PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JOY B. PATTEN, Administrator of the

Estate of Marjory L. Blaney,

deceased,

Plaintiff-Appellee,

No. 96-1846

v.

UNITED STATES OF AMERICA,

Defendant-Appellant.

Appeal from the United States District Court

for the Western District of Virginia, at Roanoke.

Jackson L. Kiser, Senior District Judge.

(CA-95-276-R)

Argued: May 8, 1997

Decided: June 26, 1997

Before HALL, WILKINS, and WILLIAMS, Circuit Judges.

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Affirmed by published opinion. Judge Williams wrote the majority

opinion, in which Judge Wilkins joined. Judge Hall wrote a dissenting

opinion.

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COUNSEL

ARGUED: Kenneth W. Rosenberg, Tax Division, UNITED STATES

DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant.

Gregory Lee Lyons, MOSS & ROCOVICH, P.C., Roanoke, Virginia,

for Appellee. ON BRIEF: Loretta C. Argrett, Assistant Attorney
General, Kenneth L. Greene, Robert P. Crouch, Jr., United States

Attorney, Tax Division, UNITED STATES DEPARTMENT OF

JUSTICE, Washington, D.C., for Appellant. E. Elizabeth Downs,

MOSS & ROCOVICH, P.C., Roanoke, Virginia, for Appellee.

_________________________________________________________________

OPINION

WILLIAMS, Circuit Judge:

The United States (the Government) appeals from the district

court's ruling in favor of Joy B. Patten, administrator of the estate of

Marjory L. Blaney (Taxpayer). The district court concluded that the

effective date of 26 U.S.C. § 2040(b)(2) (1994), did not expressly or

impliedly repeal the effective date of 26 U.S.C.§ 2040(b)(1) (West

1994), and therefore Patten was entitled to claim a stepped-up basis

in a parcel of real property (the Property) equal to 100% of the fair

market value of the Property at the time that Taxpayer's husband

died. Because we agree that Congress did not expressly or impliedly

repeal the effective date of § 2040(b)(1), we affirm.

I.

The Government and Patten have stipulated to the relevant facts.

David Blaney, Taxpayer's husband, inherited the Property in 1952.

On December 24, 1955, Blaney deeded the Property to himself and

Taxpayer as tenants by the entirety. Blaney died on July 26, 1989, and

Taxpayer became the sole owner of the Property. When Blaney died,

the fair market value of the Property was $500,000. Blaney's estate

included 50% of the value of the Property on his federal estate tax

return.

In 1990, Taxpayer sold the Property for $625,000. She reported a

taxable gain from the sale of $199,133,1 based on an adjusted basis

of $256,982. Taxpayer died on June 16, 1993. Patten, the administra-

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1 The parties do not explain the discrepancies in the numbers. Because

the parties have stipulated to the facts, we assume these values to be correct.

 2
tor of Taxpayer's estate, filed an amended return for 1990 and sought

a refund of $127,384. Patten arrived at this figure in part by increasing Taxpayer's adjusted basis in the Property from $256,982, the

amount originally claimed, to $500,000, the full fair market value of

the Property at the time of Blaney's death.

On December 1, 1994, the District Director of the Internal Revenue

Service (IRS) agreed to refund $95,672 of the amount sought by Patten. The IRS refused, however, to refund the final $31,712, which was

the amount of the refund attributable to Patten's claimed step-up in

basis in the Property. Patten sued to recover the difference.

II.

The district court granted summary judgment in favor of Patten,

reasoning that Congress has not expressly or impliedly repealed the

effective date of 26 U.S.C. § 2040(b)(1). We review the grant of summary judgment de novo, using the same standards as applied by the

district court. See Roe v. Doe, 28 F.3d 404, 406-07 (4th Cir. 1994).

Because the parties have stipulated to the facts, our review is limited

to legal questions and is therefore de novo.

A brief introduction is in order. Gain from the sale of property is

computed by subtracting the seller's adjusted basis from the amount

realized. See 26 U.S.C. § 1001(a) (1994). Where property is acquired

from a decedent, the taxpayer's adjusted basis in the property is the

fair market value at the time of death. See 26 U.S.C. § 1014(a) (1994).

