United States v. Benedict

115 Ct. Cl. 839, 112 Ct. Cl. 550

Opinion

On writ of certiorari (336 U. S. 966) to review a judgment of the Court of Claims holding that under a trust indenture which required the trustees to pay a charitable corporation 45% of the total 1944 income of the trust, after expenses, the trustees were entitled, under Sections 22 and 162 (a) of U. S. Code, Title 26, to deduct on the fiduciary return 45% of the full amount of long-term capital gains which had been set aside for such charitable use, and not merely 45% of one-half of the long-term capital gains by reason of the “capital gains” provisions of Section 117 (a) and (b).

The judgment of the Court of Claims was reversed, February 13,1950, by the Supreme Court in an opinion delivered by Mr. Justice Burton.

The syllabus of the Supreme Court opinion is as follows:

In 1944, trustees permanently set aside a charitable contribution from gains realized upon the disposition of capital assets held in the trust for more than six months. Pursuant to § 117 (b) of the Internal Revenue Code, they treated only 50% of these capital gains as income in computing the income of the trust. Meld: Under § 162 (a), only 50% of the charitable contribution (the porportionate part attributable to the taxable part of the capital gains) could be deducted in computing the federal income tax of the trust.

Mr. Justice Black and Mr. Justice Jackson were of the opinion that the judgment of the Court of Claims should be affirmed for the reasons which it gave. Mr. Justice Douglas took no part in the consideration or decision of this case. Mr. Justice Frankfurter filed a separate opinion.