As we understand it, petitioner's whole argument on the merits is that the trust and employment 1975 U.S. Tax Ct. LEXIS 105">*115 agreements obligated Dr. Richardson to render substantial postretirement services, and his 64 T.C. 621">*626 failure to render such services would cause a forfeiture of his rights under the trust agreement. On this ground, petitioners claim the trust deposits are not taxable in 1969 and 1970. We do not agree.

The employment and trust agreements and their amendments are a hodgepodge of overlapping and inconsistent provisions which have been repeatedly modified in an apparent effort to defer the income tax on the doctor's compensation. As we read those documents, the moneys deposited with the Minot bank for Dr. Richardson's benefit were "nonforfeitable," within the meaning of the earlier version of section 402(b), and such moneys were not "subject to a substantial risk of forfeiture," within the meaning of section 83(a). We do not think the doctor's rights were conditioned upon the performance of substantial services within the meaning of section 83(c)(1). We base this conclusion on a consideration of the instruments in their entirety and the meager stipulated facts and circumstances surrounding their execution.

First, the moneys paid into the trust were actually derived from compensation1975 U.S. Tax Ct. LEXIS 105">*116 otherwise receivable by Dr. Richardson, and he has shown no reason for subjecting them to a risk of forfeiture. The May 1, 1969, amendment to the contract of employment substituted a new paragraph in the section on remuneration. Prior to the amendment, the paragraph provided that: "The Pathologist shall receive from the hospital a monthly payment of one-twelfth of his estimated annual earnings." The May 1, 1969, amendment provides that, of the compensation payable to Dr. Richardson, "the Hospital shall deduct" the sum of $ 1,000 each month and pay it into the trust. The trust agreement of the same date recites that: "The Hospital, in order to enhance the compensation paid to the Doctor" has entered into the May 1, 1969, amendment under which "compensation ordinarily paid to the Doctor shall be paid to the Trustee." The trust deposits thus represented compensation for past or current services, not compensation for services yet to be performed. Cf. Estate of James Max Harrison, 62 T.C. 524">62 T.C. 524, 62 T.C. 524">530-532 (1974).

While there is no direct evidence on the point, we must infer from the available evidence that the trust was established at Dr. Richardson's request1975 U.S. Tax Ct. LEXIS 105">*117 and direction. Candido Jacuzzi, 61 T.C. 262">61 T.C. 262, 61 T.C. 262">266 (1973); J. H. McEwen, 6 T.C. 1018">6 T.C. 1018, 6 T.C. 1018">1025-1026 (1946). Fifty percent of the entrusted funds was to be invested in an insurance 64 T.C. 621">*627 contract on the doctor's life and the other 50 percent in mutual fund shares. At the doctor's death, the proceeds of the policy as well as the mutual fund shares are payable, subject to no stated conditions, to the beneficiary last designated by the doctor to receive benefits under the agreement. ⁴ These life insurance and mutual fund investment benefits, which were provided for the doctor's designated beneficiaries, are not subject to forfeiture, and their cost is income currently taxable to him. Paul L. Frost, 52 T.C. 89">52 T.C. 89, 52 T.C. 89">95-96 (1969); see also David Centre, 55 T.C. 16">55 T.C. 16, 55 T.C. 16">19 (1970); Renton K. Brodie, 1 T.C. 275">1 T.C. 275, 1 T.C. 275">282-284 (1942).

1975 U.S. Tax Ct. LEXIS 105">*118 Second, under a section entitled "Optional Transfers," ⁵1975 U.S. Tax Ct. LEXIS 105">*119 the original and amended trust agreement provided that in the event of the termination of the doctor's services for any reason, "including but not limited to termination because of his death or Disability, then anything herein to the contrary notwithstanding," the trustee could discharge its obligations under the 64 T.C. 621">*628 trust in either of two ways: "Transfer by absolute assignment of the Policy and proceeds of the fund shares" to be paid over a 10-year period to the doctor or, in the event of his death, to the beneficiary; or "Transfer by absolute assignment of the Policy and the fund shares" to another person or corporation with whom the doctor may have entered into a contract of employment. The choice of the method of discharging its responsibilities under this section was left to the trustee, but either method -- transfer by absolute assignment to the doctor or in case of his death to his beneficiary, or transfer by absolute assignment to another employer -- would eliminate any possibility of forfeiture for failure to render postretirement services to the hospital. ⁶

