Nature of the Case
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Facts
Morrill (D) established four trusts, one for each of his four children. A corporate trustee was named for each trust. The income of each trust was to be accumulated until the child became 21 years of age. Ten years after their creation, the trusts were to terminate and the corpus of each was to revert to D. Each of the trusts also provided that during the minority of the beneficiary, the trustee might, in its discretion, use the trust income to pay for room, tuition, books, and travel to and from any private school, college or other institution of learning at home or abroad. During the tax years in question, 1959-1961, the children attended college. D expressly assumed responsibility for payment of tuition, room, and board and other expenses of his children at Vassar and Connecticut College. There was no express agreement for Brown University, the Holderness School or Waynflete School. Each school submitted its bills to D. D then wrote a personal check and then sent the bill with his personal check to the trustee and requested the trustee to pay from the trust the room and tuition charges. The trustee then mailed its check for those along with D’s check for the balance of the bill. In his joint return with his wife, D did not include any of the amounts of trust income applied to the children’s tuition and room charges. The Commissioner determined otherwise and held that it was taxable income under 677. D’s claim for refund was disallowed, and this suit followed.
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