Daggett

The petitioners, as executors of the estate of Estelle P. Clark, have brought here for review a decision of the United States Board of Tax Appeals sustaining the determination of the Commissioner of Internal Revenue that in the income tax return of decedent for the years 1936 and 1937, periods prior to her death on September 19, 1937, there were deficiencies of $2,365.06 and $1,149.14, respectively. These deficiencies were assessed as being the income tax due on sums of money received by the decedent after her former husband’s death from a trust which he created for her benefit in accordance with an agreement executed shortly before their divorce. The facts, which were stipulated, may be stated as follows:

The trust was created in 1906 by James F. A. Clark in accordance with an agreement which he and his wife, the decedent, both then residents of the state of New York, made in consideration of a release by the decedent of all claims against her husband and his estate for her support and that of their child during the latter’s minority. In the agreement it was recited that the husband “is willing to provide for the support of his wife and child, so as to avoid proceedings against…

(dissenting).

The majority opinion is, I think, not in accord with the views as expressed in Helvering v. Fitch, 309 U.S. 149 , 60 S.Ct. 427, 84 L.Ed. 665 ; Helvering v. Fuller, 310 U.S. 69 , 60 S.Ct. 784 , 84 L.Ed. 1082 ; Helvering v. Leonard, 310 U.S. 80 , 60 S.Ct. 780 , 84 L.Ed. 1087 , and Pearce v. Commissioner, March 9, 1942, 62 S.Ct. 754 , 86 L.Ed. —. In the case of alimony trusts, the income of the trust paid to the wife constitutes income either to the husband or to the wife, depending upon the existence of an obligation. If the husband is obligated to the wife, even though contingently, a satisfaction of that obligation by the trust constitutes income to the husband but not to the wife because the latter is merely receiving payment on her obligation. See Commissioner v. Nicolai, 9 Cir., March 28, 1942, 126 F.2d 927 .

From this it is apparent that to escape taxation, the husband must show that there is no obligation on his part which is satisfied by payments to the wife from the trust, and if it is the wife who seeks to escape taxation, she must show that there was an obligation on the husband. Since the Commissioner’s determination is presumptively correct, the burden…