Source: https://www.legalcrystal.com/case/100952/jackson-vs-united-states
Timestamp: 2018-04-19 17:37:59
Document Index: 560187107

Matched Legal Cases: ['§ 812', '§ 812', '§ 812', '§ 812', '§ 812', '§ 812', '§ 812', 'art 2', '§ 812', '§ 812', '§ 812']

Jackson Vs United States - Citation 100952 - Court Judgment | LegalCrystal
Jackson Vs. United States - Court Judgment
LegalCrystal Citation legalcrystal.com/100952
Case Number 376 U.S. 503
.....history states: "in practice, [the support allowance deduction] has discriminated in favor of estates located in states which authorize liberal allowances for the support of dependents, and it has probably also tended to delay the settlement of estates." s.rep. no. 2375, 81st cong., 2d sess., p. 57. [ footnote 5 ] united states v. first national bank & trust co. of augusta, 297 f.2d 312 (c.a.5th cir.); estate of gale v. commissioner, 35 t.c. 215; estate of rudnick v. commissioner, 36 t.c. 1021. [ footnote 6 ] bookwalter v. lamar, 323 f.2d 664 (c.a.8th cir.); united states v. mappes, 318 f.2d 508 (c.a.10th cir.); commissioner v. ellis' estate, 252 f.2d 109 (c.a.3d cir.); starrett v. commissioner, 223 f.2d 163.....
Jackson v. United States - 376 U.S. 503 (1964)
U.S. Supreme Court Jackson v. United States, 376 U.S. 503 (1964)
1. Since a widow' right to the allowance under the State law is defeated by her death or remarriage, her interest is terminable under § 812(e)(1)(B). Pp. 376 U. S. 503 -506.
2. Qualification for the marital deduction, including the widow's allowance, is determined as of time of death. Cunha's Estate v. Commissioner, 279 F.2d 292; United States v. Quivey, 292 F.2d 252, followed. Pp. 376 U. S. 507 -511.
Since 1948, § 812(e)(1)(A) of the Internal Revenue Code of 1939 has allowed a "marital deduction" from a decedent's gross taxable estate for the value of interests
in property passing from the decedent to his surviving spouse. [ Footnote 1 ] Subsection (B) adds the qualification, however, that interests defined therein as "terminable" shall not qualify as an interest in property to which the marital deduction applies. [ Footnote 2 ] The question raised by this case is whether the allowance provided by California law for the support of a widow during the settlement of her husband's estate is a terminable interest.
Petitioners are the widow-executrix and testamentary trustee under the will of George Richards, who died a resident of California on May 27, 1951. Acting under the Probate Code of California, the state court, on June 30, 1952, allowed Mrs. Richards the sum of $3,000 per month from the corpus of the estate for her support and maintenance, beginning as of May 27, 1951, and continuing for a period of 24 months from that date. Under the terms of the order, an allowance of $42,000 had
In enacting the Revenue Act of 1948, 62 Stat. 110, with its provision for the marital deduction, Congress left undisturbed § 812(b)(5) of the 1939 Code, which allowed an estate tax deduction, as an expense of administration, for amounts "reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent." 26 U.S.C. (1946 ed.) § 812(b)(5). As the legislative history shows, support payments under § 812(b)(5) were not to be treated as part of the marital deduction allowed by § 812(e)(1). [ Footnote 3 ] The Revenue Act of 1950, 64 Stat. 906, however, repealed
§ 812(b)(5) because, among other reasons, Congress believed the section resulted in discriminations in favor of States having liberal family allowances. [ Footnote 4 ] Thereafter allowances paid for the support of a widow during the settlement of an estate "heretofore deductible under section 812(b) will be allowable as a marital deduction subject to the conditions and limitations of section 812(e)." S.Rep. No. 2375, 81st Cong., 2d Sess., p. 130.
