Document: 511 U.S. 224114 S.Ct. 1473128 L.Ed.2d 168 UNITED STATES, Petitionerv.John O. IRVINE and First Trust National Association. No. 92-1546. Supreme Court of the United States Argued Dec. 6, 1993. Decided April 20, 1994. Syllabus * As a result Sally Ordway Irvine's 1979 disclaimer five-sixteenths her interest in corpus recently terminated trust that had been created by grandfather 1917, each five children received one-sixteenth share distributed principal. Her was effective under Minnesota law even though she learned contingent at least as early 1931 when became 21, but Internal Revenue Service determined brought about gratuitous transfer subject to federal gift tax Code §§ 2501(a)(1) 2511(a). Mrs. Irvine died after paid accrued interest, respondents, representing estate, filed this refund action. Arguing transaction not excepted from Treasury Regulation § 25.2511-1(c)(2) (Regulation), Government relied on Jewett v. Commissioner, 455 305, 102 1082, 71 170, which construed 1958 version provide remainder effects taxable beneficiary unless disclaimant acts within reasonable time learning being disclaimed. Respondents attempted distinguish having dealt with established 1939, creation Act 1932 (Act). The District ruled for respondents cross-motions summary judgment. Appeals affirmed, holding Regulation's express terms rendered it inapplicable question; state therefore governed, did apply because indisputably valid law; taxation effected would violate Act's prohibition retroactive taxation. Held: is (but disclaimer) occurred before enactment tax. Pp. ____. (a) Although Code's provisions embrace all transfers property significant value, affords an exception providing transferred decedent's estate does if unequivocal local law, made "within knowledge existence transfer." held "the transfer" refers disclaimed, "reasonable time" beginning run upon trust. (b) If applies disclaimer, act resulted gifts. capacity act, are presupposed requirement tax-free be disclaimant's her, were present instance 21st birthday 1931. there no bright line rule timeliness absence statute or regulation one, delay 47 years making could possibly thought reasonable. (c) Respondents' arguments inapposite its own facts case need resolved here, inapplicability be, claim, freedom theory borrowed law. State rules do translate into principles underlying two look different objects. In order defeat claims creditors disclaimed property, legal fiction testamentary cancels ab initio substitutes single original donor beneficiary. contrast, Congress enacted supplement means curbing avoidance. Since reasons defeating furnish tax, Jewett, supra, 317, S.Ct., 1090, undoubtedly correct hold meant incorporate state-law fictions touchstones taxability Act. Absent such fiction, struck blind disclaimer. (d) Taxation following 501(b) Act, provided "not date [June 1932]." Section 501 merely prohibited application antedating Act; prohibit where, interests enactment. 981 F.2d 991 (CA 8 1992), reversed. SOUTER, J., delivered opinion Court, REHNQUIST, C.J., STEVENS, O'CONNOR, KENNEDY, THOMAS, GINSBURG, JJ., joined, SCALIA, joined except Part III-A. concurring part BLACKMUN, took decision case. Kent L. Jones, Washington, DC, petitioner. Phillip H. Martin, Minneapolis, MN, respondent. Justice SOUTER Court. 1 170 (1982), we 25.2511-1(c) interest. This presents question whether same, current 1932. We is. 2 Lucius P. irrevocable inter vivos family trust, his wife their primary concurrent life income beneficiaries, succeeded unmarried surviving spouses grandchildren. terminate death last beneficiary, Mr. Ordway's grandchildren issue any who termination. When June 27, 1979, division 13 equal shares among 12 living one died. Prior distribution, August 23, grandchildren, Irvine, reached age begun receiving annual father's 1966. nonetheless books time, permitted future six months event finally identifying causing become indefeasibly fixed.1 3 reported return, treat resulting gift. Commissioner audit indirectly meaning 1986 2501(a)(1)2 2511(a),3 Treas.Reg. 25.2511-1(c)4 [Mrs. Irvine's] knowledge" grandfather's creating estate. responded amended return treating gift, $7,468,671.00, plus $2,086,627.51 deficiency.5 She then claimed denied. 4 After 1987, action Minnesota. continued maintain partial it, requires, [earlier] "transfer" referred 25.2511-1(c), 26 CFR (1959) (promulgated 1958), starts clock ticking, occurs extent ascertained becomes possessory. 311-312, 1087. 