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Case A50

Judges: AM Donovan Ch

JD Davies M
GR Thompson M

Court:
No. 2 Board of Review

Judgment date: 3 September 1969.

J. D. Davies (Member): The taxpayer, a private company, was assessed to tax, under the provisions of sec. 99A of the Income Tax Assessment Act 1936-1966, on the incomes of two trust estates of which it was trustee. The taxpayer's objections to the assessments stated, in substance, that the grounds given by the Commissioner in a letter dated 10 March 1967, for his decision on the application of sec. 99A, were insupportable and did not militate against the exercise of the discretion conferred by that section. After some discussion before the Board, it was agreed that the two references, which involved similar facts, should be heard together.

2. Evidence given to the Board disclosed that, in 1963, Mr. S and his wife were the proprietors and managers of a retail business. They were also, through their shareholdings, the owners of two companies, one of which, S Pty. Ltd., the taxpayer company, carried on, at that time, no business or activity, and the other of which, E Pty. Ltd., conducted a wholesale business supplying goods to the retail trade, including the shops managed by S and his wife. They had two children, both daughters, the first of whom, BS, was born on 26 July 1948, and the second of whom, SS, was born on 13 July 1950. With this background, S discussed, with an insurance agent and with his accountant, the possibility and advantages of establishing family trusts and reshaping his affairs. He said, in evidence, that he had in mind at that time primarily the advantage which would accrue to his daughters by virtue of the trusts, an advantage the gist of which was, as S saw it or said he saw it, that the business, if controlled by a trustee, would not be so much affected in the event of his own death. S said that he also had in mind, though to a lesser extent, the possibility of income tax benefits resulting from the reorganisation, but that he did not have in mind achieving any reduction of probate or estate duties on his death. This end must, however, have been well to the mind of the draftsman of the two settlements with which we are concerned.

3. Two deeds of settlement resulted from the discussions, both identical in terms, save that, in the first, the daughter BS was named as the ultimate remainderman, and, in the second, the daughter SS was so named. The settlor in each case was the insurance agent, A, and, save that on the face of the documents he created the settlements and contributed both trust funds of £ 25, we are not further concerned with him. The trustee of both settlements was the taxpayer company, and both deeds provided that the trustee should hold the trust fund, as to the income arising prior to the death of the survivor of S and his wife, upon trust for two young persons, relatives of S. to whom I shall refer as the primary life beneficiaries, with this proviso -

``Provided further that the trustee may notwithstanding the foregoing and in its complete and absolute discretion -

  • (i) Until the date of distribution divide the whole or such part of the net income arising therefrom as it shall decide among such of the said (S) and (Mrs. S) and (remainderman) in such proportions and either equally or unequally between them or wholly in favour of one or more of them to the exclusion of the other or others of them as the trustee shall in its complete and absolute discretion thinks fit; and
  • (ii) Until the date of the attainment of the age of 21 years by the first of the

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    said... and... (primary life beneficiaries) to attain the age of 21 years or if both the said... and... shall die under the age of 21 years, then from the date of the death of the second of the said... and... to die until the date of the attainment of the age of 21 years by the said (remainderman) to invest the whole or such part of the said net income in each year remaining after the provisions referred to in para. (i) hereof (if any) in any of the investments hereinafter authorised and to hold the same as capital moneys upon the trusts hereby declared concerning the Trust Fund.''

Each deed went on to provide that the trust fund should be held -

``On and from the date of distribution upon trust as to the capital and income of the Trust Fund for the said (remainderman) on her attaining the age of 21 years.''

It was also provided that -

``The trustee may in its absolute discretion notwithstanding anything to the contrary herein contained -

  • (a) At any time or times during the lifetime of the said (S) and (Mrs. S) and during the lifetime of the survivor of them raise any sum or sums out of the capital of the Trust Fund and pay the same to the said (S) and (Mrs. S) for his or her absolute use and benefit in addition to the income or share of income of the Trust Fund hereinbefore given to them and to the survivor of them;
  • (b) At any time or times lend to any person beneficially or contingently entitled under the trusts hereby declared any sum or sums out of the capital of the Trust Fund either with or without security and upon such terms and conditions as to repayment with or without interest as the trustee shall in its absolute discretion think fit.''

The deeds were executed by the settlor and the trustee and were dated 30 August 1963.