However, property held jointly with the decedent is considered to

have been acquired from the decedent only to the extent that the property was included in the decedent's gross estate. See 26 U.S.C.

§ 1014(b)(9) (1994). Put simply, the surviving joint tenant ordinarily

gets a basis equal to that claimed on the estate tax return of the decedent.

The estate tax treatment, in turn, is governed by 26 U.S.C. § 2040

(1994). It is this section that is the heart of the controversy here. The

section currently reads:

 3
(a) General rule

 The value of the gross estate shall include the value of all

property to the extent of the interest therein held as joint tenants with right of survivorship by the decedent and any other

person, or as tenants by the entirety by the decedent and

spouse . . . except such part thereof as may be shown to have

originally belonged to such other person and never to have

been received or acquired by the latter from the decedent for

less than adequate and full consideration in money or

money's worth . . . .

(b) Certain joint interests of husband and wife

(1) Interests of spouse excluded from gross estate

 Notwithstanding subsection (a), in the case of

any qualified joint interest, the value included in

the gross estate with respect to such interest by

reason of this section is one-half of the value of

such qualified joint interest.

(2) Qualified joint interest defined

 For purposes of paragraph (1), the term "qualified joint interest" means any interest in property

held by the decedent and the decedent's spouse as

--

 (A) tenants by the entirety, or

 (B) joint tenants with right of survivorship,

but only if the decedent and the spouse of the

decedent are the only joint tenants.

26 U.S.C. § 2040. In other words, if the transaction here were governed by current law, Blaney should have included only one-half of

the value of the parcel in his estate tax return because the Blaneys

held a "qualified joint interest" within the meaning of § 2040(b)(2).

Therefore, under § 1014(b)(9), Ms. Blaney could claim only one-half

of the value of the parcel as her adjusted basis.

 4
The difficulty arises from the history of § 2040. Under the original

§ 2040, the entire value of the joint interest was included in the estate

of a decedent, subject to a "tracing" rule virtually identical to that in

the current § 2040(a). See Gallenstein v. United States, 975 F.2d 286,

288-89 (6th Cir. 1992) (discussing the history of§ 2040). Therefore,

unless the surviving spouse could trace the contribution she made to

acquire the property, the decedent's estate included the entire value

of the jointly held property. As a result, the surviving spouse was entitled to an adjusted basis equal to the entire fair market value of the

jointly held property at the time of death.

In 1976, Congress amended § 2040 by designating the existing provisions as § 2040(a) and by adding § 2040(b) ("1976 Amendment"),

the precursor to the modern provisions governing qualified joint interests. As enacted in 1976, § 2040(b) read:

(b) Certain interests of husband and wife

(1) Interests of spouse excluded from gross

estate

 Notwithstanding subsection (a), in the case of

any qualified joint interest, the value included in

the gross estate with respect to such interest by

reason of this section is one-half of the value of

such qualified joint interest.

(2) Qualified joint interest defined

 For purposes of paragraph (1), the term "qualified joint interest" means any interest in property

held by the decedent and the decedent's spouse as

joint tenants or as tenants by the entirety, but only

if . . . such joint interest was created by the decedent, the decedent's spouse, or both . . . .

26 U.S.C. § 2040(b) (1976) (current version at 26 U.S.C. § 2040(b)

(1994)). That is, the 1976 Amendment created a special rule for qualified joint interests, requiring that only one-half of the fair market

 5
value of jointly held property be included in the decedent's estate. As

a necessary corollary, the surviving spouse was entitled to only onehalf of the fair market value as an adjusted basis in the property. The

1976 Amendment included an effective date, stating that it "shall

apply to joint interests created after December 31, 1976." In other

words, joint interests created prior to December 31, 1976 remained

subject to the "tracing" rule still in place in § 2040(a), while joint

interests between spouses created after December 31, 1976, were subject to treatment as qualified joint interests under§ 2040(b). Section

2040 was further amended in 1978 by the addition of subsections (c),

(d), and (e), which allowed an election for joint interests created prior

to December 31, 1976. To make such an election, the joint tenants

had to pay a gift tax for the "deemed gift" resulting from a fictitious

severance and re-creation of the joint interest. The 1978 amendment

is only tangentially at issue here, in that the Government argues that

the subsequent elimination of the 1978 amendment supports its reading of the statute.

