Hawkins v. Commissioner of Internal Revenue

McCORD, Circuit Judge

(dissenting).

The petitioner is a man of ample means. The majority opinion permits him to avoid tax liability by means of a trust device executed in favor of his grandchildren. The sole question presented is the income *224tax liability of petitioner under Section 22(a) of the Revenue Act of 1938. His liability under Sections 166 and 167 was not considered by the Tax Court, nor does the Government attempt to predicate liability on these sections on appeal.

Liability under Section 22(a) is not foreclosed by reason of the fact that the Congress has made specific provisions applicable to property held in trust. Helver-ing v. Clifford, 309 U.S. 331, 337, 60 S.Ct. 554, 84 L.Ed. 788.

Here the beneficiaries acquired only potential interest in the trust. The settlor could take from one and give to another at his pleasure. He retained the sole right to alter or modify the provisions of distributions to the beneficiaries.. The decision of the Tax Court is abundantly sustained by the authorities. Helvering v. Horst, 311 U.S. 112, 61 S.Ct. 144, 85 L.Ed. 75, 131 A.L.R. 655; Helvering v. Clifford, 309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788; Brown v. Commissioner, 3 Cir., 131 F.2d 640, certiorari denied 318 U.S. 767, 63 S.Ct. 760, 87 L.Ed. 1138; George v. Commissioner, 8 Cir., 143 F.2d 837, certiorari denied 323 U.S. 778, 65 S.Ct. 192; Commissioner v. Buck, 2 Cir., 120 F.2d 775; Foerderer v. Commissioner, 3 Cir., 141 F.2d 53.

I dissent.