Thuet

In 1950 Emma Thuet, then eighty-four years of age, created the following Trust:

As a general rule, when trusts are created arrangements are made for the use and distribution of the income therefrom. We are unable to find any decisions (and none have been cited by either plaintiff or defendant) in which a trustor has attempted to provide for distribution of the corpus of the trust to the trustor in specified annual payments, without regard to the income from the trust.

It will be noted in the trust' agreement that trustee had full control of the trust estate. The trustee could invest the corpus in any manner it deemed best or fail to invest the trust funds at all. The handling of the trust fund was left entirely to the discretion of the trustee, and trustor has no control over the sources or the amount of income.

The Bureau of Internal Revenue, prior to the commencement of this action, held the trust was in effect an annuity and required taxpayer to report it as such in her 1950 income tax return. The Bureau used the annuity formula and determined the tax due was $57.27. The taxpayer, although disagreeing with the contention of the Bureau of Internal Revenue, paid the tax and…