The final relevant amendment occurred in 1981 ("1981 Amendment"), as part of the Economic Recovery Tax Act of 1981, "the

sweeping tax reform legislation abolishing estate and gift taxes

between spouses." Gallenstein, 975 F.2d at 289. The 1981 Amendment modified old § 2040(b)(2) to read:

(2) Qualified joint interest defined

 For purposes of paragraph (1), the term "qualified joint

interest" means any interest in property held by the decedent

and the decedent's spouse as

 (A) tenants by the entirety, or

 (B) joint tenants with right of survivorship,

but only if the decedent and the spouse of the

decedent are the only joint tenants.

26 U.S.C. § 2040(b)(2) (1976 & Supp. V 1981) (current version at 26

U.S.C. § 2040(b)(2) (1994)). This is the current language of the statute. The 1981 Amendment did not change § 2040(b)(1), the operative

 6
section, but it did eliminate subsections (c), (d), and (e). The effective

date of the 1981 Amendment stated that it was "applicable to estates

of decedents dying after December 31, 1981."

Thus the problem: The Blaneys' estate was created prior to December 31, 1976, but Mr. Blaney died after December 31, 1981. By its

terms, therefore, § 2040(b)(1) (the operative provision) does not

apply, whereas by its terms § 2040(b)(2) (the definitional provision)

does. The question, then, is whether the 1981 Amendment repealed,

either expressly or by implication, the effective date of the 1976

Amendment.2 The only other circuit to consider the issue ruled that

it did not, and refused to apply § 2040(b)(1) to an estate created prior

to December 31, 1976. See Gallenstein, 975 F.2d at 292. Here, the

district court agreed with the result in Gallenstein and ruled that

§ 2040(b)(1) did not apply.

Again, the question is whether the effective date of the 1981

Amendment expressly or impliedly repealed the 1976 Amendment

effective date.3 Although the Fourth Circuit has yet to consider

§ 2040, "[a]n express repeal requires that Congress overtly state with

specificity that the subsequent statute repeals a portion of the earlier

statute." Gallenstein, 975 F.2d at 290 (citing In re Buren, 725 F.2d

1080 (6th Cir. 1984)). Because the text of the 1981 Amendment does

_________________________________________________________________

2 Contrary to our dissenting colleague's claim, Patten's argument does

not rest on any "conceptual portion" of the 1976 Amendment. Dissenting

Op. at 18. Rather, Patten's argument rests on the text of § 2040(b)(1), the

operative provision of the statute, which was enacted in 1976 and has not

been amended, altered, or modified since that time. Even if Congress was

"clumsy," and even if Congress "fouled it up," we are not free to dismiss

the text of an enacted law as a mere "concept."

3 The Government argues that repeal is not the "proper" question.

Among the reasons offered to support this view is the argument that the

effective date of the 1976 Amendment was not codified. It is true that the

effective date does not appear in the United States Code. But it is also

true that the effective date was enacted as a section of the public law that

was later codified at § 2040. As noted by Patten, a piece of legislation

becomes law when it is passed by Congress and signed by the President.

Therefore, even though the effective date was not codified, it was

enacted, and it has the force of law. Accordingly, the effective date of

the 1976 Amendment controls unless it was repealed.

 7
not mention the effective date of the 1976 Amendment, there has been

no express repeal.4

Similarly, the circumstances under which implied repeal will be

found are limited:

(1) Where provisions in the two acts are in irreconcilable

conflict, the later act to the extent of the conflict constitutes

an implied repeal of the earlier one; and (2) [i]f the later act

covers the whole subject of the earlier one and is clearly

intended as a substitute, it will operate similarly as a repeal

of the earlier act. But, in either case, the intention of the

Legislature to repeal must be clear and manifest.