We accept the Court of Appeals' description of the nature and characteristics of the widow's allowance under California law. In that State, the right to a widow's allowance is not a vested right, and nothing accrues before the order granting it. The right to an allowance is lost when the one for whom it is asked has lost the status upon
Petitioners ask us to judge the terminability of the widow's interest in property represented by her allowance as of the date of the Probate Court's order, rather than as of the date of her husband's death. The court's order, they argue, unconditionally entitled the widow to $42,000 in accrued allowance, of which she could not be deprived by either her death or remarriage. It is true that some courts have followed this path, [ Footnote 5 ] but it is difficult to accept an approach which would allow a deduction
of $42,000 on the facts of this case, a deduction of $72,000 if the order had been entered at the end of two years from Mr. Richards' death and none at all if the order had been entered immediately upon his death. Moreover, judging deductibility as of the date of the Probate Court's order ignores the Senate Committee's admonition that, in considering terminability of an interest for purposes of a marital deduction, "the situation is viewed as at the date of the decedent's death." S.Rep.No. 1013, Part 2, 80th Cong., 2d Sess., p. 10. We prefer the course followed by both the Court of Appeals for the Ninth Circuit in Cunha's Estate, supra, and by the Court of Appeals for the Eighth Circuit in United States v. Quivey, 292 F.2d 252. Both courts have held the date of death of the testator to be the correct point of time from which to judge the nature of a widow's allowance for the purpose of deciding terminability and deductibility under § 812(e)(1). This is in accord with the rule uniformly followed with regard to interests other than the widow's allowance, that qualification for the marital deduction must be determined as of the time of death. [ Footnote 6 ]
Our conclusion is confirmed by § 812(e)(1)(D), [ Footnote 7 ] which saves from the operation of the terminable interest
rule interests which by their terms may (but do not in fact) terminate only upon failure of the widow to survive her husband for a period not in excess of six months. The premise of this provision is that an interest passing to a widow is normally to be judged as of the time of the testator's death, rather than at a later time when the condition imposed may be satisfied; hence, the necessity to provide an exception to the rule in the case of a six months' survivorship contingency in a will. [ Footnote 8 ] A gift conditioned upon eight months' survivorship, rather than six, is a nondeductible terminable interest for reasons which also disqualify the statutory widow's allowance in California where the widow must survive and remain unmarried at least to the date of an allowance order to become indefeasibly entitled to any widow's allowance at all.
Petitioners contend, however, that the sole purpose of the terminable interest provisions of the Code is to assure that interests deducted from the estate of the deceased spouse will not also escape taxation in the estate of the survivor. This argument leads to the conclusion that, since it is now clear that, unless consumed or given away during Mrs. Richards' life, the entire $72,000 will be taxed to her estate, it should not be included in her husband's. But, as we have already seen, there is no provision in the Code for deducting all terminable interests which become nonterminable at a later date and therefore taxable in the estate of the surviving spouse if not consumed or transferred.
The examples cited in the legislative history make it clear that the determinative factor is not taxability to the surviving spouse, but terminability as defined by the statute. [ Footnote 9 ] Under the view advanced by petitioners, all cash allowances actually paid would fall outside § 812(e)(1)(B); on two different occasions, the Senate has refused to give its approval to House-passed amendments to the 1954 Code which would have made the terminable interest rule inapplicable to all widow's allowances actually paid within specified periods of time. [ Footnote 10 ]
We are mindful that the general goal of the marital deduction provisions was to achieve uniformity of federal estate tax impact between those States with community property laws and those without them. [ Footnote 11 ] But the device of the marital deduction, which Congress chose to achieve uniformity, was knowingly hedged with limitations, including the terminable interest rule. These provisions may be imperfect devices to achieve the desired end, [ Footnote 12 ] but they are the means which Congress chose. To the extent it was thought desirable to modify the rigors of the terminable interest rule, exceptions to the rule were written into the Code. Courts should hesitate to provide still another exception by straying so far from the statutory language as to allow a marital deduction for the widow's allowance provided by the California statute.
United States v. Stapf, 375 U. S. 118 .