dissent">GoodRIch,

dissenting: Suppose this trust had been created by someone other than petitioner — for example by the grandfather of the children who are its beneficiaries. Clearly, under those circumstances, it could not be argued that the income of the trust in anywise belonged to petitioner, even though he was relieved of the pecuniary burden of maintaining them, because the trust income provided their support. Such a trust doubtless would be a happy one for petitioner and would bestow on him a benefit — but not the sort of a benefit which can be put into his income and taxed. The payments under the trust to his children might spare him from spending, but they would not add to his income.

Petitioner’s situation is not changed merely because he himself created the trust. He has taken a part of his capital, set it aside beyond his reach, and provided that both it and its earnings should belong to others. Thereafter neither the capital nor the earnings could be his. How, then, can he be taxed on those earnings? The majority opinion indicates that the trust earnings are regarded as income to petitioner because they were received by those whom he was legally bound to maintain. But he did not escape his obligation by the creation of the trust, and I am not convinced that the fact that he has obtained relief from the immediate demands of that obligation makes income to him of the amounts received by the children. He transferred from himself ownership of the corpus from which the income arises; consequently, the income belongs to the new owners of the property. See William Ernest Seatree, 25 B.T.A. 396, on appeal, C.A.D.C.; Elizabeth D. Smith et al., Executors, 25 B.T.A. 291. I see no defect in the arrangement petitioner has made — and whether he made it to reduce his own income and so avoid taxes, or to insure the welfare of his children against the threat of his personal adversity, is immaterial — and I disagree with the result reached by the majority.

This case is not controlled by either the result or the reasoning in the Wells case. As pointed out, that case was confined under a specific statutory provision respecting a trust whose income is applied to the payment of premiums of insurance upon the life of the grantor, and certainly the Court made it plain that it was not attempting to deal with trusts of any other kind. Consequently, to decide the case at bar by the result in the Wells case is to do what the Supreme Court refused to do.

Trammell and McMaiioN agree with this dissent.

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