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beneficiaries. Id. at 132. The Court had previously ruled that
the latter power to accumulate rather than disburse constituted a
right to designate under section 2036(a)(2). Id. at 135-136;
United States v. O’Malley, 383 U.S. 627, 631 (1966).
Given the above facts, the Supreme Court held “that Byrum
did not have an unconstrained de facto power to regulate the flow
of dividends to the trust, much less the ‘right’ to designate who
was to enjoy the income from trust property.” United States v.
Byrum, 408 U.S. at 143. The Court rejected the Commissioner’s
“control rationale” as it “would create a standard--not specified
in the statute--so vague and amorphous as to be impossible of
ascertainment in many instances.” Id. at 137 n.10. In reaching
its conclusion, the Court relied on a series of “economic and
legal constraints” to which any power that Mr. Byrum might have
had was subject and which prevented such power from being
equivalent to a right to designate persons to enjoy trust income.
Id. at 144.
The Court emphasized that the independent corporate trustee
alone had the right under the trust instrument to pay out or
withhold income. Id. at 137. Even if Mr. Byrum had managed to
flood the trust with dividends, he had no way of compelling the
trustee to pay out or accumulate that income. Id. at 143. The
Court also noted that the power to elect directors conferred no
legal right to command them to pay or not pay dividends. Id. at
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