Third, a trust agreement provision entitled "Retirement" ⁷ authorized the trustee, in the event of the termination of the doctor's services, to pay the benefits in one of two ways: 1975 U.S. Tax Ct. LEXIS 105">*120 (1) Consecutive monthly payments, or (2) a single payment equal to the sum of the amounts obtainable by the trustee through the surrender of the policy and the amount of the fund shares. The payment was to be made "not later than 60 days after such termination." Similar provisions appear in both the original and 64 T.C. 621">*629 amended trust agreements. Since the trustee was authorized by this provision to make a single payment of the entire trust corpus to the doctor at his retirement, it is wholly inconsistent with any theory that the hospital retained the right to compel a forfeiture of the trust fund in order to assure the doctor's postretirement services.

1975 U.S. Tax Ct. LEXIS 105">*121 True, the decision as to which method of settlement would be selected was technically left to the discretion of the trustee. But the trustee had no interests adverse to the doctor's, and these funds, in substance, were deposited by the doctor. There is no evidence indicating that the trustee intended to, or would, exercise its discretion in a manner inconsistent with the doctor's interests. Compare Estate of Harold S. Brooks, 50 T.C. 585">50 T.C. 585, 50 T.C. 585">592-593 (1968) (an estate tax case).

Finally, there is no provision in the May 1, 1969, version of the trust agreement even suggesting that the entrusted funds were subject to forfeiture in any circumstances. True, one section of the May 1, 1969, trust agreement, quoted above, provided that "after termination of his Services and while his health permits," the doctor would render "such advice and counsel as the Hospital may reasonably and from time to time require." But the succeeding paragraph provided that "For such advice and counsel as the Doctor may render" he would be compensated "at the same rate as his cash compensation rate immediately before termination of his Services." Dr. Richardson did not even sign1975 U.S. Tax Ct. LEXIS 105">*122 the trust agreement and nothing in the employment agreements he signed placed any obligation on him to render such services. As we read these provisions, however, the fairest interpretation is that, if he did not render requested advice and counsel, he would not be paid for such postretirement services. Cf. Estate of James Max Harrison, 62 T.C. 524">62 T.C. 524, 62 T.C. 524">530-532 (1974). In no sense can it be realistically said that this paragraph created a contingency which might cause the doctor to lose his rights under the trust. Sec. 1.402(b)-1(a)(2)(i), Income Tax Regs.

The April 2, 1970, amendment, as noted above, provides that "If, for any reason, without good cause," the doctor shall after the termination of his services and "while his health permits, fail and refuse to render such advice and counsel, he shall, after due notice of said breach, forfeit all rights under this Agreement." However, we do not think the formality of the adoption of this heavily qualified provision is, without more, sufficient to show that Dr. 64 T.C. 621">*630 Richardson's trust rights were subject to "a substantial risk of forfeiture" within the meaning of section 83(a) and (c)(1). The legislative1975 U.S. Tax Ct. LEXIS 105">*123 history of section 83 shows that a practical rather than a formalistic test was intended. S. Rept. No. 91-552 (1969), 1969-3 C.B. 423, 501-502. Accordingly, this provision must be interpreted in the light of the facts, discussed above, that the moneys placed in the trust were moneys Dr. Richardson had already earned and which otherwise would have been paid to him as compensation, that any strings on the trust could be severed at Dr. Richardson's retirement by the trustee's paying the full trust corpus to him, and that the hospital's connection with the trust could be severed by Dr. Richardson's accepting other employment and having the fund assigned to his new employer or a new trust. Moreover, neither the trust agreement nor the amendments thereto state what is to be done with the trust corpus in case of a forfeiture by Dr. Richardson. ⁸

1975 U.S. Tax Ct. LEXIS 105">*124 Significantly, also, section 83(c)(1) refers to "future performance of substantial services," and we think the section means services which the employee would be expected to perform. There is no showing that Dr. Richardson had any capability of performing consultation services or that the hospital had any need or expected to have any need for such services. Indeed, it is stipulated that: "St. Joseph's Hospital of Minot, North Dakota, did not receive advice and counsel from retired physicians during the years 1969 and 1970 or at any time previous thereto." Since there is no showing of any real likelihood that the doctor ever 64 T.C. 621">*631 will be called upon to perform services, we do not think petitioner has shown that his rights under the trust are actually "conditioned upon the future performance of substantial services" within the meaning of section 83(c)(1).