Radzanower v. Touche Ross & Co., 426 U.S. 148, 154 (1976). We

have recently revisited the circumstances under which an implied

repeal will be found:

[A] repeal by implication will only be found when there is

clear legislative intent to support it. Or, stated differently, a

later act will not repeal an earlier one in the absence of a

clear and manifest intention of Congress. A court may find

the requisite degree of intent when (1) "the two acts are in

irreconcilable conflict," or (2) "the later act covers the whole

subject of the earlier one and is clearly intended as a substitute."

United States v. Mitchell, 39 F.3d 465, 472 (4th Cir. 1994) (citations

omitted) (quoting Radzanower, 426 U.S. at 154 (internal quotation

marks omitted)), cert. denied, 115 S. Ct. 2578 (1995). Moreover,

because an implied repeal is disfavored, there is a"strong presumption" against finding such a repeal. See Blevins v. United States, 769

F.2d 175, 181 (4th Cir. 1985); see also Farmer v. Employment Sec.

Comm'n, 4 F.3d 1274, 1283 (4th Cir. 1993) (explaining that "[i]t is

settled law that repeal of a statute by implication is not favored").

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4 As explained by Patten, "If an express repeal must be inferred, the

`repeal' is not express. A repeal that must be inferred is, by definition,

an implied repeal." (Appellee's Br. at 13.)

 8
Nevertheless, the Government fashions several arguments supporting

its view that § 2040(b)(1) applies.

A. The "History" of § 2040

The Government first argues that the history of§ 2040 makes clear

that Congress "decided to jettison the overly complex spousal joint

interest rules and replace them with an easily applied rule." (Appellant's Br. at 19.) The theory is that because Congress "clearly" meant

to do away with the "extremely complex statutory scheme," (Appellant's Br. at 18), it follows that Congress meant to fashion a rule of

uniform applicability, that is, a rule that applied to all decedents dying

after December 31, 1981. To support this theory, the Government

cites the legislative history of the 1981 Amendment:

 The committee believes that present rules governing the

taxation of jointly held property are unnecessarily complex.

In particular, the tracing requirements are burdensome to

estates and survivors because jointly held assets are frequently purchased with joint funds. Further, because few

taxpayers understand the gift tax consequences of joint ownership, there is widespread noncompliance.

H.R. Rep. No. 97-201, at 160 (1981). In other words, the Government

argues that Congress wanted to make the estate tax treatment of

jointly held property simple; because it is simple to apply

§ 2040(b)(1) to estates created before December 31, 1976, that is

what Congress meant to do. Therefore, runs the argument,

§ 2040(b)(1) applies to estates created before December 31, 1976,

even though it does not say that it does.

This argument is in effect an implied repeal argument, resting on

the theory that the history of § 2040 evidences congressional intent to

repeal the effective date of § 2040(b)(1). But the Government has not

demonstrated that § 2040(b)(1) is in "irreconcilable conflict" with

§ 2040(b)(2), or that § 2040(b)(2) "covers the whole subject" of

§ 2040(b)(1). Because of the strong presumption against implied

repeal, we will not find an implied repeal unless one of these conditions is satisfied. Here, the Government makes only a slim showing

of congressional "intent" -- not rooted in statutory text or even legis-

 9
lative history -- to support its argument for implied repeal. Accordingly, we reject the Government's argument that the history of the

statute supports a finding of implied repeal.

B. Deletion of the "Created" Requirement

The Government next argues that because the 1981 Amendment

eliminated the requirement that the joint interest be "created by the

decedent, the decedent's spouse, or both," the requirements of

§ 2040(b)(1) have been substantively changed. That is, because the

1981 Amendment removed the requirement that the joint interest be

"created" by the decedent, it makes no sense to require that the joint

interest be created after December 31, 1976. The Government is

therefore again arguing for an implied repeal, attempting to demonstrate that one action taken by Congress requires that we find Congress meant to take another.