4. Prior to this date, the taxpayer company, by written agreement dated 29 July 1963, had agreed to purchase from S and his wife the retail business mentioned, including the goodwill of the business and the benefit of the leases of its premises. The price was to be determined by a firm of accountants and to be paid by the purchaser to the vendors, without interest, in five equal annual amounts, the first such payment to be on 30 April 1964, ``from which payment the deposit of fifty pounds ( £ 50) which has been paid on 25 July 1963, shall be deducted''. A price of £ 5,665 was determined by the accountants in due course. Some criticism of this price, as being an unduly low one, was made by the Commissioner's representative, but I have not found it necessary to give it any consideration. Nothing appeared in the terms of the agreement to indicate that the taxpayer was purchasing the business as trustee but the deposit of £ 50 was in fact paid from the two funds of £ 25 each which had already been handed by the settlor of the settlements to the taxpayer company. The taxpayer company acted, at any rate, on the basis that it had acquired the business and thereafter conducted it as trustee pursuant to the two deeds of settlement. After the acquisition of the business, the taxpayer company lodged partnership returns showing a receipt of income jointly by the two trusts of which it was trustee. Separate accounts were kept for each trust and for the mixed trust funds, though the company did not, either by deed or by resolution recorded in its minutes, declare that it held the business on trust for any person or persons or in any particular proportions.

5. At a meeting of directors of the taxpayer on 29 July 1963, at which S and his wife, the then directors, were present, it was resolved that Mrs. S resign as a director and that her one share in the company be transferred to another company in trust for S. It was resolved that a bank account be opened and - ``It was further resolved that (S) be the sole director authorised to operate on the account, to transact all matters relating to the operation of the (business) on behalf of the (settlements)''. It was resolved that E Pty. Ltd. be appointed director. The business was thereafter run by Mr. and Mrs. S as they had done previously, save that S now acted in the affairs of the business as a director of the taxpayer company, though without remuneration, and Mrs. S acted in the business not only without remuneration but with such authority only as she might have had from S. The balance of the purchase price for the business was paid without difficulty. The company purchased from S and his

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wife, again apparently as trustee, the issued capital of E Pty. Ltd., two shares, for their face value of $2 each and later resold these shares to S for $2,000 each. During the year of income with which we are concerned, the year ended 30 June 1966, the unpaid balance of the purchase price of the business was set off against amounts due by S and his wife in the books of the company, including the amount due on the resale of the shares in E Pty. Ltd.

6. In the year ended 30 June 1966, the business returned a net profit of $9,358. In the partnership return for the year, this profit was shown as having been distributed equally between the two settlements. The return lodged for each settlement showed that, of the sum of $4,679 derived by it, a distribution was made to beneficiaries, Mrs. S $1,400 and Mr. S $2,300, the balance in each case of $979 being income to which no beneficiary was presently entitled. It is with these sums of $979 that we are concerned in these references, the Commissioner having assessed them under the provisions of sec. 99A of the Act, The taxpayer alleges that this is an appropriate case where income to which no beneficiary is presently entitled should be assessed to tax under the terms of sec. 99.

7. The company's minutes of meetings of directors record a meeting held on 30 June 1966, at which Mr. S only was present, and at which it was resolved, as to each settlement,

``that a distribution of $2,700 be made out of the income of the settlement for the year ended 30 June 1966, as follows - 

   (S)                    $2,300

   (Mrs. S)                1,400

                        --------

                          $2,700

                        --------''

In addition to the arithmetical errors in these resolutions, one notes that the articles of the company, Table A of the Companies Act 1958, provided for a quorum of two directors at any meeting of directors and that S, without giving any reason therefor and without a quorum, resolved that the major part of the trust income for the year should be distributed to himself and his wife to the exclusion of the primary beneficiaries mentioned in the deeds. No resolution was passed that the balances of $979 be accumulated but these sums, at any rate, were not distributed. It is not difficult to draw an inference from these facts that it was not intended by any person connected with the preparation or execution of the deeds that the primary life beneficiaries should receive anything under the trusts, either by way of income or capital, and that they were named as the primary life beneficiaries in the deeds only as a device. It was disclosed, moreover, in the closing stages of the hearing, that throughout the year ended 30 June 1966, and perhaps even before that time, Mr. and Mrs. S had used the funds of the company for their own purchases and purposes and had thereby built up with the company loan accounts exceeding in total the net profits derived by the company for the year from the business. At the end of the year, a number of book entries were made by which the amounts due to Mr. and Mrs. S on the sale of the business, plus the amounts resolved to be distributed to them on 30 June 1966, were offset against the amounts due by them to the company in the loan accounts. As I understand it, these amounts entirely offset each other. No loan accounts, therefore, were brought into the balance sheets drawn up for the year ended 30 June 1966.

