Herberts v. Commissioner , 10 T.C. 1053 ( 1948 )

Curtis A. Herberts, Petitioner, v. Commissioner of Internal Revenue, Respondent

Herberts v. Commissioner

Docket Nos. 7049, 11149

United States Tax Court

10 T.C. 1053; 1948 U.S. Tax Ct. LEXIS 170;

June 7, 1948, Promulgated

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">*170 Decision will be entered for the respondent in Docket No. 7049. Decision will be entered under Rule 50 in Docket No. 11149.

Petitioner made outright gifts of stock to his wife and children prior to 1941. During January 1941 he caused the donated stock and additional stock to be transferred to himself purportedly as trustee under parol trusts. In December 1941 he executed in writing irrevocable trust under which he held all of the stock. He retained discretionary power to use the income for the support and maintenance of his daughter for life and of his son during minority. The principal of the trust for the son was payable to him upon reaching majority. Assets received in liquidation of the stock during 1942 were transferred during January 1943 to a single family trust. Held, petitioner is not taxable on the income attributable to pre-1941 gifts; held, further, he is taxable on balance of income received under purported trusts during 1941; held, further, he is taxable on balance of income received under written irrevocable trusts for daughter, but not for son, subject to a qualification which is left for final determination under Rule 50.

W. L. Nossaman, Esq., and Harry W. Elliott, Esq., for the petitioner.

H. Arlo Melville, Esq., for the respondent.

Kern, Judge.

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KERN

">*1053 These proceedings, consolidated for hearing, involve the following deficiencies:

Docket No.	Year	Tax	Deficiency
7049	1941	Gift tax	$ 5,077.22
11149	1941	Income tax	6,892.06
11149	1943	Income and victory tax	25,634.42

">*1054 The deficiency for 1943 was computed on the basis of 1942 and 1943 income under the Current Tax Payment Act of 1943.

The parties have filed a stipulation of facts in each proceeding. The stipulations settle some of the issues raised by the pleadings. The sole remaining gift tax issue has been abandoned by the">*174 petitioner in his briefs. The remaining income tax issues are whether the petitioner is taxable on the dividend income received and the capital gains realized during 1941 and 1942 by certain trusts purportedly created by him for the benefit of his children, under sections 22 (a) and 167 of the Internal Revenue Code; whether he is taxable on income and capital gains reported for his son in an individual return for 1942; and whether he is taxable on parts of the income received and the capital gains realized by the Herberts trust during 1943. These issues turn on the effect of certain transfers of the Herberts Machinery Co. stock which the petitioner caused to be made to and for the benefit of his children and parts of which he reported as gifts during 1941.

FINDINGS OF FACT.

The stipulation of facts is incorporated herein by reference.

The petitioner resides in Newport Beach, California. He filed all of the returns involved herein with the collector of internal revenue for the sixth district of California.

The petitioner was born August 1, 1886. He was about a year old when his father died, leaving a wife and seven children. His father was supposed to have had considerable means, ">*175 but he left a small net estate. As a result the petitioner had to sell newspapers as a young boy, went to work in a factory at the age of 11, and never had much formal education. In later years he established a successful business.

The petitioner and his wife Gladys had two children. Their daughter Evelyn was born July 9, 1914, and died March 29, 1943. She was mentally ill and incapable of managing her own affairs during a period which began in 1936 and ended with her death. Their son Curtis, Jr., was born January 24, 1927, and was a minor at all times material hereto. He was married on February 22, 1946, while still a minor. He served in the Navy from January 20, 1945, to August 12, 1946. He and his wife lived with the petitioner for a short time until they acquired their own house in October 1946.

The petitioner was the president of the Herberts Machinery Co. (hereinafter referred to as the Herberts Co.), which he had organized in 1915 under the laws of California. The petitioner, or the petitioner and members of his immediate family, held most of the outstanding stock at all times. The board of directors was composed of the petitioner, his wife, a brother-in-law, and ">*176 others who held qualifying shares. The Herberts Co. was dissolved on October 17, 1942, and its assets were distributed as more fully described hereinafter.

">*1055 At various times prior to 1942 the petitioner made outright gifts of the Herberts Co. stock to his wife and children. He caused certificates for stock registered in his name to be issued in the names of the children and in the amounts shown as follows:

Date	Evelyn	Curtis, Jr.
	Shares	Shares
Dec. 28, 1935	800	800
Dec. 16, 1937	500	500
Dec. 28, 1938	600

The foregoing stock was transferred for the Herberts Co. by its fiscal agents. Subsequently, the Herberts Co. became its own transfer agent and new certificates were issued in the same names on January 2, 1939. All but the jointly held certificates (1,200 shares) were consolidated at that time into single certificates for Evelyn (1,300 shares) and Curtis, Jr. (1,900 shares).

On January 20, 1941, all of the stock represented by the foregoing certificates, including those jointly held by Evelyn and her mother, was transferred on the">*177 books of the company to petitioner, purportedly as trustee, and new certificates were issued in the name of the petitioner as "trustee" for Evelyn (2,500 shares) and as "trustee" for Curtis, Jr. (1,900 shares), respectively. On the same date additional stock of the Herberts Co. was transferred from the name of the petitioner to himself as "trustee" for Evelyn (2,100 shares) and as "trustee" for Curtis, Jr. (2,700 shares), respectively. The petitioner believed that he had thereby created an "oral trust," the purpose of which was to protect his children during the incompetency of one and the minority of the other.

All of the foregoing stock certificates were kept by the petitioner in his home or office safe, or in a safe deposit box. Some of the certificates issued in the names of the children had been previously exhibited on Christmas trees and had been then described to the children as Christmas presents to them. It is not known whether any of the certificates issued in the names of his children and his wife were endorsed for cancellation, or otherwise, by anyone. Some were not so endorsed and some were not canceled.

All dividends paid thereon prior to 1941 were received by petitioner">*178 and were deposited in separate savings accounts which the petitioner's wife maintained in her name as "trustee" for each child, respectively.

On December 5, 1941, the Herberts Co. declared a dividend payable in stock of United Aircraft Products, Inc. (hereinafter referred to as United), and Aerco, Inc. (hereinafter referred to as Aerco). The petitioner received 230 shares of United and 3,067 shares of Aerco on ">*1056 each of the two blocks of 4,600 shares of the Herberts Co. stock which he held as "trustee" for his children.

