*860 In 1899 W. P. Halliday died testate, leaving a considerable estate to his six children in equal shares. The widow's dower consisted of a life estate in one-third of the realty and title to one-third of the personalty. Thereafter in the same year, the children and widow conveyed all of the properties to three trustees, with exclusive authority to manage and operate; to lease, mortgage, sell, and convey; and to purchase additional real or personal property. The trustees were directed to "endeavor to manage said estate in such manner as to produce the greatest amount of income consistent with safety." From 1900 through the taxable year 1934, the trust estate was managed and operated by the trustees and earned large profits, which were distributed to the beneficiaries. Held, the trust is an association, taxable as a corporation. Morrissey v. Commissioner,296 U.S. 344">296 U.S. 344.
*518 These are consolidated proceedings for the redetermination of deficiencies in income tax for the year 1934, in the case of W. P. Halliday and Carolyn*861 W. Halliday, docket No. 90378, in the amount of $16.47, and in the case of Anne R. Halliday, Docket No. 90379, in the amount of $209.90. The deficiency in each case results from the disallowance by respondent of a deduction in the amount of $20,030.66 representing the proportionate share of the respective petitioners in a loss alleged to have been sustained for the year 1934 by the W. P. Halliday estate, a trust in which they held beneficial interests. This action of the respondent is the sole error assigned by petitioners.
FINDINGS OF FACT.
One W. P. Halliday (referred to in the record as Captain W. P. Halliday) died testate in 1899. By the terms of hiw will, his wife, who had separated from him during his lifetime, had an election to abide by the separation agreement executed by them, or dissent from the will and take her widow's share of his estate in accordance with the laws of descent and distribution of Illinois. The remainder of his property, after the payment of debts and certain special bequests, he devised and bequeathed to his six children, William P. Halliday, Jr., *519 Charlotte J. Wing, Mary H. Halliday, John Halliday, Florence H. Rogers, and Adelia H. *862 Tiernan, in equal parts.
Eliza W. Halliday, widow of the testator, dissented from the will and took her dower rights under the laws of Illinois, being a life estate in one-third of the realty and title to one-third of the personalty.
After the death of W. P. Halliday, all of his heirs at law, including his widow, executed a trust instrument dated November 27, 1899, wherein all of the property, both real and personal, which they had inherited either as beneficiaries under his will or heirs at law, was conveyed to three trustees, one of whom was a grantor of the trust. The instrument in part material here reads as follows:
AND WHEREAS Said parties of the second part [the widow and children] have agreed it is for the best interest of all concerned that the various properties owned or controlled by the said W. P. Halliday, deceased, at the time of his death be kept intact and managed as a whole, until such time as they can be disposed of advantageously, and to that end have mutually agreed to convey, transfer and assign and have by deed of even date herewith, duly stamped, conveyed, transferred and assigned, to the Trustees above named, all the lands and tenements, estate and*863 interest, real, personal or mixed, devised or bequeathed to them by said will or to which they are entitled as the widow and heirs at law of said W. P. Halliday, deceased, * * *
Now THIS INDENTURE WITNESSETH That in pursuance of the purpose above expressed, it is hereby agreed and declared by the parties hereto, that the Trustees aforesaid shall and do hold said estate and property upon the trusts and with the powers and subject to the limitations hereinafter set forth, that is to say:
1st. Said Trust Property shall be known as and its business conducted under the name of "W. P. HALLIDAY ESTATE."
2nd. The Trustees shall manage, operate or lease all the real estate constituting a part of the trust premises, * * * and pay one-third of the net income therefrom, * * * to said Eliza W. Halliday during her life or until the termination of this trust as herein provided, on account of her dower interest, and pay to said six children of W. P. Halliday, deceased, in equal shares the balance of said net income, * * *
3rd. The Trustees shall hold all personal property of the trust and all real estate hereafter purchased by them from the income of real or personal property or from the*864 sale of personal property for the benefit of said parties in the following proportions, for said Eliza W. Halliday, one-third, and for said children one-ninth each and distribute the income therefrom in like proportions.
4th. The Trustees may retain out of the net income from the estate such part as they may deem advisable for a working capital or for the development of the properties and shall make semi-annually distributions of the balance of the net income from the estate beginning with the first day of July, 1900.
