- 10 -
income beneficiary. He was able to, was required to, and did
vest the income of the trust in himself. Petitioner as trustee
was required to cause the trust periodically to pay him (as
income beneficiary) the entire net income of the trust.
Petitioner, as trustee, owed fiduciary duties with respect to the
income only to himself, the sole income beneficiary.
Accordingly, we conclude that petitioner has the sole power
to vest the trust’s income in himself and is treated as the owner
of the income portion of the trust.4
B. Petitioner Is Not the Owner of the Trust Corpus Despite
the Undistributed Net Income
Petitioners argue that they are also the owners of the trust
corpus, or at least a portion of it, because petitioner left
undistributed net income with the other trust assets and it
became commingled with the trust corpus. Accordingly, they
reason, they are entitled to the deduction for the charitable
contribution no matter the source of the charitable contribution.
We disagree.
There are several fundamental problems with petitioners’
argument regarding ownership of the trust corpus. An examination
of the trust agreement indicates that the settlor did not intend
petitioner to have any rights with respect to the corpus, other
4The unique circumstances require a finding that petitioner
should be treated as the owner of the trust’s income portion. We
note, and petitioners acknowledge on brief, that this finding
does not apply in every situation involving a simple trust.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011