Edward L. Stephenson Trust v. Commissioner

81 T.C. 283 (1983)

From our private database of 46,300+ case briefs, written and edited by humans—never with AI.

Edward L. Stephenson Trust v. Commissioner

United States Tax Court
81 T.C. 283 (1983)

JC

Facts

In 1972, Edward L. Stephenson created two trusts. The Stephenson Simple Trust was funded with 5,000 shares of Procter & Gamble common stock. The Simple Trust was required to distribute all of its income, with some mandatory and discretionary income distributions to Edward’s daughter, Amy Stephenson, and another person. Income not distributed to Amy and the other individual was instead distributed to the Stephenson Accumulation Trust. The Accumulation Trust income could be distributed to Amy or added to the trust corpus. Although Amy could demand part of the Simple Trust’s corpus, Amy had no such rights regarding the Accumulation Trust. The trustees of the two trusts (plaintiff) filed separate income tax returns for the two trusts in 1974 and 1975. The government (defendant) determined that the separate identity of the accumulation trust would be disregarded and that consolidating the trusts into one simple trust yielded increased tax liability of approximately $7,000. The trustees paid the alleged deficiency and filed this suit. The government argued its position based on an Internal Revenue Service (IRS) regulation that indicated that multiple trusts established for tax-avoidance purposes were invalid and must be consolidated into a single trust. The trusts argued that the consolidation regulation was invalid and that the tax-avoidance motive was irrelevant, in keeping with prior caselaw.

Rule of Law

Issue

Holding and Reasoning (Nims, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 815,000 law students since 2011. Some law schools even subscribe directly to Quimbee for all their law students.

  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

Here's why 815,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 46,300 briefs, keyed to 988 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 815,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 46,300 briefs - keyed to 988 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership