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Brief Fact Summary. Respondent owned negotiable bonds.

In 1934 and 1935 he


detached interest coupons from them and gave them to his son.

Synopsis of Rule of Law. The power to dispose of income is the equivalent of


ownership of it.

Facts. Respondent, the owner of negotiable bonds, detached from them negotiable
interest coupons before their due date and gave them to his son. His son collected
them at maturity in the same year. The Commissioner ruled that the interest
payments were taxable to Respondent. The Board of Tax Appeals sustained the tax
and the Court of Appeals reversed.

Issue. Whether the gift of interest coupons detached from the bonds is the
realization of income taxable to the donor?

Held. Justice Stone issued the opinion for the Supreme Court in reversing the Court
of Appeals and holding that the income should be Respondents.

Dissent. Justice Reynolds issued a dissenting opinion joined by the Chief Justice
and Justice Roberts, but it is omitted from the text.

Discussion. The Supreme Court found that Respondent enjoyed the economic
benefits of the income as though he was transferring earnings. He should not be
able to avoid including these amounts as income by converting it to a gift for his
son. Similarly, a donor who retains control of trust property is taxable on the
income.