On or about December 9, 1941, the petitioner consulted his tax advisor about his tax liability incident to this dividend. His advisor recommended that written trust instruments be executed for the benefit of the children in order to avoid any question concerning the existence or terms of the so-called "oral" or parol trusts. Accordingly, his advisor introduced him to Russell H. Reay, an attorney, who prepared two instruments (hereinafter referred to, separately, as the Evelyn trust No. 1 and the Curtis trust; also referred to, collectively, as the Reay trusts). Both instruments were executed by the petitioner on or about December 9, 1941; the acknowledgments">*179 were dated December 10, 1941. The petitioner was trustee under each trust and the receipts attached to the trust instruments recited that, as such trustee, he received for each trust 4,600 shares of Herberts Co. stock and 230 shares of United stock. In addition, the Curtis trust received 3,067 shares of Aerco stock.

The Evelyn trust No. 1 provided that "such portion of the income from the trust estate as in the sole discretion of the Trustee is reasonably necessary for the care, maintenance and support" of Evelyn was to be distributed quarterly, or at other intervals, for her use and benefit during her lifetime. If in his discretion the net income was insufficient he was authorized to use such portion of the principal as "he in his sole discretion may deem adequate" for that purpose. Upon her death the trust was to terminate and the estate was to be distributed in equal shares to the petitioner and his wife, or the survivor; if neither survived, it was to be distributed to those entitled to inherit from Evelyn. The trustee had broad powers of management as well as the power to distribute moneys to or for the benefit of a minor, or an incompetent person, without the intervention">*180 of any guardian or court. The trust contained a spendthrift clause and also the following provision: "This trust shall be irrevocable."

The Curtis trust provided that "such portion of the net income from the trust estate as in the sole discretion of the Trustee is reasonably necessary for the care, maintenance, support and education" of Curtis, Jr., was to be distributed quarterly, or at other intervals, for his use and benefit during his minority. If in his sole discretion the income was insufficient he was authorized to use "such portion of the principal of the trust estate as he in his sole discretion may deem adequate" for that purpose. Upon Curtis, Jr., arriving at the age of 21 the trust was to terminate and the estate was to be distributed to him. In all other respects the provisions of this trust were the same as those provided in Evelyn trust No. 1, including the provision: "This trust shall be irrevocable." Both trusts also contained the following provision:

">*1057 Article II.

Said Trustee may either maintain, continue or operate, at the risk of the trust estate, and not at the risk of said Trustee, any business enterprise which he may receive from the trust estate, ">*181 or he may sell, exchange or otherwise dispose of the whole or any part thereof, on such terms and for such property as he may deem best; or he may retain, hold, maintain or continue any securities, properties or investments which he may receive from the trust estate, whether or not the same be of the character permitted by law for investment of trust funds; or in his sole, absolute and uncontrolled discretion he may grant, bargain, sell, convey, exchange, convert, lease for terms within or extending beyond the duration of this trust, grant for like terms the right to mine or drill for and remove therefrom gas, oil, and/or other minerals, assign, partition, divide, sub-divide or improve any of the trust estate, invest, re-invest, loan or reloan the trust estate in securities, properties or investments either of the character permitted by law for the investment of trust funds or otherwise, effect insurance, including public liability insurance, at the expense of the trust estate, of such nature and in such form and amount as the Trustee deems advisable, borrow money for any trust purpose, hypothecate the trust estate, or any part thereof, and/or replace, renew and/or extend any encumbrance">*182 thereof, upon such terms and conditions and by such means of security as may be determined upon by the Trustee; and generally in all respects he may handle, manage and operate the trust estate in such manner, and upon such terms and conditions as to said trustee, in his absolute and uncontrolled discretion, may seem best, and may do all of such other things and exercise and execute each and every right, power and privilege in connection with and with relation to the trust estate, as could be done, exercised and/or executed by an individual holding and owning said property in absolute and unconditional ownership, including, without limiting the foregoing, the rights as respects stocks and bonds of holding said securities in his own name or otherwise, voting, giving of proxies, payment of calls for assessments, exchanging securities, selling or exercising stock subscription or conversion rights, participating in foreclosures, reorganizations, consolidations, mergers, liquidations, pooling agreements, voting trusts and assenting to corporate sales or other acts.

For reasons which have not been explained 3,067 shares of the Aerco stock were not included under Evelyn trust No. 1. These">*183 shares were received under a separate trust agreement (hereinafter referred to as Evelyn trust No. 2), which was executed by the petitioner's wife on an unknown date in 1942. The agreement and the acknowledgment thereto were predated to December 9, 1941. The provisions of both trusts, Nos. 1 and 2, were substantially similar except that the latter trust, of which the petitioner's wife was trustee, was not made irrevocable.

The petitioner filed a Federal gift tax return for 1941 in which he reported gifts of Herberts Co. stock, including 2,100 shares to Evelyn and 2,700 shares to Curtis, Jr., and in which he claimed exclusions of $ 4,000 for each gift to the children. On May 15, 1942, the petitioner furnished copies of the Reay trusts to the collector of internal revenue in connection with this return.

On an unknown date subsequent to December 9, 1941, the petitioner ">*1058 consulted his personal attorney, Harry W. Elliott, who was then working on a plan to provide security for the petitioner's family. Elliott was shown copies of the Reay trusts, but he did not know that they had been executed. He recommended that such instruments should include a provision to permit the ultimate">*184 merger or consolidation of the trusts in a family trust which had been discussed as early as 1927. With the petitioner's acquiescence, the Reay trusts were redrafted to include such provision in both instruments (hereinafter referred to as the Elliott trusts). The Elliott trusts were executed by the petitioner on an unknown date subsequent to the execution of the Reay trusts. The agreements were predated to December 9, 1941; the acknowledgments thereto were predated to December 10, 1941. The petitioner as trustee executed receipts to himself as trustor for the same stocks which he had received previously as trustee for each of the Reay trusts. The provisions of the Reay and the Elliott trusts were identical, except that the latter trusts each contained the following new provision:

Article III.

