## Facts

- In 1922, Corliss created a trust directing trustees to pay income to his wife for life, with the remainder to their children.
- The trust instrument reserved to Corliss the power to modify, alter, or revoke the trust in whole or in part at any time.
- For the 1924 tax year, the trust income was paid to Corliss’s wife.
- Under Revenue Act of 1924 §§ 219(g) and (h), if a grantor has power during the taxable year to revest title to any part of the trust corpus in himself, the income from that part must be included in the grantor’s net income.
- Corliss paid the assessed tax on the trust income and sued for a refund, arguing the income was not his because legal title was in the trustees and beneficial enjoyment was in his wife.

## Issues

1. Whether Congress may tax trust income to the grantor under Revenue Act of 1924 §§ 219(g) and (h) when the grantor retains an unrestricted power to revoke or alter the trust and reclaim the corpus.
2. Whether taxing the grantor on income distributed to a beneficiary violates constitutional limits on federal income taxation.

## Decision

- The Supreme Court affirmed judgment for the government.
- The Court held the trust income was properly included in Corliss’s taxable income under §§ 219(g) and (h).
- The Court rejected the argument that formal allocations of legal and equitable title control tax attribution when the grantor retains complete power to retake or redirect the property and its income.
- The Court found no constitutional barrier to taxing the grantor on income subject to his continuing control, even if he chose not to receive it.

## Legal Principles

- Federal income taxation turns on actual control and practical dominion over property and income, not technical refinements of title.
- Income subject to a taxpayer’s unrestricted control and available for enjoyment at the taxpayer’s option may be taxed to the taxpayer, whether or not the taxpayer elects to take it.
- When a trust grantor retains the power during the taxable year to revest title to trust corpus in himself (including by revocation), the trust income attributable to that corpus may be taxed to the grantor, even if distributed to another person.

## Conclusion

Because Corliss retained an unrestricted power to revoke or alter the trust and reclaim the corpus, the trust income was subject to his control and could be taxed to him under the Revenue Act of 1924, consistent with the Constitution, notwithstanding that the income was paid to his wife.


Corliss v. Bowers, 281 U.S. 376 (1930)