provisions of these various acts are the same in substance. In this respect they are also in substance the same as section 219 (a) (d) recently passed on by the Supreme Court (John Freuler, Adm'r, v. Helvering, Commissioner, 54 S. Ct. 308, 78 L. Ed. ___, decided January 8, 1934). That decision determines that the entire net income of the trust estate is taxable; that, in determining such net income, the trustee is authorized to make the appropriate deductions allowed by law to other taxpayers; that so much of such net income as is distributable to the beneficiaries is taxable to them;...
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