5th. The Trustees, subject to the instructions of the beneficiaries as hereinafter provided, shall have full control and disposition of said estate, and shall endeavor to manage said estate in such manner as to produce the greatest amount of income consistent with safety, they shall pay taxes, expenses, keep the property properly insured, represent beneficiaries in all suits and legal proceedings relating to the premises with full power to compromise or settle any suits, to make and execute all agreements and to do all acts and things and pay *520 all sums of money necessary and proper for the due protection and management of said property for the best*865 interests of all concerned.
6th. If in the opinion of the Trustees the value of trust estate is depreciating because of the exhaustion of the mines, salt wells or the deterioration of buildings, they may charge to the income and set aside as a sinking fund such money as they may deem necessary to maintain the integrity of the principal.
7th. The Trustees may sell and convey the property real or personal, or any part or parts thereof at public or private sale either for cash or credit, may make leases thereof for terms not exceeding five years, may borrow money and mortgage the premises to raise funds for the development or extension of the various interests or to rebuild any buildings that may be destroyed by fire and lease or purchase such real or personal property as may seem to them essential for the protection of said estate. But they hereby agree to make no sales, purchases or mortgages of the amount of $5000.00 or over, without the consent in writing of a majority in interest of the beneficiaries. * * *
8th. The Trustees from time to time as they shall have funds in their hands from sales either of personal or real property of the principal of the estate may make*866 distribution thereof, but one-third of the proceeds from the sale from all real estate specified in the second paragraph shall be held in trust and invested by them and the net income therefrom paid to said Eliza W. Halliday for and during her life, * * *
* * *
The trust instrument further provided that any one or more of the trustees might be removed by the agreement in writing signed by two-thirds of the beneficial interests, and any vacancies resulting from death, resignation, or removal of a trustee might be filled in the same manner; that the heirs or devisees of any beneficiary who might die during the continuance of the trust or the assignees of any beneficiary should exercise the same voting power collectively as was exercised by such deceased or assigning beneficiary; that the trust might be determined at any time after five years from the date of the trust instrument by a vote or agreement in writing signed by a majority of the beneficial interests and should in no case continue more than twenty years after the death of the last survivor of the beneficiaries. Upon termination of the trust, either by vote or limitation, it is provided that the personal property shall*867 be sold and the proceeds distributed among the beneficiaries according to their several interests, or any beneficiary may take his or her proportionate share of personalty in kind; and the real estate remaining unsold shall be conveyed - the dower estate to the widow and the fee to the children of W. P. Halliday, deceased, except that unsold real estate purchased under paragraph "3rd" above shall be conveyed to the widow and heirs to be held by them according to their respective interests. The trustees may not be held liable for errors of judgment or for acts of default of each other, but each only for his own willful default or neglect. In case of the death of one of the beneficiaries during the *521 continuance of the trust, his or her share shall remain subject to the trust.
The property inherited from W. P. Halliday, deceased, and placed in the trust by his heirs consisted of real estate and personal property. The net worth of the trust at January 1, 1900, was $1,062,921.88, consisting of real estate valued at $487,243.89 and personal property in the amount of $575,677.99.
In 1907 there were set up on the books of the trust an undistributed income and capital account*868 and personal accounts for the beneficiaries. On January 1, 1907, the capital account of the trust had a credit balance of $1,253,755.77. From 1907 to 1926, inclusive, that account was not changed except for two charges in the amounts of $205,985.94 and $69,000. In 1926 the undistributed income account was discontinued and closed into the capital account.
From 1900 to 1906, inclusive, the trust earned total profits of $652,677.71, of which amount $390,725.65 was distributed to the beneficiaries and $261,952.06 credited to the undistributed income and capital account. From 1900 to 1926, inclusive, the trust earned total net profits of $1,685,771.29, after deducting losses sustained in 1914, 1920, and 1925 in the amounts of $9,267.28, $19,902.96, and $9,677.75, respectively. It sustained losses in the years 1927 to and including 1934, except that in 1931 it had profits of $49,346.49. From 1900 to 1934, the trustees distributed to the beneficiaries the total amount of $1,767,100.65. In 1930 the trust sustained a loss of $446,611.99. At the beginning of the taxable year 1934, the capital account disclosed a credit balance of $617,804.57.