There is specifically reserved to the Trustor hereunder, during the term of this trust, the exclusive right, power and authority to merge and/or consolidate this trust, and all of its assets in a trust or trusts which might be hereafter established by the Trustor hereunder, after giving notice to the Trustee in writing of such fact at least five (5) days before such merger and/or transfer">*185 and/or consolidation is to take effect. And, provided further, that the rights of the Beneficiary under this trust shall not in any manner be impaired, nor the value of this trust be decreased, and provided further, that the Beneficiary hereunder shall participate proportionately as a Beneficiary in such trust as might be hereafter established as the amount of the value of her trust estate hereunder at the time of merger bears to the total value of the trust estate created by said new trust; and, provided further, that the trust hereafter to be formed shall be an irrevocable trust. Should any new or other trust be established into which this trust might be merged, transferred or consolidated, upon the delivery to the new Trustee of all cash, stocks, bonds, securities or other property by the Trustee hereunder, said Trustee shall be immediately and forever released, exonerated and discharged from any further liability or responsibility in the future administration of the trust estate as created by this instrument.

The complete provisions of these trusts, together with all other written trust agreements mentioned herein, are hereby incorporated by reference.

In June 1942 the petitioner">*186 opened various brokerage accounts, including accounts for himself as "trustee" for Evelyn and Curtis, Jr., and for his wife as "trustee" for Evelyn. At that time he furnished copies of the Reay trusts to his brokers. On June 18, 1942, each block of the United stock hereinbefore mentioned was sold and the respective proceeds were deposited in each of the separate savings accounts which the petitioner's wife maintained as "trustee" for Evelyn and Curtis, Jr. On or before October 26, 1942, each block of the Aerco ">*1059 stock hereinbefore mentioned was exchanged for 170 shares of the stock of Bank of America, National Trust & Savings Association (hereinafter referred to as Bank of America), plus a small amount of cash; 70 shares from each block of Bank of America stock were sold on November 27, 1942, and the 100 shares remaining in each block were sold subsequent to January 1, 1943. The respective proceeds from the exchange of Aerco stock and the sales of Bank of America stock were deposited in each of the separate savings accounts which the petitioner's wife maintained as "trustee" for Evelyn and Curtis, Jr.

When the Herberts Co. was dissolved on October 17, 1942, its outstanding">*187 stock was registered on its books as follows:

Stockholder	Shares	Percentage
Petitioner	16,363	46.0113
Petitioner's wife	10,000	28.1191
Petitioner, as "trustee" for Evelyn	4,600	12.9348
Petitioner, as "trustee" for Curtis, Jr	4,600	12.9348
Total	35,563	100.

In January 1943 a trust agreement was executed for the benefit of the petitioner's family (hereinafter referred to as the Herberts trust). The agreement and the acknowledgments thereto were predated to January 1, 1943. The trustors were the petitioner, his wife, and the petitioner as "trustee" for Evelyn and Curtis, Jr. The trustees were the petitioner, his wife, and his attorney Elliott. The trustors transferred to the trustees all of the assets which they received from the liquidation of the Herberts Co. During the period between the dissolution of the company and the establishment of the trust the petitioner acted as agent for the purpose of accounting for the assets to the stockholders. In addition to those assets, the trustors each contributed other assets. On January 19, 1943, the petitioner's wife withdrew $ 14,805.55 and $ 15,003.61, respectively, from the separate savings accounts">*188 which she maintained as "trustee" for Evelyn and Curtis, Jr. Those amounts were deposited on January 21, 1943, to the account of the Herberts trust.

The Herberts trust provided that the net income therefrom was to be paid to the following beneficiaries in percentages which were based upon the respective contributions to the trust:

Beneficiary	Percentage
Petitioner	38.5
Petitioner's wife	28.5
Petitioner as "trustee" for Evelyn	16.5
Petitioner as "trustee" for Curtis, Jr	16.5

When Curtis, Jr., arrived at the age of 23 his share of the net income was to be paid directly to him. The trust was to continue until the death of the survivor of the named beneficiaries. The petitioner and ">*1060 his wife each reserved the power to dispose of their respective shares of the net income, and the same percentage of the principal, by appointment to any other beneficiary or beneficiaries of the trust; upon the death of either parent without exercising the power to dispose of his or her share of the net income, such share was to be paid to the remaining beneficiaries in equal shares. Upon the death of Evelyn or Curtis, Jr., leaving issue surviving, their respective shares of ">*189 the net income were to be paid to their respective issue per stirpes; upon the death of either child leaving no issue surviving, their respective shares of the net income were to be paid to the remaining beneficiaries of the trust in equal shares. Upon the termination of the trust the principal was to be distributed within three years to any beneficiary or beneficiaries appointed by the petitioner or his wife and to the surviving issue of Evelyn and Curtis, Jr., to the extent of the respective interests of the named beneficiaries. If the parents failed to appoint, in whole or part, or there were no surviving issue of the children, the undisposed of interests of the named beneficiaries were to be paid to their respective heirs. If the children died, leaving no issue surviving, prior to the death of their parents, the principal was to be distributed to the heirs of the survivor of the parents. The trust also provided for the appointment of a trustee, or guardian, to receive the income for Evelyn and Curtis, Jr., upon contingencies not herein material. It was further provided that when Curtis, Jr., arrived at the age of 25 he was to be paid one-tenth of his share of the principal">*190 each year successively thereafter.

The Herberts trust was expressly stated to be "an irrevocable trust." The trustees were given broad powers of management, which were substantially similar to the powers which the petitioner had as trustee under the Reay trusts. They also had the power to determine what was to constitute principal, gross income, and the net income available for distribution; they had the right to use principal for administration expenses if the income was insufficient. The petitioner and his wife, or the survivor, were given the power to appoint their successors; if either failed to do so, the survivor was to have a double vote in the event of disagreement with the third trustee. The petitioner and his wife, or the survivor, also had the power to remove the third trustee upon 30 days' written notice and to appoint his successor.

The interests of the beneficiaries under the Herberts trust were protected by a spendthrift clause. It was also provided that if the net income was insufficient, in the sole and uncontrolled discretion of the trustees, the principal of the trust estate was to be used to meet unforeseen contingencies, not to "exceed an equal proportionate">*191 part of the trust estate as there may be beneficiaries thereof." It was declared that:

">*1061 This trust instrument in its entirety, and all of the terms, provisions and conditions herein contained, are established for the purpose of conserving the property and estate, both separate and community, of Curtis A. Herberts and Gladys E. Herberts for the benefit of their children herein named, and it is the intention and desire of the Trustors to eliminate hazards and speculations, so far as possible, in the provisions of the trust. It is also the desire of the Trustors that such children, beneficiaries of this trust, shall be fully protected because of their inability or disability, inexperience and need of care and protection.

