Opinion ID: 2966691
Heading Depth: 3
Heading Rank: 6

Heading: Avoidance of a Windfall to the Taxpayer

Text: The Government next argues that leaving the effective date of the 1976 Amendment intact will result in an unintendedwindfall to the _________________________________________________________________ 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.