Again, the Government's argument proves neither an"irreconcilable conflict" between § 2040(b)(1) and§ 2040(b)(2) nor that

§ 2040(b)(2) "covers the whole subject matter" of § 2040(b)(1).

Instead, the Government makes only another general argument concerning congressional intent, which is insufficient unless one of the

two conditions for implied repeal is satisfied. More fundamentally,

the Government does not prove a necessary connection between

removing the requirement that the joint interest be"created by the

decedent, the decedent's spouse, or both" and repealing the effective

date of the 1976 Amendment. As explained by Patten,"what became

irrelevant after the 1981 amendment was how the spousal joint interest was created, not when it was created." (Appellee's Br. at 23.) We

agree. The 1981 Amendment can be squared with the effective date

of the 1976 Amendment simply by reading § 2040(b)(1) to apply only

to interests created by anyone -- not just the decedent, the decedent's

spouse, or both -- after December 31, 1976. We therefore reject the

Government's argument here as well.

C. Reliance on a "Functional" Analysis 

The Government next argues that because § 2040(b)(1) is the operational paragraph and § 2040(b)(2) is the definitional paragraph, a

change in the effective date of § 2040(b)(2) necessarily changed the

 10
effective date of § 2040(b)(1). That is, "[w]hen Congress amended

paragraph (b)(2) in 1981 to change the definition of a `qualified joint

interest,' it directly changed the application of paragraph (b)(1)."

(Appellant's Br. at 23.) Because of this direct change in the application of § 2040(b)(1), argues the Government, it was unnecessary to

also change the effective date.

Putting aside the fact that the Government has yet to address the

predicate conditions -- either an irreconcilable conflict or that

§ 2040(b)(2) covers the whole subject -- this argument is logically

flawed. Changing the effective date of a definitional paragraph has no

direct effect on the operational paragraph. Instead, the operational

paragraph could easily be read to apply to a qualified joint interest

created after December 31, 1976. For decedents dying before January

1, 1982, the old definition of qualified joint interest applies, while for

decedents dying after December 31, 1981, the current definition

applies. Although the converse is perhaps true -- changing the effective date of an operational paragraph would arguably affect the effective date of the definitional paragraph -- the situation here is

reversed, and the Government has failed to prove its theory.

D. Reliance on Legislative History

The Government next argues that the legislative history of the 1981

Amendment demonstrates that Congress meant to repeal the effective

date of the 1976 Amendment. The Government does not explain why

we should resort to the legislative history, considering our view that

"if the statutory language is plain and admits of no more than one

meaning, the duty of interpretation does not arise, and . . . the sole

function of the courts is to enforce [the statute] according to its

terms." United States v. Murphy, 35 F.3d 143, 145 (4th Cir. 1994)

(quotations omitted). We do not even look at legislative history unless

there is an ambiguity on the face of the statute. Moreover, because

implied repeal is at issue, the requisite ambiguity does not arise unless

the provisions are in irreconcilable conflict or one provision "covers

the whole subject matter" of the other. Accordingly, even if the legislative history supported the Government's argument, we would

decline the Government's invitation to rely on the legislative history.5

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5 In any event, the legislative history provides little guidance. The Government points only to general statements that Congress's intent was "to

 11
E. "Elimination" of the Original Effective Date

The Government next argues that the 1981 Amendment"merely

completed the elimination of the 1976 effective date" that Congress

began with the 1978 amendment to § 2040. (Appellant's Br. at 26-

27.) In 1978, Congress amended § 2040 to allow spouses with joint

interests created prior to December 31, 1976, to elect to come within

§ 2040(b). The 1978 amendment, according to the Government, represents an "erosion" of the original effective date of the 1976 Amendment. When Congress amended § 2040(b)(2) in 1981, it also

eliminated the election provided for in the 1978 amendment. The

Government points to the elimination of the election provision as evidence that Congress meant to eliminate the effective date of the 1976

Amendment, thereby obviating the need for such elections.

