Court Opinion

ID: 9643012
Source: CourtListenerOpinion
Date Created: 2023-08-22 18:15:15.800553+00
Date Added: 2024-06-11T18:10:56.321729
License: Public Domain

WILSON, Circuit Judge
(dissenting).
I do not think it is a question of what the “extent and character of the interest taken by the legatee” is. The tax is an estate tax and not a succession tax. Knowlton v. Moore, 178 U. S. 41, 49, 20 S. Ct. 747, 44 L. Ed. 969. The rights of the legatees in the property of the decedent may depend upon and be regulated by state law, but the federal income tax is not imposed on the successors to the property, but on its passing from the deceased at his death.
The issue is whether the federal law or the state law controls. The Supreme Court in Burnet v. Harmel, 287 U. S. 103, 110, 53 S. Ct. 74, 77, 77 L. Ed. 199, said: “It is the will of Congress which controls, and the expression of its will in legislation, in the absence of language evidencing a different purpose, is to be interpreted so as to give a uniform application to a nation-wide scheme of taxation. * * * State law may control only when the federal taxing act, by express language or necessary implication, makes its own operation dependent upon state law.”
Section 303 (a) (3) of the Revenue Act 1926, 26 USCA § 1095 (a) (3), contemplates bequests to charity made by the *899testator, not by the legatees. The testator made no such bequests in this case. Under the statutes of Rhode Island the legatees can make a will for the testator, and by agreement make gifts to charity, if approved by the court; but I do not think that is what is contemplated by the federal income tax act.
The Supreme Court in Y. M. C. A. v. Davis, 264 U. S. 47, 50, 44 S. Ct. 291, 292, 68 L. Ed. 558, said: “Congress was thus looking at the subject from the standpoint of the testator and not from the immediate point of view of the beneficiaries. It was intending to favor gifts for altruistic objects, not by specific exemption of those gifts but by encouraging testators to‘ make such gifts. Congress was in reality dealing with the testator before his death. It said to him: ‘If you will make such gifts, we’ll reduce your death duties and measure them, not by your whole estate, but by that amount, less what you give.’ ”
In Mississippi Valley Trust Co. v. Commissioner, 72 F.(2d) 197, 199, the Circuit Court of Appeals of the Eighth Circuit said of the above language: “The meaning of this language is that the testator and he alone must provide for the ■ charitable bequest.”
The case of Codman v. Commissioner (C. C. A.) 50 F.(2d) 763, does not, I think, support the conclusion of the opinion. This court in that case, while it recognized the Rhode Island statutes as affecting the transmission of property in that state, held that the original will governed the transfer of property in Massachusetts under the law of that commonwealth. The rights of the beneficiaries, including the charitable institutions, under the laws of Rhode Island are, no doubt, determined under the compromise will; but the issue here is, Were these gifts made under the compromise will deductible from the gross estate of the deceased under section 303 (a) (3) ?
The cases of Uterhart v. United States, 240 U. S. 598, 603, 36 S. Ct. 417, 60 L. Ed. 819, Freuler v. Helvering, 291 U. S. 35, 45, 54 S. Ct. 308, 78 L. Ed. 634, and Helvering v. Grinnell, 294 U. S. 153, 55 S. Ct. 354, 79 L. Ed. 825, do not seem to me to be in point. The case of Uterhart v. United States was a succession tax under the War Revenue Act of 1898 (30 Stat. 448); the case of Freuler v. Helvering related to a tax on income of a trust, the interpretation of which was within the jurisdiction of the state court; and the case of Helvering v. Grinnell involved the question of whether the property which the beneficiaries took was received from the deceased under a power of appointment contained in their father’s will, and therefore should be considered a part of the gross estate of the deceased, or which the beneficiaries took under another provision of their father’s will; and, if so, the property in question was not a part of the gross estate of the deceased and subject to an estate tax.
Property of the deceased passed from him at his death. He made no gifts to charity. Upon his death the federal income tax became effective. The exemption under section 303 (a) (3) of the Revenue Act 1926 covered only bequests to charity made by the deceased. 1 do not think that Congress intended that a different rule should prevail in the state of Rhode Island.
I think the decision of the Board of Tax Appeals should be affirmed.