dissenting: In my opinion there was in no one “the power to revest in the grantor title to any part of the corpus of the trust.”
While I am inclined to think that for present purposes the trustee may properly be regarded as having a substantial adverse interest by reason of his duty to retain the corpus for other beneficiaries against unfounded demands of the settlor, and that Reinecke v. Smith, 289 U. S. 172; Witherbee v. Commissipner, 70 Fed. (2d) 696; certiorari denied, 293 U. S. 582; and Sterling Morton, 38 B. T. A. 1283, are distinguishable because they involved reserved powers of the settlor, I pass that question and assume arguendo with the prevailing opinion that the trustee is not a person having a substantial adverse interest.
The necessity for the occurrence of the objective “event”, i. e., the insufficiency of income for the settlor’s customary needs and enjoyment, seems to me to make it impossible to say that there was a power in either the grantor or the trustee to revest in the grantor title to any part of the corpus. The settlor was given no power at all. Upon the trustee, the happening of the contingency imposed a duty to invade the corpus to the extent necessary to provide for the settlor’s customary needs and enjoyment. According to the Commissioner’s view, no matter how remote may be the possibility of such a distribution of corpus, the mere possibility must bo recognized as the *802equivalent of a “power.” Note too that this “power” is regarded as requiring that all the income of the entire trust is to be attributed and taxed to the settlor, irrespective of any relation it may have to the amount which she may possibly at some undeterminable time need. The statute only requires that she be taxed upon “the income from such part of the trust” as she or the trustee has power to revest in her. But here, despite the fact that she received nothing and no one has claimed that her income is inadequate for her needs, the latent power is said to require taxing her with all the trust income in every year. I am impelled to disagree with both the interpretation of the statute and with its application here.
I also think it is improper and unfair to place the decision adverse to the petitioner on the failure to prove that the contingency did not arise. The case was submitted on a written stipulation and the question submitted by both parties was whether by the terms of the twist instrument the settlor or trustee could be said to have such a power to revest as the statute described. No one suggested at any stage of the proceeding, from the deficiency notice through the reply brief, that there was a question of fact. I venture to think that if it had been intimated that the settlor might in the taxable year have needed more than the income of the trust for her maintenance and customary enjoyment and thus could have demanded some of the corpus, the petitioner would have introduced proof and perhaps could have clearly proven the negative. Indeed, from the fact that she made no such demand and that the trustee made no such payment to her, it is reasonable to infer that there was no occasion for it.
Upon the only issue litigated I am of opinion that decision should go for the petitioner.
AeuNdell, Van Fossan, Murdock, Black, and HaReon agree with this dissent.