Jacob W. Blasdel and Ruth Alice Blasdel v. Commissioner of Internal Revenue

Fifth Circuit

Jacob W. Blasdel and Ruth Alice Blasdel v. Commissioner of Internal Revenue

478 F.2d 226, 32 A.F.T.R.2d (RIA) 6194, 1973 U.S. App. LEXIS 9842

CourtCourt of Appeals for the Fifth Circuit

DecidedMay 21, 1973

Docket73-1284

StatusPublished

Cited by10 cases

This text of 478 F.2d 226 (Jacob W. Blasdel and Ruth Alice Blasdel v. Commissioner of Internal Revenue) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Jacob W. Blasdel and Ruth Alice Blasdel v. Commissioner of Internal Revenue, 478 F.2d 226, 32 A.F.T.R.2d (RIA) 6194, 1973 U.S. App. LEXIS 9842 (5th Cir. 1973).

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Opinion

*227 PER CURIAM:

This is an appeal from the United States Tax Court, 58 T.C. 1014. It involves a determination of whether certain interests conveyed from the appellants to the donees are “future interests” and therefore not entitled to the $3,000 annual gift tax exclusion. We affirm the decision below.

In 1967, appellants transferred 290 acres of farm land to the Edgewood Farm Trust and named themselves as beneficiaries. They then executed gift agreements transferring fractional shares of their interests in the trust to eighteen family members (their children, the children’s spouses, and their grandchildren). The farm land had generated very little income, so the trust was created to allow the trustee to sell the land in small parcels and distribute the proceeds to the twenty beneficiaries. But under the Powers of the Trustee, § VII of the trust instrument provided:

“The trustee shall make periodic disbursements of the income and corpus of the trust, provided that all beneficiaries of the trust are in accord and unanimously agree that such distribution be made. Should it not be possible to obtain unanimous approval of all the beneficiaries, and should a majority of the beneficiaries be desirous that a distribution be made, the trustee will be authorized to make such distribution provided that it be authorized by a majority vote of the members of the Board of Directors of the Rosenberg State Bank.”

On the authority of Ryerson v. United States, 312 U.S. 405, 61 S.Ct. 656, 85 L.Ed. 917 (1941), and Howe v. United States, 7 Cir., 1944, 142 F.2d 310, the Tax Court held that the disbursement of income and corpus conditional on (1) unanimous agreement of the twenty beneficiaries, or (2) majority approval of the beneficiaries and majority approval of the directors of a local bank constituted “future interests in property” within the meaning of § 2503(b), I.R.C. 1954.

Since the receipt of income is contingent upon an event, the language in Chanin v. United States, 1968, 393 F.2d 972, 183 Ct.Cl. 840 is applicable:

“Unless the donee is entitled unconditionally to present use, possession, or enjoyment of property transferred, gift is one of future interest for which no gift tax exclusion is operable”. [Emphasis added]

The judgment of the Tax Court is

Affirmed.

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*227 PER CURIAM:

This is an appeal from the United States Tax Court, 58 T.C. 1014. It involves a determination of whether certain interests conveyed from the appellants to the donees are “future interests” and therefore not entitled to the $3,000 annual gift tax exclusion. We affirm the decision below.

In 1967, appellants transferred 290 acres of farm land to the Edgewood Farm Trust and named themselves as beneficiaries. They then executed gift agreements transferring fractional shares of their interests in the trust to eighteen family members (their children, the children’s spouses, and their grandchildren). The farm land had generated very little income, so the trust was created to allow the trustee to sell the land in small parcels and distribute the proceeds to the twenty beneficiaries. But under the Powers of the Trustee, § VII of the trust instrument provided:

“The trustee shall make periodic disbursements of the income and corpus of the trust, provided that all beneficiaries of the trust are in accord and unanimously agree that such distribution be made. Should it not be possible to obtain unanimous approval of all the beneficiaries, and should a majority of the beneficiaries be desirous that a distribution be made, the trustee will be authorized to make such distribution provided that it be authorized by a majority vote of the members of the Board of Directors of the Rosenberg State Bank.”

On the authority of Ryerson v. United States, 312 U.S. 405, 61 S.Ct. 656, 85 L.Ed. 917 (1941), and Howe v. United States, 7 Cir., 1944, 142 F.2d 310, the Tax Court held that the disbursement of income and corpus conditional on (1) unanimous agreement of the twenty beneficiaries, or (2) majority approval of the beneficiaries and majority approval of the directors of a local bank constituted “future interests in property” within the meaning of § 2503(b), I.R.C. 1954.

Since the receipt of income is contingent upon an event, the language in Chanin v. United States, 1968, 393 F.2d 972, 183 Ct.Cl. 840 is applicable:

“Unless the donee is entitled unconditionally to present use, possession, or enjoyment of property transferred, gift is one of future interest for which no gift tax exclusion is operable”. [Emphasis added]

The judgment of the Tax Court is

Affirmed.

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478 F.2d 226, 32 A.F.T.R.2d (RIA) 6194, 1973 U.S. App. LEXIS 9842, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jacob-w-blasdel-and-ruth-alice-blasdel-v-commissioner-of-internal-revenue-ca5-1973.

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