Returns of income for the years 1941, 1942, and 1943 (including net capital gains for 1942 and 1943), and amended returns for 1941 and 1942, were filed as shown in the following table:

			Income
Year	Form	Name given on return
			Original	Amended
			return	return
1941	1040	Petitioner, "Trustee for Evelyn J. Herberts"	$ 5,661.24	$ 6,660.94
1941	1040	Petitioner, "Trustee for Curtis Arthur	6,721.44	6,723.44
		Herberts, Jr."
1942	1041	"Evelyn J. Herberts Trust" by petitioner,	13,716.48	16,657.47
		"Trustee".
1942	1041	"Evelyn J. Herberts Trust" by petitioner's	1,258.54	1,258.54
		wife,"Trustee".
1942	1041	"Curtis A. Herberts, Jr. Trust" by petitioner,	14,975.01	17,916.00
		"Trustee".
1942	1040	Petitioner, "Trustee for Evelyn J. Herberts"	None
1942	1040	Petitioner, "Trustee for Curtis A. Herberts,	527.97
		Jr."
1943	1041	"The Herberts Trust" by petitioner, "Trustee"	3,640.53
			1943	1040	"Evelyn J. Herberts (deceased 3-29-43)" by	693.55
		petitioner's wife, "Trustee".
1943	1040	"Curtis A. Herberts" (individually)	4,304.10
			* 1,876.15

">*192

The Commissioner determined in part for the years 1941 and 1942 that income equal to the amounts later reported in the amended returns, with corrections not herein material, is taxable to the petitioner under sections 22 (a) and 167 of the Internal Revenue Code. He also determined that the petitioner is taxable on the net income of $ 527.97 reported in 1942 for Curtis, Jr. The Commissioner increased the petitioner's income for the year 1943 as follows: $ 5,002.17 for a portion of net capital gain, $ 3,666 income tax net income, and $ 3,752.29 victory tax net income, for a portion of other income from the Herberts trust which was reported partly as the income of Evelyn and of Curtis, Jr.

The amended returns and checks for additional taxes were received by the Commissioner on June 17, 1947, together with consents, executed in duplicate, to the retroactive application of section 167(c) of the Internal Revenue Code, as amended, to the taxable years 1941 and 1942. The consents filed on behalf of Evelyn's estate were executed by a special administrator who had been appointed on June 13, 1947.

All of the income involved herein, except income from the Herberts">*193 ">*1062 trust, was deposited in the separate savings accounts which the petitioner's wife maintained as "trustee" for Evelyn and Curtis, Jr., respectively. These accounts were maintained exclusively for the benefit of the children. In all matters in which petitioner's wife acted as "trustee" for either of the children, she was acting as agent for petitioner in his capacity as trustee. Income taxes were paid, directly or indirectly, from these accounts for each child, or for the "trustee" of each child. The petitioner's wife also made withdrawals for Curtis, Jr., including the following: $ 1,000 on December 17, 1943, for a car; $ 100 on January 15, 1945, for travel checks; about $ 400 on December 19, 1945, for an engagement ring; about $ 330 on January 14, 1946, for a wedding ring; $ 500 on March 6, 1946, for the purchase of stock by Curtis, Jr.; and $ 250 for incidental expenses after his marriage in 1946. A balance of $ 2,006.86 in his account was paid outright to him on October 3, 1946. A balance of $ 4,696.10 in Evelyn's account at the time of her death was withdrawn by the petitioner's wife on April 1, 1943, and deposited to her personal account. This balance was used">*194 to pay doctors' bills, funeral expenses, and income taxes for Evelyn. During the seven years of Evelyn's illness the petitioner spent nearly $ 100,000 in medical and nursing care. None of the income involved herein was used for the support and maintenance of the children during the taxable years. The income from the Herberts trust was first distributed on April 8, 1946.

The petitioner did not intend to reserve for himself any economic benefit or gain either from the stock of the Herberts Co. which he gave to his wife and children prior to 1941, or from the income thereon.

OPINION.

While the respondent contends in the income tax proceeding that the petitioner is taxable under the provisions of both sections 22 (a) and 167 of the Internal Revenue Code, he relies primarily on the general principles set forth in Helvering v. Clifford, 309 U.S. 331">309 U.S. 331, and his principal contention is that petitioner is taxable under section 22 (a). The income in question is traceable, with a minor exception, to transfers of the Herberts Machinery Co. stock by the petitioner either to or for the benefit of his children.

It is necessary, therefore, to consider first the">*195 effect of those transfers.

Pre-1941 transfers. -- The petitioner made outright gifts of 1,900 shares of the Herberts Co. stock to each of his children and of 600 shares to his wife, all prior to 1941. Certificates for 1,300 shares were issued in Evelyn's name and she was named as joint tenant with her mother in certificates for 1,200 shares (the equivalent of 600 shares ">*1063 each); certificates for 1,900 shares were issued in the name of Curtis, Jr. There was no trust, oral or written, at this time. The petitioner's intention to make absolute gifts of the stock is shown by the evidence. The issuance of the stock certificates in the names of the children and wife is equivalent to a delivery of the stock to them, under the laws of California, ^{Jean v. Jean, 207 Cal. 114">207 Cal. 114; 277 P. 313; Lynch v. Lynch, 124 Cal. App. 454">124 Cal. App. 454, 124 Cal. App. 454">456; 12 Pac. (2d) 741. See, also, Kathryn Lammerding, 40 B. T. A. 589; affd., 121 Fed. (2d) 80. 1948 U.S. Tax Ct. LEXIS 170">*196 The acceptance of beneficial gifts is presumed under the laws of California. See Yano's Estate, 188 Cal. 645">188 Cal. 645, 188 Cal. 645">649; 206 P. 995; Herman v. Mortensen, 72 Cal. App. 2d 413">72 Cal. App. (2d) 413, 72 Cal. App. 2d 413">419; 164 Pac. (2d) 551. On all the evidence, we have found that the petitioner did not intend to reserve for himself, and did not reserve, any economic benefit or gain either from stock which he gave to his wife and children prior to 1941, or from the income thereon; and did not retain as to this stock any substantial rights of ownership. We hold that the pre-1941 transfers, which embrace 4,400/9,200, or 11/23, of the total stock in question, were complete and effective gifts by petitioner to his children and wife.}

">*197 On January 20, 1941, the petitioner caused the foregoing certificates of stock to be transferred to himself as "trustee" for his children. However, it was beyond the petitioner's authority to dispose of stock owned by and standing in the name of his children and wife. It was equally beyond his authority to transfer this stock to trusts which he created, or purported to create, in 1941 and subsequent years. James T. Pettus, 45 B. T. A. 855; see Lawrence Miller, 2 T.C. 285. Cf. Frank E. Joseph, 5 T.C. 1049. It follows that the Commissioner erred in taxing 11/23 of the income in question to the petitioner.