In each of eight years during the period*869 from 1907 to 1924 the amount of $43,200 was distributed in cash to the beneficiaries. The largest distributions from the trust were made in the years 1905, 1909, and 1914 in the amounts of $128,400, $340,625, and $210,000, respectively. In 1909 and 1914, certain securities owned by the trust estate were distributed to the beneficiaries in kind. No distributions were made from 1926 to 1936 to any of the beneficiaries.
In 1900 the trust had 256 shares of stock in the City National Bank of Cairo, taken over from the W. P. Halliday estate, valued at $136,760. In 1906, 45 shares of that stock were sold for $9,000. On January 2, 1906, the City National Bank was consolidated with the Enterprise Savings Bank, as a result of which the trust acquired 954 shares of the consolidated bank, known as the First Bank & Trust Co. On May 15, 1909, 900 shares of that stock, valued at $90,000, were distributed in kind to the beneficiaries of the trust, and the remaining 54 shares were distributed in kind in 1914.
*522 The following is a list of the properties acquired by the trust estate subsequent to its creation, which properties were not a part of the original corpus:
| Property acquired | Year acquired | Cost |
| 847 shares of Memphis Hotel Co | 1900 | $84,700 |
| 18 shares of Cairo City Gas Co | 1903 | 1,350 |
| 864 shares of Cairo Elec. & Tractor Co | 1903 | 86,400 |
| 1 Forester Coal & Coke Co. securities | 1905 | 50,000 |
| 198 shares of Cairo City Coal Co | 1906 | 14,850 |
| 449 shares of Halliday Hotel | 1906 | 44,900 |
| Bonds of Memphis Hotel Co | 1907 | 2,000 |
| Bonds of Cairo City Gas Co | 1908 | 5,000 |
| 20 shares of Memphis Hotel Co | 1908 | 2,520 |
| Bonds of Cairo Elec. & Tractor Co | 1908 | 25,000 |
| 1,250 shares of Memphis Hotel Co | 1924 | 50,000 |
| Total | 366,720 |
Sales or distributions of property prior to the taxable year were made by the trust as follows: 45 shares of City National Bank, sold December 31, 1906, for $9,000; stock of Cairo City Gas Co. and Cairo Elec. & Tractor Co., sold on December 31, 1908, for $192,930, consisting of $116,930 cash and $76,000 in bonds of the Cairo Railway & Light Co., all of which were distributed during the year 1909; 50 shares of Mississippi Valley Marine Railway & Dock Co., sold April 2, 1903, for $12,500; 160 shares of Halliday & Phillips Wharfboat Co., sold May 12, 1910, for $7,500; stock of the Cairo City Coal Co., sold in 1928 for $20,000; Cairo City Gas Co. bonds, $5,000, distributed in 1909; 4 shares of State National Bank, New Orleans, La., sold October 17, 1902, for $800; 30 shares of Artesian Water Co., Memphis, sold June 11, 1903, for $3,029.10; Memphis Hotel Co. bonds, $2,000, distributed April 15, 1909; one share of Memphis Savings Bank, sold March 1, 1900, for $150; 900 shares of First Bank & Trust Co., Cairo, distributed May 15, 1909, and 54 shares distributed May 2, 1914; 400 shares of Gayoso*871 stock, Memphis, sold June 19, 1901, for $50,000; stock of the Three States Fair & Racing Association, sold December 4, 1901, for $625; 2,000 shares of Memphis Hotel Co. stock, sold December 31, 1929, for $97,228.54, and 875 shares, sold December 31, 1930, for $42,537.49; Cairo Elec. & Traction Co., bonds, $25,000, distributed April 15, 1909; Forester Coal & Coke Co. securities sold March 4, 1926, for $50,000; 449 shares of Halliday Hotel, distributed April 20, 1914; Jackson County coal lands, sold in 1914; and Perry County coal lands, sold in 1931.
Among the original assets of the trust was the Yellow Bayou Plantation, located in Chicot County, Arkansas, consisting of 10,000 acres devoted to the cultivation of rice, cotton, and corn. This property was held by the trust and operated continuously until sold in 1929 to W. P. *523 Halliday and M. O. Carter for $40,000, represented by two notes of $20,000 each.
