TAXATION-FEDERAL INCOME TAX-CONSTITUTIONALITY OF THE CLIFFORD REGULATIONS

Taxpayer created a five year irrevocable trust on December 1, 1941 for the benefit of a charitable foundation. She retained a reversion in the corpus but disclaimed any right to income. She did not retain, directly or indirectly, any interim control over the corpus or income. On December 1, 1942 the term of the trust was extended to December 1, 1951. Taxpayer did not report the income of the trust in her return. The Commissioner assessed deficiencies for 1946 claiming that the trust was for a term of nine years and that under the new ten year rule, the income of the trust was that of the taxpayer. The Tax Court rejected the Commissioner\u27s contention and asserted that the ten year rule was not intended to apply to a charitable trust. On appeal, held, affirmed. The court said, inter alia, that the ten year rule raised a conclusive presumption that irrevocable trusts for less than ten years were within the grantor\u27s control, whether in fact they were or not. It prevented rebuttal by the grantor and taxed him on the strength of the presumption (thus accomplishing that which even Congress could not do) and must of necessity be void. Commissioner v. Clark, (7th Cir. 1953) 202 F. (2d) 94