Court Opinion

ID: 8724090
Source: CourtListenerOpinion
Date Created: 2022-11-26 08:55:10.160194+00
Date Added: 2024-06-11T16:59:13.344174
License: Public Domain

MADDEN, Judge
(dissenting).
I agree with the court that both issues had weight in the settlement. That brings me to the Government’s contention that if the contemplation of death issue, which section 7 did not affect, entered into the settlement at all, then section 7 gives no right of recovery. It is argued that if the gift was made in contemplation of death, that made the property fully taxable, just as it would have been, under section 811(c) before it was amended by section 7, if it had created a situation from which a remote possibility of reverter by operation of law resulted. It is true that if the case had been litigated in the Tax Court and the Tax Court had adjudged a deficiency on both grounds, the plaintiff would not be eligible for section 7 relief. In that case it would have been evident that a ground for taxation, sufficient in itself to make the property taxable, and which section 7 did not affect, was present. The presence of another ground which section 7 did affect would not have made the property retroactively nontaxable.
But in the instant case we are dealing with a negotiated settlement, and it is evident that the reverter issue was, from the plaintiff’s side, the predominant reason why they were willing to pay the tax, and that, from the Government’s side, it was an important reason why it insisted that some tax be paid. Section 7 is a remedial statute, intended to relieve from taxes or refund taxes in cases where the tax is based upon the existence of a possibility of reverter. I have no doubt that the plaintiff paid, and was required to pay a considerable part of the tax in question because of the existence of a possibility of reverter. To the extent that he did so pay it, I think section 7 entitles him to relief. The determination of that extent is, of course, not a matter of accurate calculation from known data. It is only an estimate, arrived at on the basis of the evidence. I agree with our commissioner’s estimate that $16,000 of the $20,000, and the interest on the $16,000, were paid because of the reverter issue.
The Government says that because the plaintiff resorted to the Tax Court, and that court rendered a judgment in the case, he cannot sue in this court for the refund of the taxes adjudicated by the Tax Court to be owing. That is, of course, the usual rule. But subsection *947(c) of section 7, 26 U.S.C.A. § 811 note is specific that even if refund would otherwise be prevented by existing law, refund should nevertheless be made, except in two named situations not here relevant. The fact that the Tax Court had made a determination, exactly in accord with the Supreme Court’s interpretation of section 811(c) before the enactment of section 7, would be no reason why the taxpayer who was required by that decision to pay a tax on a possibility of reverter should be treated differently from all other taxpayers, and denied the benefit of the retroactive change in the law.
I would give the plaintiff a judgment for $18,218.62, with interest as provided by law.