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Abstract

Settlors, husband and wife, established certain irrevocable trusts with themselves and another as trustees, and the children of the settlors as beneficiaries. The income from the trust property was to be accumulated, and a certain percentage of the corpus and accumulated income was to be distributed to the beneficiaries as they respectively reached certain specified ages. The trust agreement further provided that the trustees should have the power to expend from the corpus or income such sums as they should deem necessary and advisable for the maintenance, education and support of the beneficiaries, or to defray expenses arising from sickness, accident, or unusual circumstances. The income from the trust property was taxed as income to the settlors, though none of it had been distributed, on the basis that the income could have been used to satisfy a legal obligation of the settlors. In an action to recover taxes paid under protest on such income, held, that since no part of the income of the trust estate was used for the support of settlors' children during the tax year, plaintiffs were entitled to recover that portion of the taxes paid based on income derived from the trust estates. Hudson v. Jones, (D. C. Okla. 1938) 22 F. Supp. 938.

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