Stone v. Commissioner
United States Tax Court
T.C. Memo 1987-454 (1987)
- Written by Tom Squier, JD
Facts
Christopher and Gloria Stone (plaintiffs) were financially stable parents who sent their children to private schools. They did so simply because their family was wealthy enough to do so, and not to address any kind of special need or derive some specific benefit. When their children had already been attending private schools for two or three years, the Stones created trusts for their minor children, with the purpose of having the trusts pay for the children’s education expenses through college. The Stones’ attorney acted as trustee, and in accordance with the terms of the trusts, he made distributions to pay for the private high-school education of the minor children in 1981 and 1982. The Internal Revenue Service (IRS) (defendant) determined that the trust income used to pay for the children’s high-school education was taxable income for the Stones because the Stones were legally obligated to provide support for the children, including education. The Stones petitioned the United States Tax Court for a redetermination.
Rule of Law
Issue
Holding and Reasoning (Raum, J.)
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