Document: 348 U.S. 187 75 S.Ct. 229 99 L.Ed. 246 COMMISSIONER OF INTERNAL REVENUE, Petitioner,v.STATE of Louis STERNBERGER, The Chase National Bank the City New York, Executor. No. 24. Argued Oct. 19 and 20, 1954. Decided Jan. 10, 1955. Miss Melva M. Graney, Washington, D.C., for petitioner. Mr. Edward S. Greinbaum, York City, respondent. Justice BURTON delivered opinion Court. 1 issue here is whether, in determining a net estate federal tax purposes, deduction may be made on account charitable bequest that to take effect only if decedent's childless 27-year-old daughter dies without descendants surviving her mother. For reasons hereafter stated, we hold it not. 2 Sternberger died testate June 25, 1947. His return discloses gross $2,406,541.71 and, additional tax, $2,064.346.55. It includes assets owned by him at his death others held Bank, respondent herein, under revocable trust created him. As makes provisions charity are our purposes identical with those will, this applies both dispositions. 3 will places residuary during joint lives wife life survivor them. Upon such survivor, principal fund payable then living daughter. However, there no descendants, one-half residue goes certain collateral relatives decedent other half corporations. If none designated living, entire corporations.1 4 At death, survived was 62 27. latter married 1942, divorced 1944, had not remarried child. 5 In return, executor, deducted $179,154.19 from as present value conditional residue. Respondent claimed more remote Commissioner Internal Revenue disallowed determined deficiency ground. Tax Court reversed Commissioner. 18 T.C. 836. Appeals Second Circuit affirmed Court, 207 F.2d 600, authority Meierhof v. Higgins, Cir., 129 1002. To resolve resulting conflict First Newton Trust Co. Commissioner, 160 175, granted certiorari, 347 932, 74 629. 6 controlling Code substantially same terms when they were first enacted 19192 follows: 7 'Sec. 812. Net Estate 8 'For purpose shall determined, * deducting estate— 9 '(d) TRANSFERS FOR PUBLIC, CHARITABLE, AND RELIGIOUS USES. amount all bequests, legacies, devises, or transfers use any corporation organized operated exclusively religious, charitable, scientific, literary, educational *.' I.R.C., 26 U.S.C.A. § 812(d). 10 concedes corporations named qualify statute. There doubt, therefore, them been immediate unconditional, its would deductible. question before us what, any, despite (1) deferment effective date until deaths (2) conditioning upon lack time. We find answer Treasury Regulations, which long standing strengthened reenactments 812(d), since their promulgation.3 11 earliest form, predecessors these regulations, 1919, recognized, plain language, propriety deferred, but assured, charity.4 Section 81.44(d) Regulations 105 does so inescapable specificity: 12 's 81.44 Transfers public, etc., uses. 13 private purpose, taken beneficial interest favor former insofar presently ascertainable, hence severable use. 81.10 indicates principles applied computation worth federred uses, behalf executor. Thus, money property placed pay income an individual life, term years, deliver corporation, apply remainder determine remainder, appropriate factor column Table A B 81.10. bequeathed dependent termination than one manner rendering inapplicable 81.10, claim must supported full statement, duplicate, made, accordance principle set forth skilled actuarial computations.' (Emphasis supplied.) C.F.R. 14 very explicitness above emphasizes restriction 'the worth' assured bequests subject each illustrations cross references section. statute restricts deductions 'organized purposes'.5 Likewise, section regulations requires deductible of' 'severable use.' suggestion funds later used purposes. 15 Here, also, unequivocally restrictive.6 after court decisions demonstrated need doing so7 restrictions restated expressly permit fact form. 16 81.46 now provides allowable 'unless possibility negligible.' whole significant: 17 Conditional bequests. (a) transfer performance some act happening precedent event order might become effective, unless negligible. has passed vested time right defeated appeared have highly improbable allowable. '(b) legatee, devisee, donee, trustee empowered divert fund, part, rendered it, extent power, directly bequeathed, devised, given decedent, limited portion, exempt exercise power.' Sections fully implement 812(d) code. early forms obviously mutually exclusive easily reconcilable. predecessor confined outright, unconditional charity. excluded conditions, either subsequent. While encouraged charity, offered never reach Subsequent amendments clarified changed principle. 