Legal Document

373 U.S. 49 83 Supreme Court Reporter 1054 10 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 184 Andre MAXIMOV, Trustee, Petitioner,v.UNITED STATES. Number 240. Argued March 28, 1963. Decided April 29, David Atlantic Lindsay, New York City, for petitioner. Louis Federal KF105 F3 Claiborne, Orleans, La., respondent. Mr. Justice GOLDBERG delivered the opinion of Court. 1 The question in this case is whether an American trust whose beneficiaries are British subjects and residents which retains capital gains income realized country exempt from federal tax on such by virtue a provision Income Tax Convention between America Kingdom, 16, 1945, 60 Statutes-at-Large 1377, 1384, exempts 'resident Kingdom.' Certiorari was granted, 371 810, 41, 9 53, to resolve conflict decision Appeals Second Circuit, 299 Reporter, 2nd 565, denying exemption domestic trust, petitioner case, Ninth Circuit Trust company versus Smyth, 247 149, granting under similar circumstances. I. 2 petitioner, represented here its successor trustee, Maximov, citizen resident States, private created Connecticut law 1947 inter vivos deed executed grantor, Kingdom. A lifetime interest retained his wife named contingent beneficiary her life, their children were designated as remaindermen. All citizens Kingdom at times relevant. 3 administered upon sale certain assets during 1954 1955. In accordance with controlling law, instrument expressly makes applicable, these treated accretions corpus not distributed. Pursuant provisions applicable trusts general, reported part trust's fiduciary returns filed trustee years appropriate amount paid thereon. 4 Asserting Convention, claims refund disallowed Internal Revenue Service. then brought suit District seeking recovery attributable gains. Motions summary judgment both government. denied Government's motion entered full tax, holding, authority Smyth supra, that entitled treaty. reversed petitioner's claim Convention. so doing, rejected reasoning adopted, result reached, Smyth. 5 We conclude interpretation relevant adopted one more consonant language, purpose intent. Accordingly, we affirm below, exemption. II. 6 Under laws, like separate taxable entity, apart beneficiaries. §§ 641, 7701(a)(1), (14), Int.Rev.Code 1954. And, Code, neither distributed nor otherwise directly entity. See 641—668, statutory concepts taxability, properly includable in, as, gross Whatever basis there may be, therefore, relieving must be found words or implications 7 asserting freedom liability gains, relies Article XIV provides: 8 'A engaged trade business shall exchange assets.' itself established country, governed laws our trustee. It plainly Kingdom,' class limited. argues, however, purposes objectives treaty require disregard identity entity measure application exemptive economic impact would imposed. thus says since real burden falls beneficiaries, all whom objects protections, should read exempting asserted States. Mindful it construing, giving proper effect, cannot, do not, either language conceive encompassing, much less compelling, significant deviation normal word use concepts. plain does afford any support argument favor disregarding fact, very impel contrary reading. provided applies terms only Kingdom' II(1)(g) defines 'any person (other than corporation) who tax.' 'person' defined referred II(3) applying treaty, determine meaning.1 apparently well, term includes trust. 1954, § 7701(a)(1); see Harvard Law School, World Series, Taxation 5/3.4, Page 127 (1957). Thus, appears quite clearly that, within meaning distinct Since meets definitional tests signatory's country's tax—it exempted 11 Apparently recognizing impediments interpreted pursuant standards set out itself, asserts equality treatment objective furtherance compels adoption theory accorded whenever diminish equality. Since, general least, imposes no imposed here. 12 immediate compelling answer contention already noted, fails view, but it. Moreover, particularly inappropriate court sanction clear import solemn Nation foreign sovereign, when, here, indication according obvious effects inconsistent intent expectations signatories. materials instructive parties assure complete strict treatment—a virtually impossible task light different structures two nations—but rather, preamble facilitate commercial through elimination double taxation resulting countries levying same transaction profit; additional prevention fiscal evasion.2 Certainly, requires relief situation presented. There concededly imposition taxed thereon law. 9/8.1, 10/7.2, Pages 277, 307—308. impairment of, obstacle to, intercourse threatened context considerations evasion involved. 13 Even extent secure treatment, apparent face invariable inflexible sought intended. creates some inequalities treatment. For example, XIV, relies, limited 'engaged States.' even immune though doing conducting receive benefit absence there. did represent attempt equalize disparities To intended, specifically provided. context, accord unintended benefits compellingly indicated implications.3 say give broad efficacious scope mean sweep what legally traditionally recognized taxpayers protections; expect similarly lucidly intended freed taxes. 14 This, course, provide bilateral realizing appropriately protected exempt, Congress has fully implementing operative dimensions Code contains sections designed effect exemptions type consistency obligations general. See, e.g., 894, 7852(d). Our affords every negotiated behalf respective prevents windfall party. amply served adhering limiting 'residents falling purview. subject below affirmed. 15 Affirmed. 'In present Contracting Parties shall, unless requires, have Party relating taxes Convention.' recites desired 'to avoidance respect income.' also Hearings before Subcommittee Committee Foreign Relations, Conventions With Great Britain Northern Ireland Respecting Estate Taxes, S. Exec. Docs. Defendant E, 79th Cong., 1st Sess. 1—2. Treatment construing undistributed mandated intention signatories, negotiated, consistent long-standing administrative practice regulations, Treasury Decision 5569, 1947—2 Cum.Bull. 100, 7.519(c), many other conventions items normally Australia, 6108, 1954—2 614, 501.10; Belgium, 6160, 1956—1 815, 504.119; Switzerland, 6149, 1955—2 814, 509.121.

Classification Label: 11