Document: 375 U.S. 118 84 S.Ct. 248 11 L.Ed.2d 195 UNITED STATES, Petitioner,v.Dorothy Anne STAPF and B. T. Ware, II, Executors Trustees of the Estate Lowell H. Stapf, deceased, Dorothy Ann Individually. No. 54. Argued Oct. 23 24, 1963. Decided Dec. 2, Rehearing Denied Jan. 6, 1964. See 981, 477. Wayne G. Barrett, for petitioner. Mr. W. M. Sutton, Amarillo, Tex., respondents. Justice GOLDBERG delivered opinion Court. 1 Respondents brought this suit against Government in District Court Northern Texas a refund estate taxes paid pursuant to an asserted deficiency. The Appeals Fifth Circuit held that respondents were entitled certain marital deductions under § 812(e) Internal Revenue Code 19391 also other payments as 'claims estate' 'administration expenses' 812(b)(3) (2) 1969 Code.2 5 Cir., 309 F.2d 592. We granted certiorari consider questions statutory interpretation important administration federal tax laws. 372 928, 83 873, 9 7 2. 2 Stapf died testate on July 29, 1953, resident domiciliary Texas, community property jurisdiction. At time his death he owned, addition separate estate, substantial amount with wife. His will required widow elect either retain her one-half interest or take allow its terms govern disposition interest. If Mrs. will, she would be given, after specific bequests others, one-third husband's estate. By accepting bequest pass, accordance into trust benefit children. It was further provided if chose executors pay 'all not merely one-half' debts expenses. 3 relevant facts computations are dispute. decedent's valued at $65,100 $258,105.3 only totalling $32,368. expenses, including attorneys' fees, $4,073. had elected have retained fully vested ($129,052) which been charged ($16,184) 35% expenses ($1,426).4 Thus, parties agree, received net $111,443. 4 In fact will. She received, combined property, devise $106,268,5 $5,175 less than refused will.6 computing taxable claimed deduction 812(e)(1) 1939 full value ($22,367) passed wife entire $32,368 $4,073 812(b)(2). Commissioner disallowed claims insofar these represented (50%) (35%) chargeable wife's community. then instituted refund. allowed but disputed 189 F.Supp. 830. On cross-appeals Appeals, one judge dissenting all issues, each allowable full. For reasons stated below, we hold correct none is allowable.7 I. THE MARITAL DEDUCTION 6 electing effect, agreed accept devised and, turn, surrender greater This raises question whether (E)(ii) where surviving spouse condition convey equivalent contends that, purposes deduction, 'the passing given give another receiving it.' view, since no from exercise election, deduction. reject approach d argue plain meaning statute makes detriment immaterial. Section 812(e)(1)(A) provides 'in general' any passes * decedent spouse.' Subparagraph (E) deals specifically valuation: 8 '(E) Valuation Of To spouse. determining subparagraph (A) by subsection— '(ii) such incumbered manner, incurs obligation imposed respect interest, incumbrance shall taken account same manner gift being determined.' turns upon (1) introductory phrase 'any interest,' concluding provision 'such 10 allowing reasoned valuation 'as if' taxed, legal analysis should husband made inter vivos something case, it stated, gift. incurred ordinarily reduce husband, original donor.8 court concluded: 'Within confines others may 'netted' widow, thus testator, transfer vivos, liable devise.' 592, 598. 12 conclusion, based alleged final gift-amount clause 812(e)(1)(E)(ii),9 supported reading provision. First, allows gifts pass 'to present case effect distribute wealth spouse, instead transmit, through couple's gift-to-the-surviving-spouse terminology reflects concern status actual recipient donee What 'marital deduction'—a children privately selected beneficiaries. appropriate reference, therefore, moving deceased 13 Second, phrases 812(e)(1)(E)(ii) provide determination 'where th *.' Government, drawing broad import language, argues: 'An undertaking third person, receipt conditioned, plainly 'obligation interest." contend 'incumbrance obligation' refers 'a payment out Respondents' narrow construction certainly compelled literal language. Their embrace only, example, whereas speaks 'with passing' Finally, arrive real context think relates economic 14 authoritative declarations congressional intent. Senate Committee Finance, explaining operation understanding follows: 15 'If bequeaths subject, however, agreement, charge $1,000 X, (and, accordingly, spouse) value, reduced $1,000, property.' S.Rep. 1013, 80th Cong., 2d Sess., Pt. p. 6; U.S.Code Cong.Service 1948, 1228. (Emphasis added.) 16 Treasury Regulation directly upon, literally from, expressions legislative Treas.Reg. 105, 81.47c(b) (1949). includes example kind testamentary involved case: 17 'A bequeathed securities lieu them law State their residence. relinquish bequest. purpose relinquished wife.'10 18 conclude, ogerning principle, approved Congress embodied Regulation,11 must extent exceeds relinquish. 19 Our conclusion concerning congressionally intended result accords general creating 1948 amendments equalize common-law jurisdictions.12 Under system, receives outright ownership included incidence progressively scaled adhere patterns state law, permits subject requirements, free non-community Although applicable separately state, primary thrust extend taxpayers States advantages 'estate splitting' otherwise available States. purpose, permit married taxed two stages tax-exempt succeeding generations. Thus generally restricted interests includible spouse's gross estate.13 would, nevertheless, generation without taxes.14 do believe result, squarely contrary concept can justified language 812(e)(1). Furthermore, jurisdiction normally vests wife, approval create opportunity reduction practical matter, more readily couples jurisdictions jurisdictions.15 Such again, unnecessarily inconsistent basic statute. 