The Government's reliance on the 1978 and 1981 amendments is

a reincarnation of the "history" argument raised above, and suffers the

same defects. To reiterate, evidence of congressional intent is relevant

only if the sections are in irreconcilable conflict or if § 2040(b)(2)

covers the whole subject matter of § 2040(b)(1). The Government has

yet to prove that either condition is satisfied, and therefore evidence

of Congressional intent is irrelevant. Congress may have "meant" to

eliminate the effective date of the 1976 Amendment. The question

here, however, is what Congress did -- not what it meant to do.

Accordingly, we reject the Government's argument that the effective

date of the 1976 Amendment has "eroded."

F. Avoidance of a "Windfall" to the Taxpayer

The Government next argues that leaving the effective date of the

1976 Amendment intact will result in an unintended"windfall" to the

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simplify the statutory scheme by eliminating tracing for all qualified joint

interests, not simply those created after 1976." (Appellant's Br. at 24.)

This reincarnation of the Government's first argument fares no better

here. For example, the Government claims that the committee reports

demonstrate Congress's belief that it was "appropriate to adopt an easily

administered rule under which each spouse would be considered to own

one-half of jointly held property regardless of which spouse furnished the

consideration for the property." (Appellant's Br. at 24.) In no way does

the quoted language establish that Congress meant to eliminate the effective date of the 1976 Amendment.

 12
taxpayer. Because of the elimination in 1981 of estate and gift taxation between spouses, argues the Government, the surviving spouse

will always want to include the full value of the property in the decedent's estate tax return, thereby obtaining a full stepped-up basis. In

other words, "[n]ot only does the surviving spouse receive a full stepup in basis, but there is no corresponding cost by way of an increase

in estate tax." (Appellant's Br. at 28.) According to the Government,

such a windfall "clearly was not intended by Congress." (Appellant's

Br. at 27.)

Even if the Government's premise is correct -- that leaving intact

the effective date of the 1976 Amendment gives the taxpayer a "windfall" -- the conclusion surely does not follow. The Government is

apparently advocating a rule of construction that if something is good

for the taxpayer, it cannot be what Congress intended. While this

proposition may accurately describe IRS policy, no court should use

it as a legal rule. As explained by the Supreme Court, "where the benefit claimed by the taxpayer is fairly within the statutory language and

the construction sought is in harmony with the statute as an organic

whole, the benefits will not be withheld from the taxpayer though

they represent an unexpected windfall." Lewyt Corp. v.

Commissioner, 349 U.S. 237, 240 (1955).

In any event, even if we were to adopt a rule of construction disfavoring windfalls, which we have not, the fact remains that the Government has not proven an irreconcilable conflict or that § 2040(b)(2)

controls the whole subject matter of § 2040(b)(1). Because the conditions for an implied repeal have not been satisfied, there is no need

to determine Congress's "intent," least of all by such an indeterminate

rule of construction.

G. Implied Repeal of the Old Effective Date 

In its final argument, the Government turns to a direct consideration of implied repeal. According to the Government, each of the

previous six arguments was in fact an argument for express repeal,

while this final argument is an argument for implied repeal. In none

of the previous six arguments, however, did the Government point to

any language in the 1981 Amendment by which Congress repealed

the effective date of the 1976 Amendment. Thus, there is no express

 13
repeal, and the arguments regarding Congress's intentions are best

read as arguments for implied repeal. In any event, in this final argument, the Government couches its argument in terms of the test outlined above for implied repeal.

Because the district court relied heavily on Gallenstein v. United

States, 975 F.2d 286 (6th Cir. 1992), the Government argues primarily against the reasoning in Gallenstein. First, the Government argues

that there is an irreconcilable conflict between the two effective dates

because "[l]imiting the application of the 1981 definition of `qualified

joint interests' to spousal joint interests created after 1976 completely

frustrates Congress' clear intent to replace the patchwork statutory

scheme with a bright-line test for inclusion in the deceased spouse's

gross estate." (Appellant's Br. at 33.) This argument is simply another

appeal to inferential congressional intent, and it does not show an

irreconcilable conflict between the operation of the two sections.