In the petition there is an allegation to the effect that respondent erred in taxing to petitioner the income reported by Curtis A. Herberts, Jr., in his individual return for the year 1942, and that this income was from stock given to Curtis, Jr., by petitioner and not from stock included in a trust for his benefit. The only evidence bearing upon this point is a schedule introduced by petitioner as an exhibit indicating that 1,000 shares of Aerco Corporation stock was a "Gift from C. ">*198 A. Herberts," and acquired by Curtis, Jr., in 1940, and was "exchanged for 55 shares Bank of America stock" in October 1942. This is not sufficient evidence to warrant a conclusion that respondent ">*1064 erred in his determination that the sums of $ 225 as dividends, and $ 367.40 as capital gains, less deductions of $ 64.43, were taxable to petitioner as "owner of the stock." A similar allegation was made as to income reported for 1942 by Evelyn J. Herberts in her individual return. No income was reported in this return; the statement attached to the deficiency notice does not show that respondent taxed any such income to petitioner; and no evidence was offered as to this allegation. Therefore, as to these items our decision is against petitioner.

1941 transfers. -- On January 20, 1941, the petitioner caused additional shares of the Herberts Co. stock to be transferred from his name to himself as "trustee" for his children. A certificate for 2,100 shares was issued to him as "trustee" for Evelyn, and a certificate for 2,700 shares was issued to him as "trustee" for Curtis, Jr. The petitioner contends that these transfers were absolute gifts to his children, at least ">*199 in legal effect, because either (1) no trusts were created on January 20, 1941, or (2) if trusts were created, they were executed forthwith. He argues under the first point that he held the Herberts Co. stock in his name as "trustee" merely as a matter of convenience, similar to the ways in which properties were held by parents for their children in Edward H. Heller, 41 B. T. A. 1020, and Prudence Miller Trust, 7 T.C. 1245. In both of those cases we held that there was no intention to create trusts, but that there was an intention to make outright gifts. In the present case the evidence indicates, with reasonable certainty, that the petitioner intended to create a trust for each of his children and that he did not intend to make outright gifts of the stock. By 1941 Evelyn's condition had become grave and could no longer be considered as a temporary aberration (her mental illness began in 1936, a year after the first outright gift of stock had been made to her), and the petitioner had engaged in conversations with his attorney in regard to the trust device as a protection for his family. Under these circumstances we ">*200 can not ignore the significance of the petitioner's action in transferring the stock to himself as "trustee" for his children, rather than to the children individually, as in the case of the pre-1941 transfers. We think it is clear that he did not intend to make outright gifts to his children on January 20, 1941. That fact alone is sufficient to distinguish the cases relied upon by the petitioner. The petitioner contends in the alternative that if trusts were created on January 20, 1941, they were executed forthwith. He argues that such trusts were dry, or passive, since he had no active duties to perform, and, therefore, that the full legal and equitable title passed at once to the children. He relies on numerous cases, of which LaFleur v. Burns Lumber Co., 188 Cal. 321">188 Cal. 321; 205 P. 102, is a typical example. In that case a declaration in writing that a certain judgment was "in trust" for another party was held to create a valid trust under the ">*1065 California statute. ^{1948 U.S. Tax Ct. LEXIS 170">*201 in Wittfield v. Forster, 124 Cal. 418">124 Cal. 418; 57 P. 219, there was a conveyance of real and personal property "in trust" for a named lodge. In that case the Supreme Court of California held, under the same statute, that "the language employed in the instrument is entirely too vague and uncertain to constitute a valid trust. The duration of the estate attempted to be granted to the trustee, the nature and quantity of interest which the beneficiaries are to have, and the manner in which the trust is to be performed, are all left undeclared and without any reasonable certainty; and, of course, there is no statement of any of the purposes for which, under section 857 (since repealed), an express trust may be declared. And this uncertainty also makes the attempted trust as to the personal property void." The court said that in such case, while the instrument clearly showed an intention to create a trust, either the trustee took no title or there was a resulting trust to the grantor or his heirs. It has been said of these cases that "A distinction should be noted between those trusts which fail because the trustee, having no specified">*202 duties, merely holds in trust for a designated person, and those which are bad because the trustee's duties or the beneficiary's rights are uncertain." Nossaman, Trust Administration and Taxation, vol. 1, § 44, p. 42. In the instant case, as we have already said, the petitioner did not intend by the transfers of January 20, 1941, to make outright gifts to his children. By the same token we think it is clear that he did not intend to create trusts for no purpose other than to convey the legal title to the children. We are persuaded that he intended to retain the legal title in himself as trustee, that he intended to retain some powers and perform some duties as trustee, and that he intended that these things should be done for the benefit of his children. Under these circumstances we think that the trusts of January 20, 1941, may not be construed under the laws of California as mere dry, or passive, trusts. Consequently, we hold that the full legal and equitable title did not pass to the petitioner's children under those trusts. If we consider as in our opinion we must, the purported trusts under which petitioner held the stock transferred to him as "trustee" on January 20, 1941, ">*203 to be intended by him as real or active trusts, it is unnecessary to decide, in this proceeding, whether the trusts were valid or invalid. While they have been treated as parol trusts, they were created by the designation of the petitioner as ">*1066 "trustee" on the stock instruments; by no word or act did the petitioner indicate with reasonable certainty the purpose of the trusts. For present purposes, therefore, these trusts may be regarded either as valid revocable trusts under the laws of California, Whitfield v. Forster, supra. In either case, petitioner is taxable upon the distributions made prior to December 9, 1941, upon the Herberts Co. stock transferred from his individual name to the name of himself as "trustee" on January 20, 1941. If the trusts were invalid, there was no error in taxing the petitioner under section 22 (a) as the owner of the stocks in question. If the trusts were revocable, the petitioner is taxable on the income from such stock under section 166 of the code. Erik Krag, 8 T.C. 1091; George S. Gaylord, 3 T.C. 281;1948 U.S. Tax Ct. LEXIS 170">*204 affd., 153 Fed. (2d) 408. See, also, Corliss v. Bowers, 281 U.S. 376">281 U.S. 376.}