8. It is now convenient to consider the terms of sec. 99A of the Income Tax Assessment Act. That section was inserted by Act No. 110 of 1964, and applies to assessments in respect of the year of income commencing 1 July 1965, and subsequent years. The section reads in part -

``(2) This section does not apply in relation to a trust estate (other than a trust estate referred to in the last preceding sub-section) in relation to a year of income if the Commissioner is of the opinion that it would be unreasonable that this section should apply in relation to that trust estate in relation to that year of income.

(3) In forming an opinion for the purposes of the last preceding sub-section -

  • (a) the Commissioner shall have regard to the circumstances in which and the conditions, if any, upon which, at any time, property (including money) was acquired by or lent to the trust estate, income was derived by the trust estate, benefits were conferred on the trust estate or special rights or privileges were conferred on or attached to property of the trust estate, whether or not the rights or privileges have been exercised;

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  • (b) if a person who has, at any time, directly or indirectly -
    • (i) transferred or lent any property (including money) to, or conferred any benefits on, the trust estate; or
    • (ii) conferred or attached any special right or privilege, or done any act or thing, either alone or together with another person or persons, that has resulted in the conferring or attaching of any special right or privilege, on or to property of the trust estate, whether or not the right or privilege has been exercised,

    has not, at any time, directly or indirectly -

    • (iii) transferred or lent any property (including money) to, or conferred any benefits on, another trust estate, not being a trust estate referred to in sub-section (1) of this section; or
    • (iv) conferred or attached any special right or privilege, or done any act or thing, either alone or together with another person or persons, that has resulted in the conferring or attaching of any special right or privilege, on or to property of another trust estate, not being a trust estate referred to in sub-section (1) of this section, whether or not the right or privilege has been exercised.

    the Commissioner shall have regard to that fact; and

    • (c) the Commissioner shall have regard to such other matters, if any, as he thinks fit.
  • (4) Subject to the next succeeding sub-section, where -
    • (a) there is no part of the net income of a trust estate that is included in the assessable income of a beneficiary in pursuance of section ninety-seven of this Act or in respect of which the trustee is assessed and liable to pay tax in pursuance of section ninety-eight of this Act; or
    • (b) there is a part of the net income of a trust estate that is not included in the assessable income of a beneficiary in pursuance of section ninety-seven of this Act and in respect of which the trustee is not assessed and is not liable to pay tax in pursuance of section ninety-eight of this Act, the trustee shall be assessed and is liable to pay tax on that net income or on that part of that net income, as the case may be, at the rate declared by the Parliament for the purposes of this section.''

Since the coming into operation of sec. 99A, the Rating Acts have provided that the rate of tax payable by a trustee in respect of the net income of the trust estate in respect of which the trustee is liable, in pursuance of sec. 99A of the Assessment Act, to be assessed and to pay tax is 50%.

9. The validity of this section was challenged in
Giris Pty. Ltd. v. F.C. of T. 69 ATC 4015 , but, in that case, the members of the Court were unanimous that the section was a valid exercise of legislative power. One of the arguments put to the Court was that the section imposed an ``incontestable'' tax in that the imposition of tax under the provisions of either sec 99 or sec. 99A was to be determined by the exercise of an unfettered discretion of the Commissioner which could not be challenged in a court of law. In rejecting this argument, two members of the Court, the Chief Justice and Windeyer J., expressed the view that the Commissioner ought to inform a taxpayer of the grounds on which he had formed his opinion that sec. 99A should or should not operate. At p. 4018, Barwick C.J. said - ``However, in my opinion, the Commissioner is under a duty in each case to form an opinion and the taxpayer is entitled to be informed of it, and upon the taxpayer's request, the Commissioner should inform the taxpayer of the facts he has taken into account in reaching his conclusion.'' At p. 4024, Windeyer J. said -

``I have found the question in this case difficult. But I have come to agree with the Chief Justice in thinking that the Commissioner's decision is not removed entirely from examination by the Court, because I think that he could be asked by a taxpayer to state the grounds of his opinion; and if asked, that he should do so. The case would then be one in which, within limits, it would be appropriate to remember Coke's statement - and so it is of reasonable fines, customs and services... for reasonableness in these cases belongeth to the knowledge of the law and therefore to be decided by the justices': Co. Litt. 56b. That does not mean that we are to hear appeals from

ATC 295

decisions of the Commissioner to apply sec. 99A: but it does mean that we could, in a given case, say whether there were any facts which could support his decision that it was not unreasonable to apply the section.''