Petitioner's pleas of estoppel are of no avail to his position. He argues that a private letter ruling issued by respondent on July 17, 1970, to a Dr. Heidorn, determined that a similar compensation arrangement effectively deferred taxation, and that this ruling estops respondent from contending that Dr. Richardson is currently1975 U.S. Tax Ct. LEXIS 105">*125 taxable on the 1969 and 1970 deposits.

We disagree. The trial record does not contain a copy of the Heidorn trust agreement, and we have no way of knowing whether it contained provisions identical to the ones discussed above. Moreover, the prior ruling was not issued to petitioner, and petitioner had no cause to rely on it. Reliance is a necessary element of estoppel, Bornstein v. United States, 170 Ct. Cl. 576">170 Ct. Cl. 576, 170 Ct. Cl. 576">583, 345 F.2d 558">345 F.2d 558, 345 F.2d 558">563 (1965), and respondent in the instant case therefore cannot be bound by the Heidorn letter ruling. Cf. Bookwalter v. Brecklein, 357 F.2d 78">357 F.2d 78, 357 F.2d 78">82-85 (8th Cir. 1966); Minchin v. Commissioner, 335 F.2d 30">335 F.2d 30, 335 F.2d 30">32-33 (2d Cir. 1964), affg. a Memorandum Opinion of this Court; Gerstell v. Commissioner, 319 F.2d 131">319 F.2d 131 (3d Cir. 1963), affg. per curiam a Memorandum Opinion of this Court, cert. denied 375 U.S. 941">375 U.S. 941 (1963); Weller v. Commissioner, 270 F.2d 294">270 F.2d 294, 270 F.2d 294">298-299 (3d Cir. 1959), affg. 31 T.C. 26">31 T.C. 26 (1958) and 31 T.C. 33">31 T.C. 33 (1958),1975 U.S. Tax Ct. LEXIS 105">*126 cert. denied 364 U.S. 908">364 U.S. 908 (1960); Goodstein v. Commissioner, 267 F.2d 127">267 F.2d 127, 267 F.2d 127">132 (1st Cir. 1959), affg. 30 T.C. 1178">30 T.C. 1178 (1958); Shakespeare Co. v. United States, 182 Ct. Cl. 119">182 Ct. Cl. 119, 182 Ct. Cl. 119">128, 389 F.2d 772">389 F.2d 772, 389 F.2d 772">777 (1968); Knetsch v. United States, 172 Ct. Cl. 378">172 Ct. Cl. 378, 172 Ct. Cl. 378">391, 348 F.2d 932">348 F.2d 932, 348 F.2d 932">940 (1965), cert. denied 383 U.S. 957">383 U.S. 957 (1966); Bornstein v. United States, 170 Ct. Cl. 576">170 Ct. Cl. at 584-586, 345 F.2d 558">345 F.2d at 562-564. Moreover, the record shows that after issuance of that private letter ruling, one of Dr. Richardson's representatives requested additional information from respondent concerning the income tax consequences of the trust, thus indicating that petitioner did not rely on the Heidorn ruling as determinative of his own tax liability.

Petitioner argues, finally, that he relied on a letter his attorney received from respondent dated May 11, 1971, after the close of the tax years in issue, as representing respondent's determination that the compensation plan would be1975 U.S. Tax Ct. LEXIS 105">*127 effective in deferring 64 T.C. 621">*632 taxation. However, that letter does not purport to be a ruling. The letter clearly states that respondent will not issue definitive determinations as to the efficacy of forfeiture provisions until the adoption of regulations under section 83. Those regulations were first published, in proposed form, on June 3, 1971. As yet, they still have not been promulgated in final form.

Accordingly,

Decision will be entered for the respondent.