5 tried (Act), whereas 1917. also argued limitation pre-Act, 1917 "taxable absent inapplicable.6 On judgment, imposing amount violation provision "[t]he shall 1932, ch. 209, 501(b), Stat. 245. cited States, 89-1 USTC ¶ 13,802, 1989 WL 108798 (1989), Southern Florida same conclusion, virtually identical facts, involving another 6 A divided panel Eighth Circuit 936 343 (1991). It rejected view simply reaches only " 'taxable person disclaiming January 1, 1977.' Id., 347 (emphasis original). "taxable," relying 25.2518-2(c)(3) 'a completed Federal purposes regardless imposed gift.' F.2d, 347-348. court adopted reasoning sister Eleventh 908 890 (1990), whenever "any gratuitously passed conferred another, tax." 895 (citation omitted). Applying Regulation, make Finally, upheld against claim retroactivity, irrelevant antedated since 346. 7 suggestion rehearing en banc granted, however, vacated. Unlike panel, affirmed expressly limit scope . 1977." (CA8 1992). transfer," reasoned, yet enacted: "It fundamental must applicable made. No existed 16, created." 994. Given majority governed effect purposes. See id., 996 (citing Hardenbergh 198 63 (CA8), cert. denied, 344 836, 73 45, 97 L.Ed. 650 (1952)); 998 (concurring opinion). Because apply. panel's analysis application, indicating opinion, 996-998, Judge Loken concluded inapplicable, transfers," limited "property decedent will descent distribution," came transfer. shared view, consequences function dissent position supra. 998-1002. 9 conflict prompted us grant certiorari determine statute, enactment, necessarily free consequent 508 ----, 113 2958, 125 660 (1993). not, reverse. II 10 taxes gift," U.S.C. 2501(a)(1),7 "whether otherwise, direct indirect, real personal, tangible intangible. .," 2511(a).8 have repeatedly emphasized comprehensive language chosen transfers, whatever means, rights value. See, e.g., Dickman 465 330, 333-35, 104 1086, 1088-90, 79 (1984); U.S., 309-310, 1086-1087; Smith Shaughnessy, 318 176, 180, 545, 547, 87 690 (1943). 310, 1087, statutory unquestionably encompasses indirect transfer, trust," practical "to reduce expected size [the taxpayer's] confer benefit natural objects [her] bounty. ." 11 25.2511-1(c)(1)9 restates tax's broad payable device employed. (subsection 1(c)(2)), other hand, general taxability, distribution already noted, 1477. III A. point cannot serious dispute, clear 1931.10 decide good required disclaim shortly determination calculated first (1931) (1932). Moreover, understand conceded contested Tr. Oral Arg. 12. remained status based purpose curb avoidance observed, ____, [a like is] disclaimant's] 1086-1087. Accordingly, said '[a]n important, main, prevent compensate taxing gifts which, gifts, converted form laid death.' Ibid. (quoting Estate Sanford 308 39, 44, 60 51, 56, 84 20 (1939)). Hence capacious 2511(a), 14 "[T]he passage crucial scheme 316, n. 17, 1089, 17 (internal quotation marks citation opportunity disclaim, thereby avoid well taxation, should so long unlimited consider planning consequences. While earliest may appreciation potential consequences, puts prospective correspondingly superior enjoy (and incur subsequent increased retains it) outweighs favorable began running, until 68, By fairly precise advantage gained diminishing eventual treated timely, timely election bite all. B 15 alternative grounds. They argue terms, case, consequence turns efficacy Second, otherwise governing instrument barred application. 16 applicability rationale. stated, raised prior litigation argument disclaimers what phrase face presupposes some source There was, including interests, render pre-enactment taxable.11 is, say least, troublesome Government's applies. responds trouble citing 25.2518-2(c)(3)12 (adopted 1986, Regulation), deals new regime (not here) December 31, 1976,13 defines covering actually (e.g., chargeable lifetime exemption, 2503(b)). definition beg question, falls back predecessor derived intent narrow covered way. 18 second rests "where administration estate" gives recipient right refuse it.14 these descriptions transfer's character, text says nothing anyone than create given strict reading, then, has during lifetime, trust.15 19 Even assuming soundness both inapposite, escape reference giving next line. Any counter our Jewett. rejecting applied retroactively taxpayer's disadvantage repudiated "assumption taxpayer] 'right' renounce without 'taken away' Regulation. [The never right." 1090. Only go fall exemption consequently taxable. 