On or about December 9, 1941, petitioner executed the written trust instruments, known as the Reay trusts, and, as trustee thereunder, acknowledged the receipt of the Herberts Co. stock held in his name as trustee since January 20, 1941. The Reay trusts were">*205 irrevocable and there was no element of uncertainty in their terms which would warrant a question of their validity under section 2221, Civil Code of California. If the purported parol trusts of January 20, 1941, were invalid (as we are disposed to think they were) there can be no question of petitioner's right to transfer the stock (other than that given outright to the children prior to January 20) to the Reay trusts. If the parol trusts were valid they would be revocable, by virtue of the California statute already quoted. Consequently, petitioner, in either event, had the right to transfer to the Reay trusts the stock owned by him individually, or as trustee, and, after December 9, 1941, the Herberts Co. stock (other than that owned by the children) was held by him as trustee under irrevocable trusts with definite terms. Therefore, we must now decide the question whether the petitioner is taxable as grantor of these trusts under sections 22 (a) and 167 of the Internal Revenue Code. The respondent contends that all of the income in question is taxable to the petitioner under the principles of 309 U.S. 331">Helvering v. Clifford, supra, and related cases. ">*206 He argues, in short, that the petitioner's repeated attempts to retract what he had done previously show the requisite power and control over the corpus and income of the trusts to bring this case within the purview of the Clifford doctrine. We consider first, therefore, the circumstances attendant upon the creation and operation of the various trusts.

There were no further formal transfers of the Herberts Co. stock ">*1067 after January 20, 1941. However, the petitioner purported to hold the certificates issued on that date under various trusts, successively, until the Herberts Co. was dissolved on October 17, 1942. First, he acted under the parol trusts, hereinbefore mentioned, which, if valid, were revocable. Then, on or about December 9, 1941, he held the certificates under the Reay trusts, consisting of the Evelyn trust No. 1 and the Curtis trust, both of which were irrevocable. Subsequently, on an unknown date, the petitioner executed the Elliott trusts, which were also irrevocable. The provisions of the Reay and the Elliott trusts are identical, except that the latter contain a provision for the ultimate merger or consolidation of the trusts in a trust which might">*207 be established thereafter by the petitioner. He purported to hold the properties of the Reay trusts under the Elliott trusts during a period which can not be determined on the present record. In any event we regard the execution of the Elliott trusts as immaterial to the present question. It is significant, however, that the rights of the beneficiaries under the Elliott trusts (identical to the rights under the Reay trusts) were to be protected in the event of a merger or consolidation of the trusts.

The Evelyn trust No. 2 was a revocable trust. It was executed nominally by the petitioner's wife on an unknown date in 1942, for reasons unexplained by the present record. This trust consisted of property (the Aerco stock which the petitioner had received as trustee under the parol trust for Evelyn, and which, in some unknown way and for some unknown purpose, was given by him to his wife in order that she might establish this trust. Under these circumstances we regard this trust as what the petitioner on brief concedes it to be, i. e., an agency of the petitioner under the Reay or Evelyn trust No. 1, or as a trust of which petitioner was, in reality, the grantor. The taxability">*208 of its income will be determined by the same considerations applicable to the Evelyn trust No. 1.

The Herberts trust was established in January 1943 as an irrevocable trust. The petitioner was a grantor of this trust in several capacities, including that of "trustee" for each of his children. The properties of the Reay or the Elliott trusts were transferred to the Herberts trust. The income in question for 1943 was distributable to the petitioner as "trustee" for each child. The provisions of the Herberts trust differ in many respects from those of the Reay and the Elliott trusts. There are minor differences in the rights of the beneficiaries and in the powers of the trustees. The differences are probably immaterial in this proceeding. To the extent that they may be material, however, we think that the provisions of the Reay trusts are controlling. Cf. Estate of John W. Neal, 8 T.C. 237, where a decedent created an irrevocable trust during his lifetime which he purported to change by amendments beyond his powers under the trust. We held that his ">*1068 attempts to do so were insufficient to make the corpus of the trust includible in his">*209 gross estate under section 811 (d) (2) of the code. We said that he did not actually have such powers under the trust. In Lewis W. Welch, 8 T.C. 1139, 1148, we said in part as follows:

As a general rule, after a trust has been created and the rights of the beneficiaries have become vested, in the absence of a power of modification reserved, the trust may not be altered or modified to the prejudice of the beneficiaries without their consent. However, it is permissible to modify the trust where the interests of the beneficiaries are not prejudiced thereby. Cf. Boyd v. United States, 34 Fed. (2d) 488; Restatement of the Law of Trusts, ch. 10, sec. 338 (2); Estate of O. M. Banfield, 4 T.C. 29. * * *

The respondent treats the various trusts as a scheme for tax-saving purposes. He gives a prominent place in his argument to Sewell v. United States, 73 Fed. Supp. 957, recently decided by the Court of Claims. In that case, notwithstanding a state court decree to the contrary, the Court of Claims held that the taxpayer had retained control and dominion ">*210 over stock which he purported to transfer to his wife. The facts showed, among other things, that the stock certificate was kept in the corporate stock book, that it was endorsed in blank by the taxpayer's wife, and that the stock and the dividends thereon were at all times available to the taxpayer with his wife's consent. The dividends were used in part by him, and in part by the wife to pay family expenses. The facts in that case are clearly distinguishable from the present facts. In the instant case the petitioner took technical liberties with the trusts which he created, or purported to create, which are shocking to one trained in the law, but in all of his actions he scrupulously observed and protected the substantial rights of the beneficiaries. We are not persuaded by the record that petitioner disregarded, or intended to disregard, the real purpose of the trusts, which was to protect his children, for the sake of furthering any ulterior purpose of benefiting his own selfish interest. In our opinion, technical infractions of duties as trustee by a settlor-trustee, or actions taken by him under a misconception of law, can not, of themselves, warrant a disregard for tax">*211 purposes of the trusts so long as the trusts are administered in such a way as to indicate that they have reality and substance. Nevertheless, for reasons other than those advanced by the respondent in his brief, we think that the petitioner is partially taxable on the present facts for each of the taxable years after 1941.

