Frank's Trust of 1931 v. Commissioner

Third Circuit

Frank's Trust of 1931 v. Commissioner

165 F.2d 992, 36 A.F.T.R. (P-H) 728, 1948 U.S. App. LEXIS 3945

CourtCourt of Appeals for the Third Circuit

DecidedFebruary 9, 1948

DocketNo. 9496

StatusPublished

Cited by3 cases

This text of 165 F.2d 992 (Frank's Trust of 1931 v. Commissioner) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Frank's Trust of 1931 v. Commissioner, 165 F.2d 992, 36 A.F.T.R. (P-H) 728, 1948 U.S. App. LEXIS 3945 (3d Cir. 1948).

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Opinion

PER CURIAM.

This case presents the question of whether the Tax Court erred in upholding the Commissioner’s disallowance of a deduction from the gross income of a trust estate for the year 1940. The claimed deduction was proper only if the trust agreement required the trustees to distribute the income currently or such sums were actually “properly paid or credited during such year to [the beneficiaries].” Int.Rev. Code §§ 162(b), 162(c), 26 U.S.C.A. IntRev. Code, 162 (b, c); cf. Commissioner v. Stearns, 2 Cir., 1933, 65 F.2d 371, certiorari denied, 1933, 290 U.S. 670, 54 S.Ct. 90, 78 L.Ed. 579. In the light of the facts of the taxpayer’s [993]*993case the Tax Court held that neither condition existed. 8 T.C. 368. It found that the circumstances surrounding the crediting by the trustees of certain sums to the beneficiaries indicated an intent not to place the money unconditionally and irrevocably at their disposal. This conclusion was based upon the evidence which revealed the close relationship between the settlor, one of the. trustees, and the beneficiaries; the tender ages of the beneficiaries; likewise, the immediate agreement by these beneficiaries, after the sums in question had been “voted”, to leave the money with the trustees so that it could be lent to another trust which was engaged in the construction of a home for their mother and father. The transaction, therefore, did not satisfy § 162(c) of the Code. Cf. Richards’ Estate v. Commissioner, 2 Cir., 1945, 150 F.2d 837, 160 A.L.R. 1186; Commissioner v. Guitar Trust Estate, 5 Cir., 1934, 72 F.2d 544. This question is peculiarly within the competency of the Tax Court because it involves the conclusion to be drawn from certain evidentiary facts. Commissioner v. Scottish-American Investment Co., 1944, 323 U.S. 119, 65 S.Ct. 169, 89 L.Ed. 113.

The decision of the Tax Court will be affirmed.

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PER CURIAM.

This case presents the question of whether the Tax Court erred in upholding the Commissioner’s disallowance of a deduction from the gross income of a trust estate for the year 1940. The claimed deduction was proper only if the trust agreement required the trustees to distribute the income currently or such sums were actually “properly paid or credited during such year to [the beneficiaries].” Int.Rev. Code §§ 162(b), 162(c), 26 U.S.C.A. IntRev. Code, 162 (b, c); cf. Commissioner v. Stearns, 2 Cir., 1933, 65 F.2d 371, certiorari denied, 1933, 290 U.S. 670, 54 S.Ct. 90, 78 L.Ed. 579. In the light of the facts of the taxpayer’s [993]*993case the Tax Court held that neither condition existed. 8 T.C. 368. It found that the circumstances surrounding the crediting by the trustees of certain sums to the beneficiaries indicated an intent not to place the money unconditionally and irrevocably at their disposal. This conclusion was based upon the evidence which revealed the close relationship between the settlor, one of the. trustees, and the beneficiaries; the tender ages of the beneficiaries; likewise, the immediate agreement by these beneficiaries, after the sums in question had been “voted”, to leave the money with the trustees so that it could be lent to another trust which was engaged in the construction of a home for their mother and father. The transaction, therefore, did not satisfy § 162(c) of the Code. Cf. Richards’ Estate v. Commissioner, 2 Cir., 1945, 150 F.2d 837, 160 A.L.R. 1186; Commissioner v. Guitar Trust Estate, 5 Cir., 1934, 72 F.2d 544. This question is peculiarly within the competency of the Tax Court because it involves the conclusion to be drawn from certain evidentiary facts. Commissioner v. Scottish-American Investment Co., 1944, 323 U.S. 119, 65 S.Ct. 169, 89 L.Ed. 113.

The decision of the Tax Court will be affirmed.

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165 F.2d 992, 36 A.F.T.R. (P-H) 728, 1948 U.S. App. LEXIS 3945, Counsel Stack Legal Research, https://law.counselstack.com/opinion/franks-trust-of-1931-v-commissioner-ca3-1948.

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