Helvering v. Clifford

United States Supreme Court

309 U.S. 331 (1940)

A grantor of a trust who enjoys the benefits of full ownership over the trust corpus is taxed for income generated from that trust.

Relevant Facts

Clifford (the plaintiff) created a trust consisting of securities for a term of five years. The beneficiary was the plaintiff’s wife, but the amount of income paid to her was entirely in the plaintiff’s discretion. The plaintiff exercised full control over the securities and maintained the power to use both the corpus of the trust and its income as he saw fit. The stated purpose of the trust was to grant the plaintiff’s wife security and independence, and not to evade taxes on the trust income. In 1934, the plaintiff issued all income generated by the trust to his wife, which she included as income for that year. However, the Commissioner (the defendant) determined that the trust income remained taxable to the plaintiff. The Board of Tax Appeals found in favor of the Commissioner. The Court of Appeals reversed. The United States Supreme Court granted certiorari.

Issue

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Holding & Reasoning

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Concurrence

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Dissent

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Last updated:

December 20, 2020

Judicial Opinion

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Procedural History

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Citations

309 U.S. 331 (1940)