The plaintiff contemplated trading in the stock market and in 1927 declared a trust of the proceeds of his stock trading for the year 1928 in favor of various members of his immediate family, agreeing to assume all losses personally and to distribute all profits equally among the beneficiaries after deducting a reasonable compensation for his services. At the expiration of the year 1928, plaintiff deducted $10,000 as compensation, which he reported in his tax return for that year, and credited the named beneficiaries with the remainder on his books, these amount being reported in their respective tax returns for that year. Plaintiff was taxed, however, on the basis of the whole sum as a part of his gross income for the year, and he sued to recover. Held, that no trust was created at the time of the declaration because there was no res in existence. The profits when realized were not impressed with a trust and as a result were taxable to the plaintiff as gross income. Brainard v. Commissioner of Internal Revenue, (C. C. A. 7th, 1937) 91 F. (2d) 880.
Paul R. Trigg,
TRUSTS - VALIDITY - SUBJECT MATTER - PROFITS TO BE ACQUIRED IN THE FUTURE,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol36/iss6/27