¶1dissenting: I dissent from the majority opinion wherein it reftises to recognize the validity of the six trusts here involved and taxes all the income to the beneficiaries.
¶2My dissent is based on the following: (1) The trusts were irrevocable;. (2) the income was distributable within the discretion of the trustees; and (3) the income which was distributed to the beneficiaries in each of the taxable years was returned for taxation by them and the remainder of the income was returned for taxation by the trusts. This was, in my opinion, proper.'
¶3That the trusts were irrevocable is shown by the following provision in each trust:
This Trust Estate shall be and remain irrevocable and not subject to modification, alteration, or revocation, and in no event shall the Trustor have the right to repossess the income or principal of the Trust Estate, or any part thereof, during his lifetime.
¶4That the trusts were discretionary trusts is shown by the following provision in each trust:
From and after the creation.of this Trust Estate, as nearly as may be, the Trustee shall, in his discretion, pay to [the named beneficiary], all, or such portion as he deems reasonable and proper, of the net income of this Trust Estate, accumulating all surplus income and adding it to the principal of the Trust Estate.
¶5The law itself provides how the income of a discretionary trust shall be taxed. Section 162 (c), I. E. C. provides as follows:
SEC. 162. NET INCOME.
The net income of the estate or trust shall be computed in the same manner and on the same basis as in the case of an individual, except that—
… …
(c) In the case of income received by estates of deceased persons during the period of administration or settlement of the estates, and in the case of income which, in the discretion of the fiduciary, may be either distributed to the beneficiary or accumulated, there shall be allowed as an additional deduction in computing the net income of the estate or trust the amount of the income of the estate or trust for its taxable year, which is properly paid or credited during such year to any legatee, heir, or beneficiary, but the amount so allowed as a deduction shall be included in computing the net income of the legatee, heir, or beneficiary.
¶6Apparently in the instant case the foregoing provisions of the law have been complied with and, so far as I can see, the law does not require more. I do not agree that the entire income of the trusts, whether distributed or not, is taxable to the beneficiaries under the doctrine of Helvering v. Clifford, 309 U. S. 331; Edward Mallinckrodt, Jr., 2 T. C. 1128; affd., 146 Fed. (2d) 1; Edgar R. Stix, 4 T. C. 1140; affd., 152 Fed. (2d) 562. These cases, relied upon by the majority in support of its conclusions, are, in' my opinion, not applicable to the facts which are present here. If, by the majority opinion, it is meant that the six trusts could not become partners in the partnership which was organized by proper partnership agreement, then it seems to me that such holding is contrary to the weight of authority and is wrong. Cf. Thompson v. Riggs (CA-8), 175 Fed. (2d) 811.
¶7Because of the foregoing reasons, I respectfully dissent.