Glenn E. Edgar
United States Tax Court
56 T.C. 717 (1971)

- Written by Joe Cox, JD
Facts
[Editor’s Note: This case can also be found under the title “Edgar et al. v. Commissioner of Internal Revenue.”] Glenn Edgar was grantor and life-income beneficiary of a trust. The trustee invested the trust corpus in a pair of limited partnerships that had net operating losses for the years 1962 to 1964. Edgar then deducted the portion of the losses deductible by the trusts under his own income tax return. The government disallowed those deductions, stating that Edgar had not established that he was a partner in the partnerships that had losses or was not otherwise allowed to deduct that amount. The government indicated that the trusts were the partners rather than Edgar, and the losses are accountable to the trusts and not distributable to Edgar, who was only entitled to trust income. Further, if Edgar were entitled to deduct such a loss, there was a question regarding how the deduction would be divided between the trust corpus, in which Edgar was not arguing that he had a deductible interest, and income, from which Edgar sought to claim his deduction. Edgar analogized the entire situation to payment of trust income, in which a trust can distribute income to its beneficiary, and therefore, the trust is allowed to deduct the income distributed in this manner.
Rule of Law
Issue
Holding and Reasoning (Featherston, J.)
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