Morsman v. Commissioner

Robert Morsman (plaintiff), unmarried and childless but with a living brother, executed a trust agreement naming himself trustee of his own stocks, providing the trust would terminate on his death if he had no children, or otherwise pay income to any future children for 20 years before distributing the principal to his children, widow, or heirs. After Morsman sold some trust stock at a profit in 1929 without reporting the income on his personal return, the IRS (defendant) ruled the income was his individually, and the Board of Tax Appeals agreed; Morsman sued, arguing the income belonged to the trust rather than to him.