Jack Smith and Rose Mae Smith v. Harry C. Westover, Former Collector of Internal Revenue, and Robert A. Riddell, Director of Internal Revenue

JAMES ALGER FEE, Circuit Judge.

Jack and Rose Mae Smith are husband and wife. Before marriage, Jack Smith had established a successful wholesale shoe business. After marriage, the business was treated as community property. On December 31, 1942, Jack Smith bought out the interest of Rose Mae Smith, giving four promissory notes therefor. On September 29, 1943, two trusts were created for the benefit of the children of Jack and Rose Mae Smith, one in favor of a son then age eleven by Jack Smith and having as trustee, Rose Mae Smith, and the other in favor of a daughter then age three created by…