Tax Legal Services · Primary-source case analysis

Corliss v. Bowers: Retained Control Made Revocable-Trust Income Taxable to the Settlor

By Aneeta Mishra and Timothy Chan

Published September 3, 2026

Corliss v. Bowers examined federal taxation of income from a trust that the settlor could alter or revoke at will while directing current income to his wife.

The transfer left a complete power of revocation

The trust placed securities with a trustee and directed income to the settlor’s wife, but the settlor reserved authority to change or end the trust and recover the property.

Tax follows command over economic benefit

The Court emphasized actual command over property and the ability to enjoy its benefit rather than the formal route by which income was paid.

Nonreceipt did not defeat the tax

Income may be taxed to the person who retains the power to direct or reclaim it even if that person permits another to receive it during the tax year.

The assessment was sustained

The Court rejected the constitutional challenge to taxing the settlor on the trust income. Current grantor-trust treatment is governed by detailed Code provisions that must be applied to present facts.

Key takeaways

• Inventory every retained power over trust property and income.
• Distinguish legal title from practical command.
• Apply the current grantor-trust statutes to each power.
• Document amendments, revocation rights, distributions, and tax reporting.