Court Opinion

ID: 4485716
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:33:54.807977+00
Date Added: 2024-06-11T15:04:32.308424
License: Public Domain

HAMBLEN, J., concurring: I concur with the majority opinion, and I think it appropriate to respond to Judge Chabot’s concurring and dissenting opinion as to the section 2035 issue in that it fails to recognize that a net gift is merely a conduit for the payment of the donor-decendent’s tax liability. The net gift concept is a gift made on condition that the donee or a third party pay the tax imposed on the donor of the gift. Consequently, when the donee or other party pays the tax, it is simply an indirect payment by the donor which was reserved as a condition of the gift. As such, the tax paid should be included in the gross-up. Overall congressional intent reflected in the structure of the estate tax provisions of the Revenue Act of 1976 would be frustrated otherwise, and a loophole would be created. The language used in Gregory v. Helvering, 293 U.S. 465, 469-470 (1935), affg. 69 F.2d 809 (2d Cir. 1934), is pertinent here: But the question for determination is whether what was done, apart from the tax motive, was the thing which the statute intended. * * * * * * Simply an operation having no business * * * purpose * * * the sole object and accomplishment of which was the consummation of a preconceived plan * * * to transfer a parcel of corporate shares to the petitioner. * * * * * * The rule which excludes from consideration the motive of tax avoidance is not pertinent to the situation, because the transaction upon its face lies outside the plain intent of the statute. To hold otherwise would be to exalt artifice above reality and to deprive the statutory provision in question of all serious purpose. Indeed, if the majority opinion has a fault, it is in devoting too much attention to the charge that our rationale departs from the statute. I believe we are simply adhering to the elementary principle of not exalting form over substance. In any realistic view, the gift tax at issue was paid by the donor and, therefore, falls squarely within the statutory language of section 2035(c). Sterrett, Clapp, Wright, and Williams, JJ. agree with this concurring opinion.