81.46(a) today yields condition 'negligible' 'highly improbable.' 81.46(b) equally strict. relates whereby diverted part noncharitable limits portion cannot diverted. Where thus invaded ascertainable balance recognized deduction. 20 chance much Therefore, instant case, permissible. 21 claims, however, covers case. so, reads §§ together instead confining subjects, overlap. deferred case where can compute, approved standards, degree receive bequest. computes corresponding percentage short, claims equal whatever fraction corresponds, actuarially, benefit it. 22 This considered somewhat comparable proposal 1928. Humes United States, 276 487, 48 347, 72 667, taxpayer sought based 15-year-old niece, issue, reaching age 40. sustain proposal, establish actuarially measure Speaking through Brandeis, found inadequate. It, did drop matter there. following statement: 23 'One guess, gamble on, even insure against, future event. Solicitor General tells Lloyds London against having twins. But fundamental bar, whether contingent insured guessed at, what construction Did Congress, providing determination taxable, intend should contingency actual known data? Neither taxpayer, nor revenue officer—even equipped aid art supply—could do guess contingency. clear Congress gift character.' Id., page 494, 348. 24 Since written, advances art. Today, estimates employed widely then. computations illustrate advance. They not, lessen necessity statutory authorization scope required best appreciated examined revealing light specific circumstances 25 respondent's fairly reflecting two-million-dollar residue, reduced proportion making estimate, computed basis 4% compounded annually tables: 1. expectancy daughter, Combined Experience Mortality prescribed regulations. 27 2. estimate probability remarriage American Remarriage Table, published Casualty Actuarial Society. 28 3. child being born specially devised table prepared accepted data derived statistics Bureau Census.8 29 On tables, finds .18384 dollar solely chances daughter's remarriage; .24094 legitimate descendant survive her; .24058 illegitimate her. last seeks here. 30 successful, means allowance irrevocable over $175,000 although admits real nothing. bequest, fact, offers inducement about $2,000,000 remarry leave descendant. reduces average further demonstrates inappropriateness authorizing 31 An clearer illustration interpretation code readily suggests itself. conditioned remarriage, fix dollar. once substantial basis. remarry. she action cancel anything already allowed estate. person defeat fulfillment depends, less dependable. reduction open door easy abuse. result well encourage gifts inuring writing conditions into assure assuring benefits 32 That remains supra, decided. also far discussed. relegates words 81.44(d): 33 'If view emphasis outright long-standing exclusion (and predecessors), regard sentence invading domain extending restricted 81.10(i) deals length valuation remainders reversionary interests gives many examples computations. Every example, language 81.44(d), quoted above, authorize deduction, prohibits Such established administrative valid 'should overruled except weighty reasons.' South Texas Co., 333 496, 501, 68 695, 698, 92 831. 34 specifically faced see reason retreat views stated. assurance determinable determinable, properly denied. Henslee Union Planters Nat. 335 595, 598—600, 69 290, 291 292, 93 259; Merchants Boston 320 256, 259—263, 64 108, 110—112, 88 35; Robinette Helvering, 318 184, 189, 63 540, 542, 87 700. has, propriety, sure States Provident 272, 54 389, 78 793; Ithaca 279 151, 49 291, 73 647. 35 Some lower courts squarely met problem denied 'it 50% corpus; 50-50 getting nothing.' 181. See Graff Smith, 100 F.Supp. 42; Hoagland Kavanagh, 36 875; Wood 197. practice, evidenced deny further, Paul, Federal Gift Taxation (1946 Supp.), 426—427. judgment Appeals, accordingly, cause remanded conformity opinion. 37 Reversed. 38 REED, whom DOUGLAS joins, dissenting. 39 facts stated Court's Its statement legal issues accords understanding wit: 40 'The time.' 41 dissenting, length, conclusion seems disregard subvert enactment, admittedly testamentary objects desirable good people.1 hesitation dissenting remediable decision springs, think, overemphasis protest usefulness counterweight extensions treatment language. 42 First. statute, U.S.C. allows 'amount legislative history explanatory meaning.2 read 812 alone, could doubt deductible? think says 'all bequests'—whatever takes will. word assuredly institution. 