In Corliss v. Bowers, the U.S. Supreme Court ruled that income generated by a trust fund is taxable to the grantor if they retain control over its disposition. The case involved Mr. and Mrs. Corliss who had set up separate trusts for their children but retained significant powers over them including revocation of the trusts or alteration of beneficiaries at any time without consent from anyone else involved in the trust agreement, effectively maintaining control over it as though it were still their property directly under their management and disposal. The IRS argued that because of this level of control, income produced by these trusts should be considered part of Mr. and Mrs.Corliss' personal incomes for tax purposes rather than being taxed separately as independent entities (trusts). The court agreed with this argument stating "taxation is not so much concerned with the refinements of title as it is with actual command over property". This ruling established an important precedent regarding taxation on trust funds where grantors maintain substantial power.

The dissenting opinion in the case of Corliss v. Bowers, Collector of Internal Revenue, argued that the majority's decision was a departure from established principles regarding taxation and income. The dissent emphasized that the creation of trusts should not be used as a means to avoid tax obligations. It contended that when an individual retains control over property or income through a trust arrangement, they should still be considered as having "income" for tax purposes under law. This view is based on the belief that one cannot separate ownership from control without fundamentally altering our understanding of what constitutes taxable income. Therefore, it disagreed with the majority’s ruling which allowed individuals to use trusts to effectively shield their wealth from taxation.