Douglas v. Willcuts, 296 U.S. 1 (1935)
U.S. Supreme CourtDouglas v. Willcuts, 296 U.S. 1 (1935)
Douglas v. Willcuts
Argued October 14, 1935
Decided November 11, 1935
296 U.S. 1
1. Payments to a divorced wife under a decree for alimony are not regarded as income of the wife, but as paid in discharge of the general obligation to support, which is made specific by the decree. P. 296 U. S. 8.
2. In a decree of divorce and for alimony, a Minnesota court adopted a provision agreed to by the parties on the eve of the action whereby securities were conveyed by the husband to a trustee from the income of which the wife, during her lifetime, was to receive annual payments " in lieu of, and in full settlement of alimony, and of any and all dower rights or statutory interests in the estate" of her husband, and "in lieu of any and all claims for separate maintenance and allowance for her support." The decree adjudged that the husband provide and create the trust fund as set out in the agreement, and that the wife have the provision made in the agreement "in lieu of all other alimony or interest in the property or estate" of her husband.
(1) That, by the law of Minnesota, the State court was not bound by the trust agreement, but had full authority to make the allowance to the wife out of the husband's property and to set up a trust to give effect to the allowance, and, by adopting the terms of the trust agreement, it made them its own. P. 296 U. S. 6.
(2) That the provision for annual payments adopted in the decree became an award of alimony, imposing upon the husband, in fulfillment of his statutory duty, the obligation of devoting the income, through the medium of the trust, to the use of the divorced wife. P. 296 U. S. 8.
(3) That the income from the trust was not income of the wife, but income taxable to the husband under Revenue Acts 1926, § 213, and 1928, § 22, defining gross income. P. 296 U. S. 9.
3. Section 213, Revenue Act 1926, and § 22, Revenue Act 1928, defining gross income, are to be construed in the light of the evident intent of Congress to make full use of its power to tax income. P. 296 U. S. 9.
4. The provisions of § 219, Revenue Act 1926, and §§ 161, 162, Revenue Act 1928, as to taxation of trusts, fiduciaries and beneficiaries, refer to cases where the income of the trust is no longer to be regarded as that of the settlor, and were not intended to apply to cases where such income would otherwise remain, by virtue of the nature and purpose of the trust, attributable to the creator of the trust, and accordingly taxable to him. P. 296 U. S. 9.
5. Section 219(h), Revenue Act 1926, and § 167, Revenue Act 1928, define instances in which the grantor remains taxable, as in case of certain reservations for his benefit or provisions for the payment of premiums upon policies of insurance on his life, but are not to be regarded as excluding instances, not specified, where, in contemplation of law, the income remains in substance that of the grantor. P. 296 U. S. 10.
73 F.2d 130 affirmed.
Certiorari, 295 U.S. 722, to review a judgment reversing one for the present petitioner in the District Court in a suit to recover moneys paid under protest as income tax.