United States v. Powell
United States Court of Appeals for the Tenth Circuit
307 F.2d 821 (1962)
- Written by Eric Miller, JD
Facts
Leonidas Powell created an irrevocable living trust in which he and the Fourth National Bank of Wichita were designated as co-trustees. The co-trustees were empowered to invade trust corpus—that is, access the principal of the trust—if necessary for the maintenance, welfare, comfort, or happiness of Powell’s wife or daughters or for the education of the daughters. After Powell’s death, his estate (plaintiff) did not include the trust assets in the federal estate-tax return. The Internal Revenue Service (IRS) assessed a deficiency, reasoning that the trust assets were taxable and should have been included. The IRS commissioner relied on Internal Revenue Code (IRC) § 811, a provision that required the inclusion of trust property in the decedent’s gross estate if the property was subject to the decedent’s right to alter, amend, revoke, or terminate the trust. [Editor’s Note: This provision is now IRC § 2038.] The estate brought an action against the United States (defendant) to recover estate taxes paid. The court found in favor of the estate. The case was then appealed to the United States Court of Appeals for the Tenth Circuit.
Rule of Law
Issue
Holding and Reasoning (Phillips, J.)
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