312-316, 1087-1089. followed longstanding cases although creates determines those taxed. Burnet Harmel, 287 103, 110, 53 74, 77, 77 199 (1932); Morgan 309 78, 80-81, 424, 425-426, 585 (1940); Mitchell, 403 190, 197, 91 1763, 1768, 29 406 (1971). put way Pelzer, 312 399, 402-403, 61 659, 661, 85 913 (1941): revenue laws light establish nationwide uniform taken control necessary implication section involved makes dependent law." Cases illustrate why rules. Under rules, gift16 generally relating moment canceling substituting Schoonover Osborne, 193 Iowa 474, 478, 187 N.W. 22 (1922); Seifner Weller, 171 S.W.2d 617, 624 (Mo.1943); Albany Hosp. Hanson, 214 N.Y. 435, 445, 108 N.E. 812, 815 (1915); Burritt Silliman, 93, 97-98 (1855); Perkins Isley, 224 N.C. 793, 798, 32 S.E.2d 588, 591 (1945); see American Law Property 14.15 (A. Casner ed. 1952). might follow common-law principle bilateral transaction, requiring donor's give, donee's acceptance, see, Wallace Moore, 219 Ga. 137, 139, 132 37, 39 (1963); Gottstein Hedges, 210 272, 275, 228 94 (1929); Pirie Le Saulnier, 161 Wis. 503, 507, 154 993, 994 Blanchard Sheldon, 43 Vt. 512, 514 (1871), tolerance reflects less theoretical concern. An important defeasance reaching property. thus operates obviating more straightforward 21 treatment objects, however. well, And afforded Regulation,17 provides respondent's. IV Presumably ward off attack resting possibility due process, Untermyer Anderson, 276 440, 48 353, 72 645 (1928), substance carried forward day.18 applies, authorized, limitation. use frame reveals flaw position. government's interpretation [i.e., taxability] clearly contrary Congressional intent." Brief 26. But Such postenactment happened occasion critical events, fractional portions children, date. To taxed cling related indulged regulate creditors' rights, fantasy.19 sum, retroactivity sufficiently answered statement Jacobs, 306 363, 367, 59 551, 554, 83 763 (1939), "does operate conditions depends V 23 Commissioner's assessment authorized statute. judgment 24 ordered. 25 BLACKMUN 27 I join seems me basis says, ante, deprive "a consequences." Considering malum se ) nowhere condemned laws, Department's arbitrarily declaring solely deter consideration. Secretary discretion term used Gift Tax indulge antagonism choosing permissible meanings. "disclaimer planning" meaning. 28 justification must, always, textual one. consists, my fact failure reasonably prompt known bequest implicit acceptance. Qui tacet, consentire videtur. Thus, later causes someone else operation effectively else. (The nondisclaimer much weaker issue—perhaps incorrectly.) override nondisclaimer, Department regulations correctly (or permissibly) conclude not. syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Lumber Co., 200 321, 337, 282, 287, 50 499. Minn.Stat. 501.211, subd. (1978), repealed Minn.Laws, 340, art. replaced 501B.86, (1992) (changing nine months, 1990)). "A hereby calendar year individual, resident nonresident." 2501(a)(1). "Subject limitations contained chapter, 2501 relevant effect: "The transactions whereby employed, constitute further 25.2512-8. Where heir, next-of-kin completely unqualifiedly accept ownership (whether intestate property), refusal unequivocable [sic] can permit refusal, disposition next-of-kin. where purported relate complete unqualified depend circumstances particular taking account recognition effectiveness contrary, fails him he presumed accepted (1959). assessed additional penalties connection unrelated 1980 third quarter reduced unified credit available year. 2505 (1988 Supp. IV). That here. force throughout period unsuccessful refund. parties agree, (1986) supersedes earlier governs 7805(b) (Secretary "may prescribe extent, any, ruling regulation, internal effect"); Automobile Club Mich. 353 184, 707, 710, 746 (1957) (Treasury Regulations doing abuse Secretary's discretion). now 25.2511-1(c)(2), (1993), part: "In 1977, distribution), 2, 3, 25.2512-8 insufficient However, 1976, paragraph (c)(1) donee if, qualified donee, passes donee. Nor effected. 2518 corresponding disclaimer." 25.2511-1(c)(1), 25.2511-1(c)(1) Arguably, 1928 old, women time. 1866 Minn.Gen.Stat., 59, 2; Vlasak Vlasak, 204 Minn. 331, 331-332, 283 489, 490 (1939). 245 (nonretroactivity provision). 25.2518-2(c)(3), "With respect gift." regime, post-1976 21. 2518; 25.2518-1, 25.2518-2, 25.2518-2 will. 306, 1084, (1982). Brown Routzahn, 914, 916 (CA6 1933); succession, refused give disclaimers; traditional "title entitled power vesting title themselves." 63, 66 (1952) (citations challenge validity insofar allegedly sanction infra, 2502(b). take step arguing 502 read embody process violated, they here allowed adoption presented 1979.

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