Among the properties originally acquired by the trust was certain real estate located in the city of Cairo, Illinois. In 1916 the trustees secured an agreement with the First Bank & Trust Co. to occupy the ground floor of a building which they proposed to erect on*872 the property, and thereafter a three-story building was erected at a cost of $71,046.41. Another building was constructed by the trustees in 1916 at a cost of $63,245.02, and they also constructed an annex to the Halliday Hotel in 1907, costing $40,000. In 1927 the trust borrowed $20,000 from Charlotte Wing and $30,000 from Eliza W. Halliday for operating the Yellow Bayou Plantation. The trust also borrowed in 1927 somewhere around thirty to fifty thousand dollars from the bank in Cairo and the Central State Bank in Chicago.
Eliza W. Halliday, widow of W. P. Halliday, deceased, died in February 1930, at which time her dower interest in the estate ceased, and her interest in the trust passed to the other beneficiaries of the trust.
Petitioner W. P. Halliday inherited one-third of the beneficial interest in the trust of his father, William P. Halliday, Jr., who was an original grantor and beneficiary of the trust, and the petitioner was appointed and has acted as one of the trustees since the death of his father. William P. Halliday, Jr., died in 1928.
Petitioner Anne R. Halliday inherited one-third of the beneficial interest in the trust of her husband, William P. Halliday, *873 Jr.
Of the original grantors, Eliza W. Halliday lived in Santa Monica, California; Florence Rogers (Gorham) lived in Oji, California; Adelia H. Tiernan lived in Santa Barbara, California; Mary H. Halliday lived in Berlin, Germany; Charlotte J. Wing lived in Santa Barbara, California; John Halliday lived in West Palm Beach, Florida; and William P. Halliday, Jr., lived in Memphis, Tennessee. Petitioner W. P. Halliday lives in Memphis, Tennessee, and petitioner Anne R. Halliday lives in Washington, D.C.
OPINION.
HILL: Substantially the only issue raised by the pleadings in these consolidated cases is whether or not respondent erred in disallowing deductions of $20,030.66 each claimed by petitioners from gross income for the taxable year, representing their respective proportionate shares of the total loss alleged to have been sustained by the W. P. Halliday estate trust, in which they owned beneficial interests.
The deductions were disallowed by the respondent for the reason that, as stated in the deficiency letter, the trust was held to be taxable as an association. Petitioners contend that the trust was not an *524 "association" taxable as a corporation, within*874 the meaning of section 801(a)(2) of the Revenue Act of 1934, 1 because it was a pure or liquidating trust and not a business trust; that, being a revocable trust, the income was taxable to the grantors under sections 166 and 167 of the Revenue Act of 1934, 2 since power was vested in the grantors to revest in themselves title to the corpus of the trust and the income was distributable to them; that, inasmuch as the income of the trust was in such circumstances taxable to the grantors, it follows that they are entitled in computing net income to deduct their proportionate shares of any net loss sustained by the trust; and, since petitioners inherited the beneficial interest in the trust of one of the original grantors, they stand in his shoes and are entitled to deduct their respective proportionate parts of the loss which such original grantor would otherwise have been entitled to deduct.
*875 not only because the trust is taxable as an association, but on the additional grounds: (1) That the petitioners have failed to prove the amount of the loss, if any, sustained by the trust in the taxable year; (2) that sections 166 and 167, supra, have no application here, since petitioners are not grantors of the trust within the meaning of those sections; and (3) that the quoted statute does not authorize deductions by either beneficiaries or grantors for losses sustained by a trust.
We shall confine our discussion in the first instance to the issue as raised in the pleadings, viz., whether respondent erred in denying the *525 claimed deductions on the ground that the W. P. Halliday estate trust is taxable as an "association." Obviously, a decision of this question in the affirmative would dispose of the case and render sections 166 and 167 inapplicable.
Petitioners urge the contention that the trust was merely a convenient device for the liquidation and distribution of the inherited assets among the beneficiaries, and, as indicating that such was the purpose in creating the trust, they point to the recital in the trust instrument that it was agreed to be for*876 the best interests of all concerned that the various properties owned and controlled by W. P. Halliday, deceased, at the time of his death be kept intact and managed as a whole until such time as they could be disposed of advantageously.
In the light of other provisions of the trust agreement, and the facts and circumstances disclosed by the record, we are unable to accept the views of the petitioners as to the motivating purpose of the original grantors in establishing this trust. In determining such purpose, we must look to all pertinent provisions of the trust agreement and the practical interpretation of the parties as exemplified by the actions of the trustees thereunder. And, as stated by the Supreme Court in :
The parties are not at liberty to say that their purpose was other or narrower than that which they formally set forth in the instrument under which their activities were conducted.
