Source: https://www.legalcrystal.com/case/97779/commissioner-vs-disston
Timestamp: 2017-11-21 21:28:21
Document Index: 719517594

Matched Legal Cases: ['§ 504', '§ 504', '§ 502', '§ 504', '§ 502', '§ 517']

Commissioner Vs Disston - Citation 97779 - Court Judgment | LegalCrystal
Commissioner Vs. Disston - Court Judgment
LegalCrystal Citation legalcrystal.com/97779
Case Number 325 U.S. 442
Respondent Disston
..... the question must be determined whether the trusts provided for a present interest in the trust income, or some definable portion of it. the first direction of each trust is to accumulate the net income until the minor reaches twenty-one. if that were all, it would again be clear that a future interest was created by the postponement of enjoyment. a later paragraph directs the trustees, however, "to apply . . . such income therefore as may be necessary for the education, comfort and support of the respective minors." and to accumulate the remainder. page 325 u. s. 448 respondent urges that this case differs from the fondren case in that there the trust instrument showed that it was not contemplated that the income would be needed for education and support, and.....
Commissioner v. Disston - 325 U.S. 442 (1945)
U.S. Supreme Court Commissioner v. Disston, 325 U.S. 442 (1945)
Held: that gifts to the trusts were of "future interests," within the meaning of § 504(b) of the Revenue Act of 1932 and applicable Treasury Regulations, so that, in computing the gift tax, the $5,000 exclusion prescribed by that section was not allowable. Fondre v. Commissioner, 324 U. S. 18 . P. 325 U. S. 447 .
2. A taxpayer claiming benefit of the 5,000 exclusion in computing a gift tax under § 504(b) of the Revenue Act of 1932 has the burden of showing that the gift to which the claim relates was not of a "future interest." P. 325 U. S. 449 .
3. In computing the gift tax pursuant to the formula prescribed by § 502 of the Revenue Act of 1932, an adjustment may be made in the net gift figure for an earlier year, even though assessment and collection of a gift tax for such earlier year be barred by limitations. P. 325 U. S. 449 .
This case, like Fondren v. Commissioner, 324 U. S. 18 , presents questions whether certain gifts to minors are gifts of "future interests in property," within the caning of the Revenue Act of 1932, c. 209, 47 Stat. 169.
sum of the net gifts for the preceding years. [ Footnote 1 ] The Commissioner, in determining the net gifts made for this purpose by the 1936 trust, adjusted the exclusions which he had allowed in 1936 to the extent of $5,000 for each of the three minors. The period of limitations for assessment and collection of 1936 gift taxes had run. [ Footnote 2 ]
The guiding principles were outlined recently in Fondren v. Commissioner, 324 U. S. 18 . Gifts of "future interests," within the meaning of § 504(b), to any person are not excluded from the computation of net gifts to the extent of the first $5,000 in value, as are present interests. Treasury Regulations 79 (1936 ed.), Article 11, defines "future interests" as interests "limited to commence in use, possession, or enjoyment at some future date or time. . . ." The definition has been approved repeatedly. Cf. Ryerson v. United States, 312 U. S. 405 ; United States v. Pelzer, 312 U. S. 399 ; Fondren v. Commissioner, 324 U. S. 18 .
needed for that purpose, or the requirements for maintenance, education, and support that were foreseeable at the time the gifts were made. In the absence of some indication from the face of the trust or surrounding circumstances that a steady flow of some ascertainable portion of income to the minor would be required, there is no basis for a conclusion that there is a gift of anything other than for the future. The taxpayer claiming the exclusion must assume the burden of showing that the value of what he claims is other than a future interest. Cf. New Colonial Ice Co. v. Helvering, 292 U. S. 435 . That burden has not been satisfied in this case.
The question remains whether the adjustment of net gifts for 1936 in computing 1937 and 1938 tax liability is barred by the statute of limitations. As has been noted, § 502 requires utilization of "the aggregate sum of the net gifts . . . for each of the preceding calendar years" in the formula for computing gift tax liability. Section 517(a) does not purport to bar adjustment of the net gift figure for that purpose, but simply prevents assessment and collection of a tax for a year barred by the statute. The statute does not support to preclude an examination into events of prior years for the purpose of correctly determining gift tax liability for years which are still open. The Tax Court and Treasury Regulations have construed § 517(a) as requiring determination of the true and correct aggregate of net gifts for previous years. [ Footnote 3 ] The construction is in accord with the statutory language.