Court Opinion

ID: 9418857
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:41:29.023723+00
Date Added: 2024-06-11T17:15:00.507199
License: Public Domain

Mr. Justice Stone,
dissenting.
Decedent, in making disposition of his property by his trust deed, retained a valuable interest in the property by which he postponed final disposition of it until his death. I think that the value of that interest was rightly subjected to the tax imposed by § 302 (c). This conclusion is strengthened and not avoided by construing the section as imposing a tax on the value of the interest which is shifted from donor to donee on the former’s death. Although the tax is a death tax, § 302 (c) nevertheless applies to any interest in gifts inter vivos which, by their provisions, are “intended to take effect in possession or enjoyment at or after death,” and such gifts are subjected to the tax as a death tax if they are not complete until the donor’s death. Reinecke v. Northern Trust Co., 278 U. S. 339, 345; Klein v. United States, 283 U. S. 231. The decedent’s death, operating upon his gift inter vivos not complete until his death, is the event which calls the statute into operation. Klein v. United States, supra, 234.
The section, in its scope and purpose, is thus similar to § 302 (d) which includes in the decedent’s taxable estate the value of his interest held as joint tenant or tenant by the entirety, although created by deed inter vivos. Tyler v. United States, 281 U. S. 497; Phillips v. Dime Trust & S. D. Co., 284 U. S. 160. Both provisions prevent tax evasion by subjecting to the death tax, forms of gifts inter vivos which may be resorted to, as a substitute for a will, in making dispositions of property operative at death. See Tyler v. United States, supra, 505. *47Compare No. 10, Helvering v. City Bank Farmers Trust Co., decided this day, post, p. 85.
It seems plain that the gift here was not complete until decedent’s death. He did not desire to make a complete gift. He wished to keep the property for himself in case he survived his daughter. He kept this hold upon it by reserving from his gift an interest, terminable only at his death, by which full ownership would be restored to him if he survived his daughter. If he had reserved a power to revoke the trust, if he survived her, Reinecke v. Northern Trust Co., supra, would have made the gift taxable, as would Klein v. United States, supra, if he had reserved a remainder in himself with gift over, if he did not survive his daughter. Instead, by using a different form of words, he attained the same end and has escaped the tax.
Having in mind the purpose of the statute and the breadth of its language it would seem to be of no consequence what particular conveyancers’ device — what particular string — the decedent selected to hold in suspense the ultimate disposition of his property until the moment of his death. In determining whether a taxable transfer becomes complete only at death we look to substance, not to form. Klein v. United States, supra, 234; Chase National Bank v. United States, 278 U. S. 327, 335; Reinecke v. Northern Trust Co., supra, 345; Saltonstall v. Saltonstall, 276 U. S. 260, 271. However we label the device it is but a means by which the gift is rendered incomplete until the donor’s death. The extent to which it is incomplete marks the extent of the “ interest ” passing at death, which the statute taxes.
The judgment should be reversed.
The Chief Justice, Mr. Justice Brandéis, and Mr. Justice Cardozo join in this opinion.