No doubt it was contemplated by the parties that the trustees under paragraph "8th" of their agreement might make distributions from time to time whenever they had funds in their hands from sales of personal*877 or real property of the principal of the trust, not required to be used for other purposes specified in the trust agreement. But the making of such distributions was clearly left to the discretion of the trustees; they were authorized but not directed to make them. Furthermore, we think it fairly appears from the record that liquidation and distribution of the corpus did not constitute the primary purpose for which the trust was created.
By the second paragraph of the trust instrument the trustees were vested with exclusive authority to manage, operate, or lease all the real estate constituting a part of the trust premises, and were directed to pay the net income therefrom to the beneficiaries in stated proportions. By the fourth paragraph the trustees were permitted to retain out of net income from the estate such part as they might deem advisable for a working capital or for the development of the properties. In the fifth paragraph the trustees, subject to the instructions of the beneficiaries in certain matters, were given full control and disposition of the estate, and were specifically directed to "endeavor to manage said *526 estate in such manner as to produce*878 the greatest amount of income consistent with safety." They were empowered to pay taxes and expenses, keep the property insured, represent the beneficiaries in all legal proceedings relating to the premises, with full power to compromise or settle any suits, and to make and execute all necessary agreements. The trustees were also authorized to set aside out of income a sinking fund to maintain the integrity of the principal. And they were given power to sell and convey any part of the property, real or personal, at public or private sale, either for cash or on credit; to make leases for terms not exceeding five years; to borrow money and mortgage the premises to raise funds for the development or extension of the various interests; to rebuild any building destroyed by fire, and to purchase real or personal property, except that the trustees agreed not to make any sales, purchases, or mortgages of $5,000 or over without the consent in writing of a majority in interest of the beneficiaries.
Pursuant to such delegated authority the trustees, during the period of 34 years prior to the taxable year, carried on varied and extensive business enterprises, including the operation for approximately*879 29 years of the Yellow Bayou Plantation in Arkansas, which comprised 10,000 acres devoted to the cultivation of rice, cotton, and corn, and for such purpose borrowed large amounts of money in addition to the working capital of the trust; they bought and sold properties, including the acquisition of additional assets, not a part of the original corpus, in an amount in excess of $366,000, or more than one-third of the value of the original estate.
The properties and business affairs of the trust were so managed by the trustees that substantial profits were derived during the years 1900 to 1926, both inclusive, except that for the years 1914, 1920, and 1925 comparatively small losses were sustained. From 1900, when the trust began operations, through 1906, total profits of $652,677.71 were earned, or in excess of $93,000 annually, of which total profits the amount of $390,725.65 was distributed to the beneficiaries and the balance of $261,952.06 apparently was retained by the trustees as working capital. During the period from 1900 to 1926, both years inclusive, the trust, after deducting the losses sustained in the three years mentioned above, earned total net profits of $1,685.771.29, *880 or an amount considerably in excess of the value of the original corpus. It sustained losses in the years 1927 to and including the taxable year, except that in 1931 it derived profits of $49,346.49.
At January 1, 1900, the net value of the trust corpus was $1,062,921.88. From January 1, 1900, to the beginning of the taxable year the trustees distributed to the beneficiaries $1,767,100.65 and, despite the losses sustained in the years 1927 to 1934 (including a loss in the year 1930 of $446,611.99), the capital account still disclosed a credit *527 balance at the beginning of the taxable year in the amount of $617,804.57.
From a consideration of the foregoing facts, in the light of the powers vested in and the directions given to the trustees by the grantors for the management and operation of the trust, we are unable to conclude that the primary purpose of the grantors was to establish a trust for the liquidation of the inherited properties and the distribution of the proceeds among the beneficiaries, in connection with which the earning of profits would have been merely incidental. In our opinion, this trust was intended to be and was in fact an organization for the*881 carrying on of a business enterprise with centralized management, the principal purpose of which, as stated in the trust agreement, was "to produce the greatest amount of income consistent with safety."