'amount' deductible—its value. plainly require enjoyment. 43 Under interpretation, father's default institutions, paid. hand, left simply free remainder. differentiation said instance greater other; less. particular estates securetax advantages aggregate received tax-recognized institutions. surely carry out congressional purpose. contention urging possible over-all windfall mathematical law averages.3 44 Our support Regulation 105, 81.44. After referring whose regulation adds: 45 46 tables refer only. alone allow, uncertain ultimate receipt. opinion, 235. follow because 'statutory bequests.' emphasis. leads contrary result.4 47 agrees, Government's immaterial charity's receipt valued death.' holds Although Government asserts upheld decisions, hold. five cases touched problem. Three disposed failure introduce, impossibility making, sound principles.5 None taking beneficiary uncertain. Two—Ithaca 647, 793—allowed invade corpus fixed standard capable ample needs beneficiary, uncertainty sufficient justify refusal is, face, decide simpliciter, deductibility controlling, taking. moment's examination. Property deceased's life; pass lawful issue; die distributed among various organizations. Prior testator, operation incapable childbearing, vesting existing (the 81.46(d))6 ignored regulation, apparently believing requiring amendment relevant inquiry sole What saved tax? practical question, concluded presumption invoked, ascertaining constituting bring market, ordinarily attaches inquiry. supra.' 286, 392. 50 allow ultimately fall beneficiary. accord 1002, led certiorari. background forbid, intended exclude cases. 51 Second. agrees contingencies instances 'possibility Clearly 'remote.' quite true reenactment 812, interpreted limitation remainders. ruling consistent manifested 52 Whether written merely indicative purpose,7 Whatever varying desirability moneys businesses public foundations, sanctioned provisions, degrees contingency, Tax.8 policy brought munificent chosen 53 promulgation 81.46, declaring Even interpreting statutes isolated produce results 'plainly variance legislation whole,' rather literal words. Trucking Ass'ns, 310 534, 543, 60 1059, 1063, 84 1345. rule applicable safeguards enactments. Interested parties outside Service perhaps heard. Reports explaining available. Public discussion, happens place. due adoption make indication weighed context frustrated issuance regulation. foregoing affirm Circuit. These appear 836, 837—838. Originally 403(a)(3) Act 1918, Stat. 1098. Griswold, Cases Materials (3d ed.), 679 et seq.; Taxation, 638 seq. latest 2055(a) 1954, 68A 390, Edwards Slocum, 264 61, 63, 293, 564; Geo.Wash.L.Rev. 198, 201; Va.L.Rev. 387—388. Like deductions, rest ambiguity. Stewart, 311 60, 71, 61 102, 109, 85 40, Jacobson, 336 28, 49, 358, 369, 477. 408(a) 56 949, added so-called 'disclaimer provision,' whereby, renunciation effectuates earns 'Art. 53. Public, similar bequests.—* prevent another devise value, interest, Article 20.' T.D. 783—784. methods single interest. Congressional insistence appears describing deductible: earnings inures stockholder trustees, fraternal society, order, association operating lodge system, contributions permits 56. bequests.—Where legacy, devise, act, event, necessary occurrence place allowed. Where, gift, subsequent allowed.' 785. 793. Ninth & 951. Despite conclusions contrary, contends proposed material study experience conducted Committee Society, Proceedings Society (1933), 279—349. widows who, husbands, beneficiaries workmen's compensation laws states lose remarriage. reports relied cover years 1921 1929, inclusive. id., 286—288, 298. Myers, Further Experience, (1949), statistics, white women District Columbia, indicating women, old, marry first-born children. Census publications 1940; Vital Statistics Pt. II, 89; Nativity Parentage White Population—General Characteristics 110; Types Families 9. assumes note method correctness add position reliance 1003, involving multiple decrement theory. Jordan, Life Contingencies, 251. holding together. 667. said: Claims charities calculations actuaries tables. embodied findings, laid claimed. volume character drawn two differ mortality almost certainty.' pages 492—493, 347. male female members Scotch peerage. 259. Compare 'Conditional Treas.Reg. 37, Art. Helvering R. J. Reynolds Tobacco 306 110, 115, 59 423, 425, 83 536; Crane 331 1, 8, 67 1047, 1051, 91 1301, Wilshire Oil 308 90, 18, 101. Harv.L.Rev. 377, 398, 1311. 679, setting brief reference differing merit deduction; Vol. I, c. 12.

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