trust with me in the courtroom today i would like to acknowledge valerie quince who is a law clerk with our firm this summer miss quince was a law clerk with us last summer she's completed her second year region law school and did some very significant work  james galloway was not a particularly educated man but he was successful he was able to amass through conservative investment  significant estate and he quit that state into a trust when he went in for the trust the first time around he had counsel unfortunately he then amended it three times on his own and as a result the final trust document with the amendments provided that in one trust at the time of mr galloway's death his assets would be divided four ways there were two charitable beneficiaries and there were two non church the beneficiaries each of whom received a twenty five percent interest in the trust in the principle of the trust upon the date of his death they were entitled to their twenty five percent plus any income coming out of their twenty five county went through and into and work with the pennsylvania department of revenue which gave him a number and said this is your charitable deduction over three hundred thousand dollars they apply for that charitable deduction the i r s looked at it and said no you can't do it because this is a split interest trust and that's what leads us to the litigation today it is not a split interest trust in the manner that was construed conceived of by congress when in  acre if you want to buy if you and i own black acre together and we each have a fifty percent interest in black it or you have a fifty percent undivided interest in black and i have a fifty percent undivided interest in black acre cited in this matter tells you what is an interest in the same property and if you look at pennsylvania law and i think that it's black letter law that in order to determine what a property interest is you don't look at federal regulations you don't look at federal statute you look at state law if you look at pennsylvania law pennsylvania law will tell you that you can have undivided fractional interests in the same property whether it's realty or personal tit and that is not a split interest if you look at the congressional intent behind the adoption twenty fifty five easy you'll see that what they were talking about interests how do we get to what the congressional intent was unless there's an ambiguity in that well i would think as a general matter your honor that there is an in statute in the fact that it does not tell you what constitutes the same property inherently there is in him to give you a t in the statute and i think that courts that have looked at this and have said that no it's clear it's plain i think that those courts are wrong there is an ambiguity in the statute so i think that you do get to legislative intent but i think that beyond that if you look at some at some of the other cases that have  discussed charitable contributions that the court always has a right to look at what congressional intent is if you look at bob jones university versus the united states for sixty one us five seventy four five ninety six and ninety hundred three decision you'll see that the supreme court has recognized that in an acting the charitable deduction provisions in i r c twenty fifty five and its predecessors congress sought to ensure gifts to charities  both the tenth circuit and the seventh circuit in looking at this have said that while congressional intent while that congressional intent to prefer charitable gifts to his states that was state taxes is a case of absolute priority while loopholes should not be permitted to diminish estate tax payments by ostensibly charitable bequests which may never become effective we cannot blindly resolve all doubts in favor of the internal revenue service if we are to respect legislative intent to encourage gifts to charities  that is from james p flanigan versus united states at a ten second one thirty nine thirty one tenth circuit nine hundred eighty seven quoting norris versus commissioner at one thirty four f second seven ninety six eight zero two seven circuit one nine hundred forty three so i believe that there is plenty of ability for the court to go in and to consider the legislative intent i think that there is an ambiguity and i think that even beyond that you have the no there was one bundle of property there was well he certainly intended he certainly intended for the effect to be that way because he guaranteed he  guaranteed the charity's a twenty five percent interest each in the property and the income but but again just because you have just because you have one pool of property doesn't mean that that constitutes the same property it absolutely does not mean that because if that were the case then you could never have an undivided interest in black acre if you had more than one owner but you can have a one third interest in black acre church fisher can have a one third interest in black acre judge rock and have a one third interest in black acre and each of your interests is independent and undivided and what the what the very limited minuscule opportunity opportunities for abuse in this instance are the internal the internal revenue code specifically provides for that ability or the regulations rather specifically provide for the ability of the i to bless the deduction in a case where the chance of abuse is so small as to be negligible and in this gainst as that's the case there is absolutely the there's absolutely no significant opportunity for abuse in this matter all i can tell you at this point in time is that the sitting here today the charities in this instance have received over one hundred sixty thousand dollars worth of not not wor one hundred sixty thousand dollars from the stross and yet the trust has been entitle to no deduction whatsoever and i think that that flies in the face of statutory intent and i think that that is unjust and i think that that is the wrong result ok mr mark  us involving one set of property and then the trust holds the property for charitable and non charitable beneficial you know under the plain language of under the plain language of the statute factual scenario wasn't mentioned in the legislative history but the language of the statute of so broad and clear that it covers the situation it's an interesting property in