Dunbar v. Commissioner of Internal Revenue
Court of Appeals for the First Circuit · 1933-05-23 · cited 4×
The case involved petitions by the beneficiaries of the Fiske and Hammond trust seeking review of Board of Tax Appeals decisions that assessed income tax deficiencies for 1924-1926 on the ground that the trust qualified as an association taxable as a corporation under the Revenue Acts of 1924 and 1926. The First Circuit held that the trust was not an association, vacating the Board's rulings and remanding for further proceedings. The court reasoned that, under Hecht v. Malley and related precedent, the determinative factor is whether the trustees were actually carrying on business in a quasi-corporate form, rather than the breadth of powers granted in the trust instrument; here the trustees merely collected rents from property already under long-term lease and performed ordinary trust management functions without engaging in active business operations. The opinion emphasized that passive holding and distribution of income did not meet the statutory test for taxation as a corporation.
