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Horst, supra–-were intrafamily donative transfers.43 If given
effect for tax purposes, such intrafamily transfers would permit
family members to “split” their incomes and avoid the progressive
rate structure (a less pressing concern these days). In
addition, because the transferred item never leaves the family
group, the transferor may continue to enjoy the economic benefits
of the item as though the transfer had never occurred. See
Commissioner v. Sunnen, 333 U.S. 591, 608-610 (1948) (husband
transferred patent licencing contracts to wife; husband’s
indirect post-transfer enjoyment of royalty payments and other
benefits received by wife a factor favoring decision that
transfer was an invalid assignment of income); Helvering v.
Clifford, 309 U.S. 331 (1940) (husband created short-term trust
for wife’s benefit; intrafamily income-splitting possibilities
required special scrutiny of arrangement, and husband’s continued
43 The statement of facts in the third Supreme Court
decision relied on by the majority and the dissent of Judge
Wisdom, Helvering v. Eubank, 311 U.S. 122 (1940), does not reveal
whether the transfer at issue was intrafamily. However, the
majority opinion in Eubank contains no independent analysis; it
rests entirely on the reasoning of the Supreme Court’s opinion in
the intrafamily transfer companion case of Helvering v. Horst,
311 U.S. 112 (1940). In addition, in Commissioner v. Sunnen, 333
U.S. 591, 602-603 (1948), the Supreme Court described Eubank,
along with several other classic assignment of income cases, as
part of the “Clifford-Horst line of cases”, all involving
transfers within the family group. The Supreme Court in Sunnen
further stated that “It is in the realm of intra-family
assignments and transfers that the Clifford-Horst line of cases
has peculiar applicability.” Commissioner v. Sunnen, 333 U.S. at
605.
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