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Commissioner, 65 T.C. 296 (1975), affd. per curiam 547 F.2d 32
(2d Cir. 1976). In Byrum, the decedent Milliken C. Byrum (Mr.
Byrum) transferred to an irrevocable trust that he created shares
of stock in each of three closely held corporations. Prior to
the transfer, Mr. Byrum owned at least 71 percent of the
outstanding stock of each corporation. The beneficiaries of the
trust that Mr. Byrum created were his children or, in the event
of their death before termination of the trust, their surviving
children. The trust instrument specified that there was to be a
corporate trustee, and Mr. Byrum designated an independent
corporation as sole trustee. The trust instrument vested in the
trustee broad and detailed powers with respect to the control and
management of the trust property. Such powers of the trustee
were exercisable in the trustee’s sole discretion, subject to the
following rights reserved by Mr. Byrum: (1) To vote the shares
of unlisted stock held in the trust; (2) to disapprove the sale
or transfer of any trust assets, including the shares transferred
to the trust; (3) to approve investments and reinvestments; and
(4) to remove the trustee and to designate another corporate
trustee to serve as successor trustee. United States v. Byrum,
supra at 126-127.
The Government’s principal argument in Byrum was that, by
retaining voting control over the corporations whose stock he
transferred to the trust, which the Government maintained gave
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