The trust income and capital gains for 1942 are involved in this proceeding under the provisions of the Current Tax Payment Act of 1943. The trust income for that year was received by the petitioner as trustee under either the Reay or the Elliott trusts, which were identical in all material respects. The petitioner was the grantor and the trustee under those trusts for each of his children, respectively. He reserved broad powers of management. The properties of those trusts ">*1069 consisted primarily of stock in the Herberts Co., which the petitioner controlled (at least prior to the execution of the trusts). Here the similarities end. The provisions for the distribution of the income and principal of the trusts were different in the case of each child.

The Evelyn trust No. 1 provided that the petitioner was to distribute such portion of the income as">*212 in his sole discretion was reasonably necessary for the care, maintenance, and support of Evelyn during her lifetime. He also had discretionary authority to use the principal of the trust for that purpose. Upon Evelyn's death the trust estate was to be distributed in equal shares to the petitioner and his wife, or the survivor, with provisions over if neither survived. Under those provisions we think that the petitioner had the power to accumulate the income from the trust for the benefit of the remaindermen rather than for the benefit of Evelyn. The facts show that he did not distribute any of the income for the benefit of Evelyn during her lifetime. Thus, he could and did control the ultimate disposition of the income from the trust. When that power is combined with all the other powers and circumstances, we think that the petitioner retained the equivalent for tax purposes of an economic ownership of the property in question. Stockstrom v. Commissioner, 148 Fed. (2d) 491; certiorari denied, 326 U.S. 719">326 U.S. 719. Cf. Commissioner v. Buck, 120 Fed. (2d) 775. Accordingly, we hold that the">*213 Commissioner did not err in taxing the petitioner under section 22 (a) on the income and capital gains received and realized for Evelyn during her lifetime, except as to those portions hereinbefore excluded from the trusts. This applies to the year 1942 and part of 1943.

The Curtis trust presents a different problem for the year 1942. While the petitioner had the power to accumulate the income therefrom, he had no power or control over the final destination of that income. Curtis, Jr., was entitled to receive the principal and the undistributed income of the trust estate when he arrived at the age of 21. The difference between the trusts for Evelyn and Curtis, Jr., is aptly illustrated by the difference between the trusts involved in Alex McCutchin, 4 T.C. 1242; affd., 159 Fed. (2d) 472. On the other hand, the petitioner had the power to distribute such portion of the income as in his sole discretion was reasonably necessary for the care, maintenance, support and education of Curtis, Jr., a minor, whom he was obligated to support under the laws of California. ^{1948 U.S. Tax Ct. LEXIS 170">*214 Helvering v. Stuart, 317 U.S. 154">317 U.S. 154, in which the Supreme Court held that income available for the discharge of a grantor's parental obligation is taxable to him, notwithstanding ">*1070 the fact that the income was not used for that purpose during the taxable year.}

The petitioner contends that the Stuart case is distinguishable and, in the alternative, that it is inapplicable. He argues, first, that, since the primary duty to support a minor rests upon his parents, in California, the estate of the minor can not be used where the parents are able to fulfill that obligation. See Ex parte Carboni, 46 Cal. App. 2d 605">46 Cal. App. (2d) 605, 46 Cal. App. 2d 605">613; 116 Pac. (2d) 453;">*215 In re Keck, 100 Cal. App. 513">100 Cal. App. 513; 280 P. 387. But those cases do not involve trusts in which a power to make payments for the support and maintenance of a minor beneficiary is expressly granted to the trustee by the settlor, as in the present case. In J. M. Leonard, 4 T.C. 1271, 1287, we held that the fact that the trustee had the power to use income for support and maintenance "only in the event the grantors as parents are unable to support the beneficiary" was sufficient to distinguish the Stuart case, where the grantors actually fulfilled their obligation. In Lillian M. Newman, 1 T.C. 921, and David L. Loew, 7 T.C. 363, cited and relied upon by petitioner, there was no power expressly given to the trustee to use the trust income for the support and maintenance of the minor beneficiaries. Thus, in the three cases upon which petitioner bases his argument on this point, the power of the trustee to use the trust income for the support and maintenance of minor beneficiaries was, in one case, contingent upon an unfulfilled condition, ">*216 and, in the other two, was not expressly granted by the settlor, and, because of state law, would not be inferred. In the instant case the trustee had the express and unconditional power to use the trust income for the support and maintenance of the minor beneficiary. The fact that the settlor-trustee was also under the personal statutory obligation to support and maintain the minor beneficiaries is material for the purpose of establishing the basis for the application of the Stuart case rather than for the purpose of distinguishing it. We hold that the Stuart rule applies to the income of the Curtis trust in question for the year 1942, subject to the following considerations.

The petitioner next relies upon section 167 (c) of the code, as added by section 134 (a) of the Revenue Act of 1943, ^{1948 U.S. Tax Ct. LEXIS 170">*219 which modifies the Stuart rule, and, so petitioner contends, renders the rule of that case ">*1071 inapplicable here. Section 167 (c) is made applicable to the year 1943 by section 134 (b) (1), and it is further made applicable retroactively to the year 1942 by section 134 (b) (2) of the Revenue Act of 1943 1948 U.S. Tax Ct. LEXIS 170">*217 of the Commissioner. The petitioner filed the prescribed consents, but he filed them after the time prescribed by the Commissioner in Regulations 111, section 29.167-3. We construe the filing of the consents and amended returns, and the covering letter of petitioner's attorney, as constituting a request for an extension of time. The regulations provide that the Commissioner may grant a reasonable extension of time "if request for such extension is filed with the Commissioner prior to the date heretofore fixed for the filing of the consent or within a reasonable time thereafter, and a showing is made to his satisfaction (1) that unusual circumstances exist, such as a case involving taxation of the grantor under the rule of Helvering v. Clifford, (309 U.S. 331">309 U.S. 331), and (2) that the granting of the extension will not jeopardize the interests of the Government." The retroactive effect of section 167 (c) for the year 1942, consequently, depends upon whatever action the Commissioner may take prior to the final decision in this proceeding under Rule 50, provided that his decision be not arbitrary or in abuse of his discretion. See J. M. Leonard, supra, p. 1287;">*218 W. L. Taylor, 6 T.C. 201, 207, 208. If the Commissioner, in his sound discretion, allows an extension of time and accepts the filing of the consents, decision on this issue (i. e., the taxation of the income of the Curtis, Jr., trust for 1942) will be entered for the petitioner. The parties may advise us as to the action of the Commissioner in this regard in proceedings under Rule 50.}

The trust income and capital gains in question for the year 1943 were received and realized initially by the petitioner and others as trustees under the Herberts trust. ">*220 They were distributable to the petitioner as "trustee" for Evelyn and Curtis, Jr., respectively, under either the Reay or the Elliott trusts. We have already held that the rights of the beneficiaries under those trusts are controlling. We have already held that the income distributable to the petitioner as "trustee" for Evelyn until the date of her death during 1943 is taxable to him under section 22 (a).

