Tuesday, April 2, 2013

Blair v. Commissioner case brief

Blair v. Commissioner case brief summary
300 U.S. 5

Petitioner assignor sought certiorari review of a judgment from the United States Court of Appeals for the Seventh Circuit, which reversed a decision of the Board of Tax Appeals that overruled income tax assessments imposed by respondent Commissioner of Internal Revenue for income from a testamentary trust that petitioner had assigned to his children.

Petitioner assigned the income from a testamentary trust to his children. The trustee accepted the assignment and distributed the income directly to the assignees. Respondent Commissioner of Internal Revenue ruled that the income was taxable to petitioner.

On certiorari review, the United States Supreme Court reversed the judgment of the appellate court, which held that petitioner was liable for the tax on the basis that petitioner's interest did not attach to the corpus of the estate and that the income was not subject to petitioner's disposition until received.

-The petitioner was not liable for the income tax because he did not receive the income as the owner of the beneficial interest.
-Since the beneficial interest of the trust was assignable and petitioner assigned the interest without reservation, the assignees became the beneficiaries and were responsible for payment of the income tax.

The Supreme Court reversed that judgment that held petitioner liable for tax on income from a testamentary trust that he assigned to his children where the assignment was valid, the assignees thereby became the owners of the specified beneficial interest in the income, and the assignees were taxable on the income received from the trust.
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