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Taxation-Federal Income Tax-Taxation To Settlor Of Income From Trust Established To Discharge A Legal Obligation

Michigan Law Review

Shortly before the entering of a decree of absolute divorce in favor of his wife, a husband agreed to transfer securities in trust for the wife's benefit in lieu of alimony and all other claims. The divorce decree incorporated the trust agreement. On certiorari to the Circuit Court of Appeals for the Eighth Circuit, which had sustained a tax against the settlor on the income of the trust estate on the ground that it discharged a legal obligation, the Supreme Court of the United States affirmed the judgment. After disposing of the argument that the trust was entirely voluntary since …