">*1072 The income distributable to the petitioner as "trustee" for Curtis, Jr., during 1943 is not taxable under 317 U.S. 154">Helvering v. Stuart, supra.Sec. 167 (c), supra. The facts show that the income in question was not used for the support and maintenance of Curtis, Jr., during the year 1943. It was not, in fact, distributed until April 8, 1946. The question remains whether the petitioner retained economic benefits of any other nature upon which he is taxable under section 22 (a). We think not. While he had broad powers of management under all of the trusts mentioned herein, the circumstances attendant upon the creation and operation of the trusts show that his administrative powers were exercisable primarily for the benefit of the beneficiaries">*221 of the trust. The Herberts Co. was dissolved in 1942 and its assets were transferred to the Herberts trust, thereby eliminating the only circumstance which might have suggested that his administrative control was exercisable primarily for his benefit. See Ward Wheelock, 7 T.C. 98. It is unnecessary to decide for present purposes whether the petitioner's administrative powers are defined by the Reay trusts, the Elliott trusts, or the Herberts trust. In any event, those powers, though broad, were exercisable by the petitioner in a fiduciary capacity. Standing alone, they would not justify a conclusion that the trust income was taxable to petitioner. United States v. Morss, 159 Fed. (2d) 142; Hall v. Commissioner, 150 Fed. (2d) 304; cf. T. D. 5488, 1946-1 C.B. 19, as amended by T. D. 5567, 1947-2, C.B. 9. We hold that the Commissioner erred in taxing the petitioner under either section 22 (a) or section 167 (relating to income for benefit of grantor) on the income distributable to him as "trustee" for Curtis, ">*222 Jr., during the year 1943.

In the gift tax proceeding there were originally three issues which involved (1) the value of the Herberts Co. stock at the date of the gifts, (2) the amount of the specific exemption available to the petitioner, and (3) the exclusions allowable under section 1003 (b) (2) of the Internal Revenue Code, as amended by section 454 of the Revenue Act of 1942. The first two issues have been settled by stipulation. The remaining issue arose out of the disallowance by the Commissioner of two exclusions of $ 4,000 each which the petitioner claimed with respect to the Herberts Co. stock transferred on January 20, 1941, from his name to himself as "trustee" for his children. The respondent contends that the transfers were "gifts in trust" within the meaning of section 1003 (b) (2), as amended, which allowed no exclusion for such gifts. The petitioner states at the conclusion of his original brief that "the gift tax deficiency should be found as claimed by respondent, except that the stipulated value of $ 8 per share of Herberts Machinery Co. applies." Thus, the sole remaining gift tax issue has clearly been abandoned by the petitioner. In his reply brief, however, ">*223 petitioner attempts to raise an issue not stated in the ">*1073 pleadings by contending that the value of the gifts should be further reduced if the petitioner is held "constructively chargeable with the tax on the income from the donated property" by computing the value of a (constructively) reserved life estate pursuant to Regulations 108, section 86.19 (f). We do not pass upon the merits of that argument, because it does not rest upon any issue properly before us. There are now no issues presented by the pleadings or the record which require us to decide whether the transfers in question are taxable as gifts, or, if so, what value should be assigned thereto.

Decision will be entered for the respondent in Docket No. 7049. Decision will be entered under Rule 50 in Docket No. 11149.

---

Footnotes

• *. Two certificates for 600 shares each were issued in the names of Evelyn and her mother as joint tenants.↩

• *. Victory tax net income.↩

• 1. Sec. 327, Civil Code of California, provides:

  "Upon surrender to the secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books."↩

• 2. Sec. 2221, Civil Code of California, provides:

  "Subject to the provisions of section eight hundred and fifty-two [relating to trusts of real property], a voluntary trust is created, as to the trustor and beneficiary, by any words or acts of the trustor, indicating with reasonable certainty:

  "1. An intention on the part of the trustor to create a trust, and,

  "2. The subject, purpose and beneficiary of the trust."↩

• 3. Sec. 2280, Civil Code of California, as amended in 1931, provides in part as follows:

  "Unless expressly made irrevocable by the instrument creating the trust, every voluntary trust shall be revocable by the trustor."↩

• 4. Sec. 196, Civil Code of California, provides:

  "The parent entitled to the custody of a child must give him support and education suitable to his circumstances. If the support and education which the father of a legitimate child is able to give are inadequate, the mother must assist him to the extent of her ability."↩

• 5. SEC. 167. INCOME FOR BENEFIT OF GRANTOR.

  * * * *

  (c) Income of a trust shall not be considered taxable to the grantor under subsection (a) or any other provision of this chapter merely because such income, in the discretion of another person, the trustee, or the grantor acting as trustee or cotrustee, may be applied or distributed for the support or maintenance of a beneficiary whom the grantor is legally obligated to support or maintain, except to the extent that such income is so applied or distributed. In cases where the amounts so applied or distributed are paid out of corpus or out of other than income for the taxable year, such amounts shall be considered paid out of income to the extent of the income of the trust for such taxable year which is not paid, credited, or to be distributed under section 162↩ and which is not otherwise taxable to the grantor.

• 6. Section 134 (b) (2), Revenue Act of 1943, provides as follows:

  "(2) Retroactive Effect. -- The amendments made by subsection (a) shall also be applicable with respect to all taxable years to which such amendments are not made applicable under paragraph (1), in the same manner as if such amendments had been a part of the revenue laws applicable to such taxable years, but only if there are filed with the Commissioner (in accordance with regulations prescribed by him with the approval of the Secretary) at such time and by such persons as may be prescribed under such regulations, signed consents that there shall be paid, at such time as the Commissioner may prescribe, all of the taxes under Chapter 1 of the Internal Revenue Code or under the corresponding provisions of prior revenue laws which would have been paid for the taxable years concerned if such amendments had been a part of the revenue laws applicable to such taxable years."↩