Helvering v. Fuller
310 U.S. 69 (1940)

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U.S. Supreme Court

Helvering v. Fuller, 310 U.S. 69 (1940)

Helvering v. Fuller

No. 427

Argued March 20, 1940

Decided April 22, 1940

310 U.S. 69

Syllabus

In compliance with a separation agreement approved by a decree of divorce in Nevada, the husband created an irrevocable trust of shares of stock to continue for ten years, during which period all trust income was to be used for the maintenance and support of the wife, or, in case of her prior decease, then for the

Page 310 U. S. 70

children or, in case of their prior decease, then for the heirs of the wife or as she should provide in her will. At the expiration of the ten-year period, the trust property was to be transferred to her outright. The husband retained "exclusive voting power" of the shares during the term of the trust. Power to sell the stock vested jointly in him, the wife, and the corporate trustee, and could be exercised only in case all three agreed in writing. Those three had the power to invest and reinvest the proceeds and to disburse, withhold, and accumulate the principal of the trust at their discretion, such power over the income being vested in the wife and corporate trustee.

Held:

1. The question whether the husband is taxable on the trust income under the Revenue Acts of 1928 and 1932 is not affected by the fact that an independent undertaking on his part to make certain weekly payments to his wife, not secured by the trust, was contained in the same instrument with the trust agreement. P. 310 U. S. 73.

2. The provisions of the Revenue Acts of 1928, § 24(a)(1), and 1932, § 24, and Treasury regulations concerning the nondeductibility of "family expenses" and of "alimony" imply the necessity for an examination of the local law to determine the marital status and the obligations which have survived a divorce. P. 310 U. S. 74.

3. Under the law of Nevada, the decree and the trust agreement, no power of modification having been reserved, operated to discharge, pro tanto, the husband's duty of support, and under the Revenue Acts, supra, he was not taxable on the trust income. P. 310 U. S. 75.

4. Whether the trust agreement left the husband sufficient interest in or control over the shares to make him the owner of the corpus for the purposes of the federal income tax is a question not raised or passed upon in this case. P. 310 U. S. 76.

105 F.2d 903 affirmed.

Certiorari, 309 U.S. 644, to review the reversal of a decision of the Board of Tax Appeals, 37 B.T.A. 1333, sustaining a determination of a deficiency in income tax.

Page 310 U. S. 71

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