"Statutory provisions will not be considered to be in irreconcilable

conflict unless there is a `positive repugnancy' between them such

that they `cannot mutually coexist.'" Mitchell, 39 F.3d at 472 (quoting

Radzanower, 426 U.S. at 155). Here, the sections are not so irreconcilable:

 The statutory provisions at issue here cannot be characterized as being irreconcilably in conflict in the sense that there

is a positive repugnancy between them or that they cannot

mutually coexist. It is not enough to show that the two statutes produce different results when applied to the same factual situation, for that no more than states the problem.

[Section] 2040(b)(1) applies to a qualified joint interest created after 1976, and . . . § 2040(b)(2) redefines a qualified

joint interest for estates of decedents dying after 1981.

Gallenstein, 975 F.2d at 291 (citations omitted). We agree with this

reasoning. There is no inherent tension between the operation of the

two provisions.

Second, the Government tries to prove that § 2040(b)(2) covers the

whole subject matter of § 2040(b)(1), primarily by referring to the

history of the section as described above. Again, evidence of Congress's intent is relevant only if § 2040(b)(2) covers the whole subject

 14
matter of § 2040(b)(1), and the Government is not permitted to

bootstrap its way out of the requirement that the subsequent enactment cover the entire subject matter of the first. As described in

Gallenstein:

The statutes at issue here are far from mutually exclusive in

the manner necessary for such an assumption. Congress

expressly made one subsection applicable to all decedents

dying after 1981. Another subsection, applicable to interests

created before 1977, allowed a different computation for

purposes of calculating the estate's taxable income.. . .

Despite the government's extensive discussion of legislative

history, we find the fact that Congress chose not to change

§ 2040(b)(1)'s operative effective date dispositive of this

case.

975 F.2d at 292. Again, we are persuaded by this reasoning. The Government simply has not proven that § 2040(b)(2) covers the whole

subject matter of § 2040(b)(1). Therefore, evidence of congressional

intent should be ignored.

III.

We agree with our dissenting colleague that "[t]his case does not

involve difficult questions of express or implied repeal." Dissenting

Op. at 16. On the contrary, this case involves easy questions of

express or implied repeal -- there has been neither, and § 2040(b)(1)

continues to apply only to estates created after December 31, 1976.

Congress may have intended to repeal the effective date of the 1976

Amendment, and a single effective date might be simpler and easier

to administer. Nevertheless, "even the will of the majority [of Congress] does not become law unless it follows the path charted in Article I, § 7, cl. 2 of the Constitution." Landgraf v. USI Film Prods., 511

U.S. 244, 263 (1994) (citing INS v. Chadha, 462 U.S. 919, 946-51

(1983)). The question is what Congress did, not what it meant to do,

and we find no evidence that Congress eliminated the effective date

of the 1976 Amendment. We therefore affirm the decision of the district court.

AFFIRMED

 15
HALL, Circuit Judge, dissenting:

In my view, the majority opinion is not so much wrong as it is

beside the point. This case does not involve difficult questions of

express or implied repeal. On the contrary, we are asked simply

whether an act of Congress applicable to the estates of decedents

dying after December 31, 1981, applies to the estate of a decedent

dying after December 31, 1981. The answer is manifest, so I am constrained to dissent.

I.

As the majority notes, before 1976, all joint interests in property

were treated the same for estate tax purposes. The decedent's estate

included the full market value of the property, except to the extent

that the survivor could show that he or she contributed money toward

the property's purchase or improvement. The survivor's basis in the

property was -- and still is -- the amount included in the decedent's

estate.

The pre-1976 rule was a great injustice to housewives. Their husbands generally had been the bread (and thus the property) winners.

If the husband died first, the wife was stuck with an estate tax bill (at

the time, the marital deduction was only 50% of the estate passing to

the survivor). On the other hand, if the wife died first, the husband

could take the property free of charge.

