Schulz v. Commissioner

CUMMINGS, Chief Judge.

These appeals, which were consolidated by order of this Court, are the tip of an iceberg.1 The common issue is the appropriate treatment, for tax purposes, of so-called family or constitutional trusts. The taxpayers contend that these are bona fide trusts taxable as such.2 The Commissioner. argues, and the Tax Court found, that they are ineffective attempts to shift the incidence of taxation by assignment of income under Lucas v. Earl, 281 U.S. 111, 50 S.Ct. 241, 74 L.Ed. 731, and invalid grantor trusts under Sections 671-677 of the Internal Revenue Code, 26 U.S.C. §§…