James D. Ballou and Sarah L. Ballou v. United States

This court has, on several prior occasions, passed upon the validity of trusts in family partnerships, in tax cases, where the husband or father was the donor, and the wife or children were the beneficiaries. In those cases where the Tax Court has held that such trusts were invalid, the decisions were reversed by this court on the ground that the trusts were valid, even though the donor retained an interest in the business out of which the trusts were created, and even though no capital had been contributed to the business by the beneficiaries except the shares set aside in trust by the…