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the transferee holds it in trust for a beneficiary creates a
valid oral trust. Constructive delivery, such as by
earmarking property or recording it in the name of the
transferee, is also sufficient to comply with * * *
[California Probate Code section 15207(b)].
Here, Phyllis essentially “delivered” the trust property to Julie
when she named Julie as the successor owner. Moreover, Phyllis
made an oral declaration to Julie instructing her to distribute
the annuity to the children upon Phyllis’s death. Indeed, Julie
immediately complied with Phyllis’s directive upon Phyllis’s
death.
Based on our conclusion that Julie received the distribution
in trust for the benefit of the children, we hold that Julie did
not receive the distribution in her personal capacity, and,
therefore, the distribution is not income to her. See Healy v.
Commissioner, 345 U.S. 278, 282 (1953) (“[R]eceipts by a trustee
expressly for the benefit of another are not income to the
trustee in his individual capacity, for he ‘has received nothing
* * * for his separate use and benefit’”.), quoting Eisner v.
Macomber, 252 U.S. 189, 211 (1920).
We now turn to whether any part of the distribution
constitutes income to Mark. For tax purposes, amounts required
to be distributed to a beneficiary from a trust corpus are
includable in the gross income of the beneficiary. Sec. 662(a).
Indeed, the beneficiaries of the oral trust were the three
children. As one of those beneficiaries, Mark received in his
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