Source: https://supreme.justia.com/cases/federal/us/312/399/
Timestamp: 2019-04-22 16:45:07+00:00

Document:
1. Decided in part upon authority of Helvering v. Hutchings, ante, p. 312 U. S. 393. P. 312 U. S. 401.
2. The revenue laws are to be construed in the light of their general purpose to establish a nationwide scheme of taxation uniform in its application. Their provisions are not to be taken as subject to state control or limitation unless the language or necessary implication of the section involved makes its application dependent on state law. P. 312 U. S. 402.
3. Gifts in trust to grandchildren, limited to those who survive a ten-year accumulation period and attain twenty-one years of age, are gifts of "future interests," from which the $5,000 exemption in computing gift taxes is withheld by § 504(b) of the Revenue Act of 1932. P. 312 U. S. 403.
90 Ct.Cls. 614; 31 F.Supp. 770, reversed.
Certiorari, 311 U.S. 634, to review a judgment of the Court of Claims granting a recovery of money collected as gift taxes.
to the extent of the first $5,000 of each gift "made to any person by the donor" during the calendar year.
"In the case of gifts (other than of future interests in property) made to any person by the donor during the calendar year, the first $5,000 of such gifts . . . shall not . . . be included in the total amount of gifts made during such year."
the surviving grandchildren and the issue per stirpes of the deceased grandchildren.
During the years 1933, 1934, and 1935, the taxpayer added further amounts of property to the 1932 trust. In 1934, he also made gifts directly to his three granddaughters and created a trust to pay the income in equal shares to his wife and three daughters with gifts over of each share of the corpus of the trust upon the death of the life tenant.
Upon claims for refunds of overpaid taxes upon the transfers made in the years 1933, 1934, and 1935, the commissioner recomputed the tax and allowed one $5,000 exclusion only from the net amounts subject to gift tax given or added in each year to each trust. In the present suit, brought in the Court of Claims, respondent sought to recover overpaid taxes for the years in question on the grounds that the gifts to the beneficiaries were gifts of present, not future, interests, and that the taxpayer, in the computation of the tax for each year, was entitled to one exclusion of $5,000 for each beneficiary. The court sustained both contentions, and gave judgment for respondent accordingly. 31 F.Supp. 770. We granted certiorari, 311 U.S. 634, to resolve the conflict of the decision below with that of the Seventh Circuit in Ryerson v. United States, 114 F.2d 150.
The Government challenges both grounds of decision below. It argues that only a single $5,000 exclusion is allowable under § 504(b) from the total gifts made to the trust in each calendar year, and that, if the gifts are deemed to be made to the named beneficiaries of the trust, no deduction can be allowed in the case of gifts to the 1932 trust because they were of future interests for which no exclusion is allowed by § 504(b).
persons to whom the gifts are made and that, for purposes of computation of the tax, § 504(b) excludes the first $5,000 in value of the gift to each beneficiary from the taxable amount of the gifts made in the calendar year. For the reasons stated in our opinion in that case, we hold that the first beneficiaries of the trusts in this case are the persons to whom the gifts were made, and that the taxpayer is entitled to the benefit of the $5,000 exclusion for each gift to such beneficiary if it is not of a future interest.
involved makes its application dependent on state law. Burnet v. Harmel, 287 U. S. 103, 287 U. S. 110; Morgan v. Commissioner, 309 U. S. 78, 309 U. S. 81.
"The term 'future interests in property' refers to any interest or estate, whether vested or contingent, limited to commence in possession or enjoyment at a future date. The exemption being available only insofar as the donees are ascertainable, the denial of the exemption in the case of gifts of future interests is dictated by the apprehended difficulty, in many instances, of determining the number of eventual donees and the values of their respective gifts."
$5,000 exclusion from all gifts in trust, the section as amended continues to withhold the benefit of the exclusion from all gifts of "future interests in property."
We think that the regulations, so far as they are applicable to the present gifts, are within the competence of the Treasury in interpreting § 504(b) and effect its purpose as declared by the reports of the Congressional committees, and that the gifts to the eight beneficiaries of the 1932 trust were gifts of future interests which are excluded from the benefits of that section. Here, the beneficiaries had no right to the present enjoyment of the corpus or of the income, and, unless they survive the ten-year period, they will never receive any part of either. The "use, possession or enjoyment" of each donee is thus postponed to the happening of a future uncertain event. The gift thus involved the difficulties of determining the "number of eventual donees and the value of their respective gifts" which it was the purpose of the statute to avoid.
We have no occasion to consider the definition of future interests in other aspects than those presented by the present case. The judgment of the Court of Claims will be reversed so far only as it excluded the gifts to the 1932 trust from the computation of the tax for each of the years in question.

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