Eldon R. Kenseth and Susan M. Kenseth - Page 71




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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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