Helvering v.

Horst
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Citation. 311 U.S. 112, 61 S. Ct. 144, 85 L. Ed. 75, 1940 U.S.

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.