Such conclusion would seem to be supported by the further fact that at the beginning of the taxable year, more than 34 years after the trust was created, the trustees still retained undistributed capital assets of a value in excess of 50 percent of the value of the original corpus. That the trustees were unable, during such an extended period of time, to sell the assets advantageously and distribute the proceeds to the beneficiaries is incredible, if such had been the purpose of the grantors in establishing the trust and the trustees had made any serious efforts to carry out that purpose.
Petitioners argue that not only must a trust be engaged in business for profit but "it must take a quasi-corporate form" in order for it to be taxable as an association under the statute. And in support of their contention that the trust here in question was not quasi-corporate in nature, they point to the facts that the trustees are managers of the trust and do not hold their positions as officers*882 of a corporation; that there has been no regular election of trustees and there is no provision for any regular meeting of the trustees like the meetings of a board of directors of a corporation; no minutes are kept of the actions of the trustees; there have been no meetings of the beneficiaries similar to meetings of the stockholders of a corporation; and no certificates of stock or other evidence of beneficial interests have ever been issued.
This contention can not be sustained. None of the factors mentioned is controlling. As pointed out by the Court in :
While the use of corporate forms may furnish persuasive evidence of the existence of an association, the absence of particular forms, or of the usual terminology of corporations, cannot be regarded as decisive.
In the cited case, the Court in its opinion further stated:
What then, are the salient features of a trust - when created and maintained as a medium for the carrying on of a business enterprise and sharing its gains - which may be regarded as making it analogous to a corporate organization? A *528 corporation, as an entity, holds the title to*883 the property embarked in the corporate undertaking. Trustees, as a continuing body with provision for succession, may afford a corresponding advantage during the existence of the trust. Corporate organization furnishes the opportunity for a centralized management through representatives of the members of the corporation. The designation of trustees, who are charged with the conduct of an enterprise, who act "in much the same manner as directors," may provide a similar scheme, with corresponding effectiveness. Whether the trustees are named in the trust instrument with power to select successors, so as to constitute a self-perpetuating body, or are selected by, or with the advice of, those beneficially interested in the undertaking, centralization of management analogous to that of corporate activities may be achieved. An enterprise carried on by means of a trust may be secure from termination or interruption by the death of owners of beneficial interests and in this respect their interests are distinguished from those of partners and are akin to the interests of members of a corporation. And the trust type of organization facilitates, as does corporate organization, the transfer*884 of beneficial interests without affecting the continuity of the enterprise, and also the introduction of large numbers of participants. The trust method also permits the limitation of the personal liability of the participants to the property embarked in the undertaking.
All of the essential elements of an association, as stated in the foregoing extract from the Supreme Court's opinion, namely, continuity, centralized management, limited liability, and facilitated transfer of beneficial interests, are present in the instant case. The fact that there was not a large number of participants in the trust involved here is immaterial. In , the Court remarked:
The small number of persons in the trust now before us does not present a difference in the legal aspect of their enterprise from the standpoint of the statutory classification. A few persons, as well as many, may form an association to conduct a business for their common profit.
The conclusions reached hereinabove render it unnecessary to discuss the additional grounds urged by respondent in support of his determinations. The deficiencies are approved.
*885 Judgments will be entered for the respondent.
Footnotes
1. Acquired in exchange for land valued at $31,500 and cash in the amount of $18,500. ↩
1. SEC. 801. DEFINITIONS.
(a) When used in this Act -
* * *
(2) The term "corporation" includes associations, joint-stock companies, and insurance companies. ↩
2. 2 SEC. 166. REVOCABLE TRUSTS.
Where at any time the power to revest in the grantor title to any part of the corpus of the trust is vested -
(1) in the grantor, either alone or in conjunction with any person not having a substantial adverse interest in the disposition of such part of the corpus or the income therefrom, or
(2) in any person not having a substantial adverse interest in the disposition of such part of the corpus or the income therefrom, then the income of such part of the trust shall be included in computing the net income of the grantor.
SEC. 167. INCOME FOR BENEFIT OF GRANTOR.
(a) Where any part of the income of a trust -
(1) is, or in the discretion of the grantor or of any person not having a substantial adverse interest in the disposition of such part of the income may be, held or accumulated for future distribution to the grantor; or
(2) may, in the discretion of the grantor or of any person not having a substantial adverse interest in the disposition of such part of the income, be distributed to the grantor;
* * *
then such part of the income of the trust shall be included in computing the net income of the grantor. ↩