Congress began a series of clumsy reforms in 1976. It added 20

U.S.C. § 2040(b),1 which provided that, for a "qualified joint interest"

of a husband and wife, the decedent's gross estate included only onehalf of the value of the property, notwithstanding which spouse contributed the funds for its purchase. This was a great idea, except that

Congress fouled it up right away by defining "qualified joint interests" as those (i) created by the decedent, the survivor, or both (ii)

after December 31, 1976. Thus, the reform applied to nothing when

enacted, and preexisting joint interests could be made "qualified joint

interests" only if the couple took formal steps to record a new deed,

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1 The old rule survives for non-spousal joint interests and is codified at

20 U.S.C. § 2040(a).

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etc. Naturally, many of the persons the new statute was designed to

benefit failed to take those steps.

Congress tried to fix § 2040 in 1978, but succeeded only in making

things worse. Section 2040c was added to permit a reduction in the

decedent's gross estate where the survivor, though not contributing

capital, had participated in a farm or business. Section 2040(d) took

the logical step of eliminating the need for a re-creation of the pre1976 joint interest, but only if the couple filed a gift tax return -- and

paid any applicable tax -- reporting the parties' contributions to the

property's purchase and appreciation. Naturally, couples were just as

unlikely to pay taxes on their own initiative as to draw up a new deed.

Finally, new § 2040(e) delivered the regime of complexity's coup de

grace: even if a couple re-created their pre-1976 joint interest by deed,

there would be no "qualified joint interest" unless they also filed the

gift tax return under § 2040(d).

II.

In 1981, Congress undertook a grand revision of the tax code. It

finally did the right thing with § 2040:

 (i) the 1978 amendments (subsections (c), (d), and (e))

were repealed, and

 (ii) subsection (b) was revised to make any property held

by the decedent as a spousal joint tenant a "qualified joint

interest,"

 (iii) with the new (b) "applicable to estates of decedents

dying after December 31, 1981."

Simultaneously with this amendment, the marital deduction for the

surviving spouse was increased to 100%. This change allowed the tax

burden of spousal joint property to be deferred until either both died

or the survivor sold the property and realized a gain.

III.

When David Blaney died, the 1981 amendment was, by its own

terms, applicable to his estate, so only half of the value of the prop-

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erty was included. When Marjory Blaney sold the property the next

year, she used as her basis the amount included in her husband's

estate, which was also in compliance with clear law. See 26 U.S.C.

§ 1014(b)(9). Her administratrix has now convinced the majority that

this adherence to the letter of the law was wrong.

The administratrix's argument is that Congress created the concept

of "qualified joint interest" in 1976 and made it effective only prospectively. The 1981 amendment did not "repeal" this conceptual portion of the 1976 law, and, therefore, § 2040(b) really applies only to

"estates of decedents dying after December 31, 1981" where any pre1976 joint interest would have been a "qualified joint interest" under

prior law.

Of course, the statute says no such thing, and, inasmuch as the statute is clear on its face, we have no license to construe it to include

this far-reaching proviso. It just does not matter what sort of concept

Congress created in 1976, because, in 1981, it created an entirely different one. Since December 31, 1981, "qualified joint interest" has

been defined solely by the date of the first spouse's death. There was

no reason or need for Congress to repeal the effective date of a

repealed definition. Everyone who died on or before December 31,

1981, has died; all who were destined to survive survived. It takes no

act of Congress to ratify the effect of the sands of time.

In sum, "qualified joint interest" was once defined by the time and

manner of the creation of the interest; now it is defined by the date

of death. David Blaney's death fit the definition. 2

I would reverse.

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2 It bears noting that the administratrix's argument provides for a windfall that Congress surely did not intend. The 100% marital deduction was

enacted simultaneously with the new § 2040(b). By providing that the

survivor's basis was only half of the property's value, Congress ensured

that the survivor or her estate would ultimately pay some tax. To include

100% of the value in the decedent's estate (under the old rules) and permit the survivor a 100% deduction (under the new rules) is illogical and

supports my view that the statute was intended to mean what it clearly

says -- it applies to estates of decedents dying after December 31, 1981.

It applies here.

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