that that's that this is an interesting property and there are no language about splitting on interest in property where it goes to charitable in non charitable beneficial roves in the argument is that that they trust their flunks that test so the only recourse is to come up with will come within one of the exceptions set forth by congress and there's no argument here by the by the trustee that they fall within any of the narrow exceptions say for all other interest you have to have an annuity a guaranteed annuity or the payments have to be a fixed percentage of the value of the property you refer to this is a remainder a sliding why is this tr then the charitable benefits for aries get their interest so that that looks a lot like a remainder interest and would fall under the that easy to say provisions yet that miss case the remainder can only well that was the kind that was the kind of argument that was rejected by the district court in th face of the plain language of the statute if there's an interest in property that passes to mixed beneficiaries then that's the end of that in fact there's a good well from sa just seems to me that there are so many different estates and trusts it floated around during that period of time on brazeau oversaw this that notwithstanding that time the only three exceptions they laid out for somebody like mr you galloway he wanted to make people wait really what the issue was here he said i'm going to give you half in two thousand and six you're going to have to wait till two thousand and sixteen for whatever reason he thought that people were going to spend it all too quickly and he wanted his and a pool income fund which clearly allows the they don't like the state to remain on neither of those three options i don't care what kind of how the tax counsel would the property so congress is making it very clear that they didn't want any valuation uncertainties you have to go in order to get a deduction for a mixed terrible but quest involving a trust you have to follow the recipe that congress set forth in the internal revenue code and that there is no matter what one of these alternatives you look at the trust has to be structured in a specific what if it's not there's no  demonstrated think that they come within the comprehensive statutory scheme that the congress and i'd also be and i'd like to mention that the arguments  of the internal revenue code and that is accepted from the language of the statute that we have twenty fifty five is except that it throws you back to the rules under one seventy and they simply don't apply here because we don't we have a frost we don't have four that is in fact one ninety eight atlantic seconds five o five pm one nine hundred sixty four and i also want to provide the court with a citation to what i was saying about the i r s his ability to essentially before you and says it is a classic split interest trust and yet no one nowhere has the following split interest trust it does not appear in the regulation it does not appear in the statute there is no definition for it there is no definition for what is meant by in the same property and consequently i think that there is an ambiguity in the statute that this court has the ability to interpret by looking back at the legislative intent if you look at the legislative intent if you look at the regulation and the examples that are given under the regulation if you look at the cases that are cited every single one of those cases is a remainder interest where the non charitable beneficiary had an interest in the income and or the principle of the trust for a period of years whether it was for their life whereas in the case of abel i believe it was twenty one years and in those instances these specific construct of those trust was exactly what congress was going after because they didn't want to situation where somebody would come in and say ok i have a life interest in this principle or i have a life interest in the income from this principle therefore to enhance my quality of life i'm going to go ahead and i'm going to invest in high risk high income producing investments the safety the principal be damned and at the end of that individual's life they would have had the benefit of the income and the estate would have a record the charity would have a reduced interest in the principal because it would have been wasted during that individual's life that is not the case here first of all the trust document itself specifically limits the types of investments the nature of the twelve the investments that can be made secondly everybody shares equally in the income from their part of the trust so if the charity has twenty five percent of the income in the trust they get the twenty five percent of the income  if the individuals have fifty percent then they get fifty percent but if the trustee were by some stretch to go out there and invest in high heels low high yield high risk type of investments the charities while they would have a reduced principal would get the benefit of the income during that interim period that's why we say that this is an undivided interest everybody got their bucket at the time of james galloway's death they get the income that flows out of that bucket they get the principle that sits in that bucket until the time of distribution there's no reason why the definition of an interest in property as interpreted under the internal revenue code without specific congressional provisions ought to be any different than the definition of what an interest in property is under pennsylvania law the case law is clear it is black letter  law that that terminations of property interest rests with the state the commonwealth of pennsylvania the pennsylvania supreme court has been very clear in saying that you can have fractional undivided interests in both personal t and that's what we have here we have fractional undivided interest in personalty that is the trust is it one pool of property it is are those interests yet undivided absolutely as the court h the result that should come out of this appeal is that the trust the entitled to a deduction for the monies actually paid to the charities in other words if you don't want to give the trust any any value for the actuarial possibility that the that the interest of the charities will increase at least give us what we're giving them for sure thank you