*1093 Where the grantor of a trust retains the independent right to dispose of the income thereof and during the taxable years designates the recipients of his bounty, held, the income of the trust is taxable to him. Corliss v. Bowers,281 U.S. 376, followed.
*280 The commissioner determined deficiencies in the petitioner's income tax of $2,606.78 for 1927 and $1,891.91 for 1928.
The only question for our determination is whether the income of a trust established by the petitioner is taxable to him.
FINDINGS OF FACT.
The petitioner is a resident of Stonington, Connecticut.
On December 11, 1923, the petitioner transferred to the Washington Trust Company, of Westerly, Rhode Island, certain securities of the par value of $162,607.58, in accordance with a declaration of trust executed by the petitioner at that time, which, in so far as material hereto, is as follows:
Said Trustee shall, during my lifetime, pay from the net income, interest and profit accruing upon said fund, to such persons as I may designate, on the first days*1094 of January, April, July and October, in each year, such sums as I may request; and all net income, interest or profit accruing on such dates, not thus paid, shall be reinvested, and become a part of said fund.
I reserve and retain the power and right to increase the principal of said fund, at any time. It is understood that while living, I may advise and consult with the Trustee and its officers as to investments. Upon my decease, said *281 Trustee shall pay to my wife, if she be then living, from the net income of said fund, at the times hereinbefore fixed, during the remainder of her natural life, such sums as she may request. Upon the decease of my said wife, should she survive me, or if she pre-decease me, then at my decease, I direct said Trustee to pay the net income from said fund, at the times hereinbefore stated, to my children, if living, in equal shares.
In December, 1923, the petitioner was 66 years of age and in vigorous health. He was vice president of the Atwood Machine Company and as such officer received a salary which, with the income from property which he retained, was far more than ample for the support of himself and his wife during the remainder*1095 of his life.
At the time the petitioner executed the above trust, his son's widow, Adeline M. Bradley, and his two daughters, Annie B. Brown and Vera Findlay, and their families were dependent upon the petitioner for their main support. At that time he was living with his first wife, Lois G. Bradley, who has since died. Prior to the taxable years under consideration, the petitioner remarried and during these years was living with his wife, Mildred G. Bradley.
For the taxable years under consideration fiduciary returns were filed by the trustee. Mildred G. Bradley, the petitioner's wife, filed separate returns. The petitioner filed separate returns on which he did not report any of the income of the trust.
In the determination of deficiencies the Commissioner has added to the incomes reported by the petitioner for the years 1927 and 1928, $13,461.66 and $13,487.29, respectively, representing the net income of the trust of which the Washington Trust Company was trustee. These amounts are inclusive of payments made to beneficiaries designated by the petitioner during the taxable years as follows:
| 1927 | 1928 | |
| Mildred G. Bradley | $7,778.65 | $4,200.00 |
| Vera B. Findlay | 2,400.00 | 1,200.00 |
| Annie B. Brown | 1,200.00 | 1,200.00 |
| Adeline M. Bradley, guardian | 1,200.00 | |
| Adeline M. Bradley | 1,200.00 | |
| Total | 12,578.65 | 7,800.00 |
*1096 The balance of the income of the trust fund during these years was either added to the principal or used to pay the expenses of the trust.
OPINION.
SMITH: In addition to the principal issue the petitioner also alleged error with respect to the taxability of alleged capital gains upon sales of securities by the trustee, but no evidence has been offered regarding such sales and we have no basis upon which to make any determination with respect thereto.
*282 The petitioner contends that the trust was established in 1923 for the purpose of providing for the dependent members of his family, and that he had no intention of ever designating himself as a beneficiary of the trust. He asserts that he has never received any of the income in question, the amount of which is not in dispute, and that the respondent has erroneously taxed this income to him under section 219(h) of the Revenue Act of 1926. The petitioner submitted a statement of the income and disbursements of the trust fund for the purpose of showing to whom the income was paid. From this statement it appears that a considerable portion of the income in each year was added to the principal, and that the beneficiaries*1097 designated by the petitioner to share in his bounty each year received only such amounts as he deemed necessary for their support. It is to be noted that none of these persons was designated in the trust instrument as a beneficiary. Although the petitioner claims that the trust was established to take care of his dependents, and the facts show that he had other income more than ample in amount to provide for himself and wife, she nevertheless received the largest share of the distributed income during the taxable years.
The respondent's action in taxing the income of this trust to the petitioner is sustained. There is nothing in the trust instrument to prevent the petitioner from designating himself as the beneficiary. The petitioner had the right to dispose of the income of the trust as he saw fit, and during the taxable years before us designated the recipients of his bounty. The instant proceeding is controlled by , wherein the Supreme Court said:
* * * if a man disposes of a fund in such a way that another is allowed to enjoy the income which it is in the power of the first to appropriate it does not matter whether*1098 the permission is given by assent or by failure to express dissent. The income that is subject to a man's unfettered command and that he is free to enjoy at his own option may be taxed to him as his income, whether he sees fit to enjoy it or not. * * *
See also . Cf. ; ; .
Judgment will be entered for the respondent.