Their Honours had in mind, I think, that, on an appeal against an assessment, the Court would review the exercise of the Commissioner's discretion in the traditional manner in which the Courts review administrative acts, that is to say that if, in any case, it were found that the Commissioner had taken into account any matter which he ought not to have taken into account or omitted to take into account some matter which he ought to have considered, the Court, in the exercise of its powers under sec. 199 of the Income Tax Assessment Act to ``make such order as it thinks fit'' might refer the matter back to the Commissioner to reform his opinion on proper grounds. See, for example,
MacCormick v. F.C. of T. (1945) 71 C.L.R. 283 , and the examination of an administrative decision which was undertaken in
Mudge v. Attorney-General (1960) V.R. 43 .

10. Shortly before the issue of the assessments with which we are concerned, the Commissioner in fact wrote to the tax agents for the taxpayer company and advised -

``Consideration has been given to your application for exercise of the discretionary power within the terms of sec. 99A in relation to the abovenamed trusts. You are advised that the following factors militate against exercise of the discretion -

  • (i) Income of the trusts is derived from a business partnership and in each case some beneficiaries are under the age of sixteen years.
  • (ii) Income is capable of being accumulated in more than one trust for the benefit of the same beneficiary.

To the extent that the trustee exercises his discretion to pay or apply part of the income for the benefit of a beneficiary sec. 94(4) will apply whilst that beneficiary is under the age of sixteen years.''

On the disallowance of the taxpayer's objection, he again wrote to the taxpayer's agents giving somewhat similar grounds for his decision. At the hearing of the references, counsel for the taxpayer asked the Board to review these grounds. Counsel submitted that neither of the grounds had any substance and that, as the Commissioner had formed his opinion on invalid grounds, the Board ought to quash the assessments. Counsel for the Commissioner, on the other hand, submitted that the Board's duty was to form its own opinion for the purposes of sec. 99A and to act upon that opinion and not upon the Commissioner's.

11. The terms of the Act support, I think, the Commissioner's view on this point. Sec. 185 of the Income Tax Assessment Act provides -

``A taxpayer dissatisfied with any assessments under this Act may, within sixty days after service of the notice of assessment, post to or lodge with the Commissioner an objection in writing against the assessment stating fully and in detail the grounds on which he relies....''

Sec. 186 provides -

``The Commissioner shall consider the objection, and may either disallow it, or allow it either wholly or in part, and shall serve the taxpayer by post or otherwise with written notice of his decision.''

Sec. 187 provides -

``A taxpayer dissatisfied with the decision may, within sixty days after such service, in writing request the Commissioner either -

  • (a) to refer the decision to a Board of Review for review; or
  • (b) to treat his objection as an appeal and to forward it either to the High Court or to the Supreme Court of a State.''

It is immediately apparent that there is a clear distinction between the function which the Boards of Review are intended to perform and the function which appellate courts perform. What is forwarded to the Court is an appeal against an assessment. By sec. 199(1) of the Act, the Court hearing the appeal ``may make such order as it thinks fit, and may by such order confirm, reduce, increase or vary the assessment''. In an appropriate case then, a Court will set aside an assessment, notice of which has issued, and order that the matter be referred back to the Commissioner for assessment according to law. This is because it is for the Commissioner and not for the Court to form the opinion upon which the alternative applications

ATC 296

of sec. 99A and sec. 99 depend. Boards of Review are, however, in a different position. Their function is not to hear appeals against assessments, but to review the decisions of the Commissioner disallowing objections in whole or in part. Sec. 193(1) of the Act provides -

``For the purposes of reviewing such decisions, the Board shall, subject to this section, have all the powers and functions of the Commissioner in making assessments, determinations and decisions under this Act, and such assessments, determinations and decisions of the Board, and its decisions upon review, shall for all purposes (except for the purpose of objections thereto and review thereof and appeals therefrom) be deemed to be assessments, determinations or decisions of the Commissioner.''

