dissenting: In making himself trustee in the trust indenture for the benefit of his four children, petitioner Hall, as settlor, undoubtedly conferred upon himself large powers of administrative control over the trust corpus and income. The trust, however, was irrevocable and only upon the happening of a very remote contingency, to wit: “In the event all of the said beneficiaries shall die without issue and prior to the full distribution of this trust estate,” was any of the trust corpus or accumulated income to revert to the settlor. It is true that the settlor provided that “the trustee may at any time during the continuance of this trust pay to or expend for the use and benefit of said beneficiaries, any and all sums reasonably necessary for the purpose of educating and maintaining said children and for the purpose of defraying the expense of any illness, emergency or other extreme misfortune.” This provision in the trust indenture would undoubtedly make the income of the trust taxable to petitioner under section 167 of the Internal Revenue Code prior to its amendment in the 1943 Act, notwithstanding none of the income of the trust was used by petitioner for the purposes named. See Helvering v. Stuart, 317 U. S. 154.
However, in such cases as the above, where the evidence shows that none of the income of the trust was used for the support, education, and maintenance of the settlor’s minor children, Congress in section 134 of the Revenue Act of 1943 consummated a retroactive legislative repeal of the Stuart case and reinstated the rule exemplified by E. E. Black, 36 B. T. A. 346. See David Small, 3 T. C. 1142. The majority opinion does not hold that petitioner is taxable with the income of the trust under section 167, but holds that he is taxable with it under section 22 (a) because he retained such large powers of control over the corpus and income as trustee as to still leave himself owner of the property for all intents and purposes. I do not agree with such a conclusion. This case is not like Commissioner v. Buck, 120 Fed. (2d) 775, cited in the majority opinion. In the Buck case the court was careful to point out:
The outstanding fact, which distinguishes this case from Helvering v. Palmer, 115 F. 2d 368 and Blair v. Commissioner, 300 U. S. 5, is that respondent has reserved to himself during his life, the power, at any time and from time to time, to “alter or amend in any respect whatsoever,” the provisions of the indenture relating to “the disposition of the income and principal of the trust estate or the separate shares into which the same may be divided, and to change any beneficial interest” thereunder. True, he cannot do so in such a way as to “revest in himself title” or “so as to direct that any part of the income * * * be distributed to him or be held or accumulated for future distribution to him.” But he has unlimited power, at any moment to reduce or obliterate the share of principal or interest originally allotted to his wife or any child, if for any reason, or for no reason, he decides, in the exercise of his uncontrolled discretion, that any of the beneficiaries is receiving more than seems desirable. * * *
In the Buck case a bank was named as trustee and the foregoing broad powers which the court commented upon were reserved to Buck as the settlor of the trust.
We have no such situation in the instant case. All the wide administrative powers of control which the trust indenture authorizes petitioner as the trustee to exercise are to be exercised by him in his fiduciary capacity. I do not understand that the trust indenture confers upon petitioner as trustee the power “to reduce or obliterate the share of principal or interest originally allotted to the beneficiaries” as the court pointed out was present in Commissioner v. Buck, supra. If I understood that the trust indenture conferred upon petitioner any such broad powers as that, then I would agree that he, as the settlor of the trust, would be taxable with the income. But as I understand the reading of the trust indenture in the instant case, all four beneficiaries were to share equally in the principal and income of the trust and the trustee had no power to change or alter their proportionate intei’ests. For example, he had no power to say that Patricia should be the beneficiary of one-half of the income and principal of the trust instead of one-fourth of it, and that Nanette should not receive anything at all. It is true that the trustee was vested with the power to determine when and in what amounts income and principal were to be distributed to the beneficiaries or whether the income should be accumulated and reinvested and distributed to the beneficiaries at a later date. But, as I interpret the trust indenture, the trustee had to carefully account for the principal and income and at the end of the trust term of fifteen years all principal and accumulated income had to be turned over to the beneficiaries, who were entitled to receive it, and in equal shares to each beneficiary. Cf. J. O. Whiteley, 3 T. C. 1265. If the trustee was given the power “to reduce or obliterate” the share of principal or interest originally allotted to any one of his four children except “for the purpose of educating and maintaining said children and for the purpose of defraying the expense of any illness, injury or other extreme misfortune,” I fail to see it.
I do not think the power of a trustee to determine whether income or principal of a trust shall be distributed to a beneficiary or withheld from him in a given year, so long as there is no power to deprive such beneficiary of his ultimate share on final distribution, gives the trustee any such economic interest in the property of the trust as to make the income taxable to him under section 22 (a). See my concurring opinion in Lorenz Iversen, 3 T. C. 756, at page 775.
Considering all the facts in the instant case, I do not think there is any more reason to say that the income of the trust is taxable to petitioner under section 22 (a) of the Internal Revenue Code than there was in such cases as Frederick Ayer, 45 B. T. A. 146; David Small, supra; and Estate of Benjamin Lowenstein, 3 T. C. 1133.
Based on the foregoing reasons, I respectfully dissent from the majority opinion.
Smith, Arundell, and Van Fossan, JJ., agree with this dissent.