20 Since our does require advanced respondents, construed accord clearly expressed Regulation. conclude purposes, conditional another. transferred ($106,268) ($111,443). benefit, 21 II. CLAIMS AGAINST ESTATE AND ADMINISTRATION EXPENSES 22 A. Claims Against Estate. 'Such amounts laws administered total $32,368, consisting largely due past income. directed debts. absent provision, half issue presented whether, direction, by' law. 24 first claim type deductible.16 cannot denied party substance direction confer beneficial party. contentions 812(b) designed 'expenses, losses, indebtedness, taxes' authorize despite policy transmitted death.17 provisions demonstrate voluntary transfers deplete because testator described settlement 'claims' 'debts.' intent evidenced treatment founded promises agreements. section carefully restricts deductible indebtedness *, when promise they contracted bona fide adequate consideration money money's worth. *' Absent offset augmentation could disguise obtain transmitting gifts. As requirement suggests, predicated solely finding legally enforceable governing validity contracts wills.18 referred those against' administering created deceased's gratuitous assumption attaching 25 pertinent states represent personal obligations *.'19 agree respondents' contention 'personal obligations' within true, manager personally 596. liability portion was, accompanied right over Ibid. rule debts, attach property. define what 'obligation' 'claim,' where, solvent, realistically deemed 26 812(b), like deductions, analyzed light equalizing taxation jurisdictions. include might be, sense, surety, couple increase transfers. borrowing requiring wife.20 That qualify deduction,21 812(b). A opinion, tend unwarranted States.22 27 Administration Expenses. 28 testator's well entirely totalled allocable share costs determined $1,426. executors' attributable 29 812(b)(2) involves substantially considerations determine 812(b)(3). both instances, directing non-estate reduces confers providing read policies taxing transmission hold, 30 C. Payment Debts Expenses Marital Gift. 31 view responsibility properly characterized material rather 'expenses.' allowed. disposes argument, facts, even items valuable received.23 absence allowable. 32 judgment reversed remanded proceedings opinion. 33 so ordered. 34 Reversed remanded. 62 Stat. 117 (1948), now Int.Rev.Code 1954, 2056(b)(4)(B). (E)(ii): '(e) Bequests, etc., '(1) Allowance '(A) general. An equal has 53 123 (1939), 2053(a). Subsequent references arose. for: '(b) Expenses, taxes. amounts— funeral '(2) '(3) '(4) unpaid mortgages to, therein, undiminished mortgage jurisdiction, United States, administered, income decedent, accrued before death, succession, legacy, inheritance herein mortgages, shall, limited worth figures throughout rounded nearer dollar. apportionment initially revenue examiner sust ined D.C., 830, 838. $700 automobile Stapf. There some credited ($1,400) ($700). difference immaterial insufficient alter did receive therefore used courts below ($700) automobile. taking computed method. explained 'Computed differently owned her, thereby transferring one-sixth election take. method computation having $27,541.16 aggregate $22,366.66, making loss $5,174.50.' 594. $700, representing 597, n. 5. allowance challenged review See, e.g., v. Wemyss, 324 303, 65 652, 89 L.Ed. 958. Act 1932 mere transferee constitute requisite 'consideration worth' transferor relieve him liability. reliance ignores neither who considered nor donee. relied 81.47c(b)(3) (1949), 20.2056(b)—4(b) (3) (1958). illustration 'of imposition decedent: residence $25,000 $5,000 sister. $20,000.' Lowndes Kramer, Federal Gift Taxes (1962), 17.4: '(W)hat Regulations driving seems this. part him, clear thing actually excess above Therefore, qualifies frequently 'given considerable cases decisive weight interpretative regulations bodies adversary origin.' Skidmore Swift & Co., 323 134, 140, 61, 164, 124. varies context, particularly persuasive when, H.R.Rep. 1274, pp. 24—26; 1258; S.Rep.No.1013, 26—29; 1163; Sugarman, Tax Equalization—The Deduction 36 Cal.L.Rev. 223, 228—230. concerns eventual taxability marital-deduction indicated terminable (B). supra note 12, 28; Warren Surrey, Taxation (1961), 759—760. recognized decision: 'Here excluded. exclusion deferred assessed much survives day. became transfer. escape taxes.' effects decision, see dissent Judge Wisdom. F.2d, 608—609. 76 Harv.L.Rev. 1671, 1675. Morgan Commissioner, 78, 80—81, 60 424, 426, 585 (concerning 'general power appointment' act): 'State creates rights. acts designate interests, rights, created, taxed. duty ascertain words specify found local object prevail matter name law.' Hart Wechsler, Courts System (1953), 456—457. op. cit., supra, 10, §§ 1.2, 2.2. majority adequate-consideration here main ad valorem taxes, However, widow's terms. 81.36 (1942), 20.2053 (1958): 'Claims estate.—The deducted heading existing matured, thereon death. Only deducted. With regard suggested that: 'because bound, until elects, incompatible regulation existence fulfilled work retroactively.' 37 Tul.L.Rev. 297, 315. 604 (Wisdom, J., dissenting): 'For twilight years, $1,000,000 borrow additional invest using $2,000,000 collateral. increased million dollars, dollars. $1,000,000. All this, matched Court's holding, 'net' 000 untaxed, wife.' infra, 134. concede 'even 1/3 debt expense provisions, ended up will.' Her assets $129,052. ($1,426) $17,610. When viewed summarized remaining ($83,902; 5, supra) balance ($129,052 minus $83,902) gave $45,151. return $22,367 (see assumption, $17,610, $39,976. exchange produced $5,175.

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