By sec. 195, the Board, by a decision in writing, ``may either confirm, reduce, increase or vary the assessment''. It is clear that it does not have the power vested in the Court to ``make such order as it thinks fit''.

12. On my reading of the sections, the Board's decision is deemed to be itself an assessment, determination or decision of the Commissioner either confirming, reducing, increasing or varying the assessment. It is not open to a Board to merely declare that an assessment made by the Commissioner under the provisions of sec. 99A is invalid, the opinion of the Commissioner under that section having been founded on one or more improper matters. The Board's function is, rather, to consider the whole matter anew as if it were making the original assessment. I turn to consider, therefore, not whether the Commissioner was justified in his opinion by the grounds put forward in his letters to the taxpayer's agents, but rather whether, on the facts established by the taxpayer, an assessment under the provisions of sec. 99A were proper. Counsel for both the taxpayer and the Commissioner agreed that the taxpayer's objection, though it concerned itself with the grounds mentioned in the Commissioner's letters, was wide enough to justify the Board in so acting. An objection to an assessment carries with it inferentially, if not explicitly, a request for amendment of the assessment. What is forwarded to a Court is an appeal against the assessment itself, but what is forwarded to the Board is, in substance, the taxpayer's request for amendment of the assessment and the Commissioner's decision to reject that request in whole or in part.

13. I turn now to the substance of sec. 99A, and I think I may say that a good deal of the difficulty which it appeared to present has disappeared following the lucid exposition of its provisions by the High Court in Giris case. The basic approach to the section was stated by the Chief Justice at p. 4017 in these terms -

``However, I am not prepared to treat the section in isolation from sec. 99 and to give literal effect to what after all is not much more than a draftman's device in allowing the section to apply where the Commissioner has not thought it was unreasonable for it so to do. In my opinion, the two sections must be read together and so read they do exhibit a cohesive scheme on the part of the legislature. In my opinion, the operation of each of the sections depends on the view of the Commissioner as to the unreasonableness of applying the one rather than the other to the particular taxpayer in respect of the year of income in question. So read, in my opinion, a duty is imposed on the Commissioner to decide in each case and in respect of each year of income whether it is unreasonable to apply sec. 99A rather than sec. 99.''

And, as Kitto J. said at p. 4020, if the Commissioner ``after final consideration of the case,... finds himself with no positive opinion that the application of sec. 99A is unreasonable, the liability of the trustee under that section is to remain''. Moreover, as Menzies J. said at p. 4022, the section ``leaves, as a problem for the Commissioner to decide, retrospectively and in the light of what has happened, whether the particular provision should not apply to a particular trust estate in respect of a year that has passed''.

14. What, however, is to guide the Commissioner in his decision? On this point, Windeyer J. said at p. 4024 -

``The Commissioner is to ask himself whether it would be unreasonable that sec. 99A should apply to any particular trust estate.... I assume that he is to be guided and controlled by the policy and purpose of the enactment, so far as that is manifest in it.... That purpose I take it is to enable the Commissioner to keep sec. 99A as an instrument to prevent avoidance of taxation by the medium of

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trusts, but not to use it when to do so would seem to him not in accordance with that purpose.''

The Chief Justice expressed substantially the same view when he said at p. 4017 -

``I have been unable to find any content for the word `unreasonable' in the context of the two sections except considerations of a kind upon which a legislature acts in deciding whether an enactment or its particular terms are or are not unreasonable having regard to the interests of the public generally, of the citizen to be affected, of the Revenue and of the requirements of those policies, political, economic and fiscal which the Parliament is prepared to sanction.''

What their Honours had in mind, I think, was this. Trusts are a proper means of achieving legitimate social, family and business objectives, objectives of a non-fiscal nature. They are also a means of achieving fiscal objectives, a means of avoiding or lessening the burden of tax. The 50% rate of tax falling on sec. 99A trusts should not be imposed where it would unreasonably restrict the achievement of legitimate non-fiscal, social, family or business ends. On the other hand, the it is the rate of tax applicable to those trusts which seek to lessen the burden of taxation. In cases where trusts are used as instruments to achieve both fiscal and non-fiscal ends - and competent draftsmen properly keep taxation laws in mind when preparing documents which affect a client's property and income - a decision must be reached, on the facts of each particular case as to which should prevail on the balance, the interests of the Revenue or the legitimate interests of the beneficiaries under the trust. This is such a case. It is plain enough, for example, in the present case, that the effect of the application of sec. 99A to the income to which no person is presently entitled will, as a matter of practical fact, be that future income will not be accumulated under the trusts and the interests of the remaindermen will thereby be diminished. In reaching such a decision, the specific matters referred to in sub-sec. (3) of sec. 99A must, of course, be taken into account.

