St. Joseph Bank & Trust Co. v. United States

NICHOLS, Circuit Judge.

A. father transferred stock to a trustee for the education of his then minor children, as required by a divorce settlement with their mother. The stock, though valuable, had until then a zero basis. Shortly after the transfer, the trustee sold part of the stock at market. The question we must decide is whether the gain is taxable under the United States Internal Revenue Code as income to the settlor or the trustee, there being no doubt it was one or the other. The trustee obtained a favorable holding in the district court. The government appealed to this court, and we…