15. We are not, however, in the present case, assisted by any of the specific matters referred to in sub-sec. (3)(b) of sec. 99A, except that they are an indication that one may look beyond the facts of the particular trust to whatever connection or relationship persons concerned with the trust may have with other trusts. And, similarly, we may examine fully the manner in which property came to be vested in the trust and its income derived by it.

16. The Commissioner's representative said, and not without force, that the creation of two settlements had plain fiscal implications in that the terms of each were the same, except as to the name of the ultimate remainderman. He pointed out that the income-earning property was a business which was purchased by the mixing together of the trust funds into one fund and that this had been done before the settlements themselves had been executed. It is plain enough. I think, that one deed of settlement would have been both adequate and proper to impose a trust over the business and that the foreseeable result of the two separate trusts was, as has happened, that the income to which no beneficiary has been presently entitled has been split into two estates with a consequential benefit by way of tax rates unless the provisions of sec. 99A be applied. The Commissioner's representative also pointed out that the income of the trusts was derived from the business which Mr. and Mrs. S had transferred to the taxpayer company on favourable terms and which they continued to manage, and that the practical effect of the trusts and the arrangement was that such part of the profits of the business as was required from time to time by Mr. and Mrs. S to meet their expenditure found its way into their hands and that, while the balance was accumulated as income to which no person was presently entitled, with consequential fiscal benefits, it was nevertheless available to them at Mr. S's discretion under the power given to the trustee to ``raise any sum or sums out of the capital of the Trust Fund and pay the same to the said (S) and (Mrs. S) for his or her absolute use and benefit''.

17. This, however, is only one side of the matter, and it is necessary to take a composite view to ascertain whether, on the whole of the facts, it is unreasonable that sec. 99A should apply. Looking at the matter as a whole, I do not think that it could be said that the imposition of the sec. 99A rate of tax would unduly hinder the accomplishment of legitimate family or business objectives or would unduly interfere with the interest which any beneficiary might have

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under the deeds. One can put the primary life beneficiaries on one side straight away, for as I have said their names were inserted in the deeds mainly as a device and I am satisfied that it is not intended that they should benefit in any way from the trusts declared. We turn then to the position of Mr. and Mrs. S, and we find that the imposition of the sec. 99A tax would not interfere with their interests under the deeds, for the imposition of the tax would do no more than result in the distribution to them each year of the whole of the income. We are left then with the interests of the two daughters, the remaindermen. Their interests would need serious considerations were it not for the provisions of the deeds I have already mentioned entitling the trustee, in its absolute discretion, to pay any part or parts of the capital of the funds to Mr. or Mrs. S for his or her absolute use and benefit and to lend to any beneficiary, including Mr. or Mrs. S, any sum or sums out of the capital ``upon such terms and conditions as to repayment with or without interest as the trustee shall in its absolute discretion think fit''. One cannot, in the light of these provisions, have any confidence that the accumulations already effected or future accumulations of income, accumulations which might be discouraged by the assessment under the provisions of sec. 99A of the income to which no person is presently entitled, would in fact find their way into the hands of the remaindermen. Confidence in that result is dispelled by the fact that the trustee is a company controlled by S and by the manner in which the trust funds have been administered. Counsel for the taxpayer in his address in reply stated that S was prepared to undertake that accumulated income would not be resorted to during his lifetime for the purpose of paying capital sums to himself or his wife. The position as it stands, however, is that the trustee has that power and we must, I think, consider the matter on that footing. On the whole, then, taking all these matters into account, it is not, in my opinion, unreasonable that, for the year ended 30 June 1966, sec. 99A should apply to that part of the income of each trust estate as was income to which no person was presently entitled.

18. For these reasons, I would uphold the Commissioner's decisions on the objections and would confirm his assessments.


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