Court Opinion

ID: 4485771
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:33:58.25741+00
Date Added: 2024-06-11T14:54:07.771480
License: Public Domain

NlMS, J., dissenting: I respectfully dissent from the majority’s holding on the disclaimer issue. The majority attempts to apply Jewett v. Commissioner, 455 U.S. 305 (1982), but on facts parallel to those in our case, the Seventh Circuit has pointed out the defect in our analysis. Kennedy v. Commissioner, 804 F.2d 1332 (7th Cir. 1986), revg. and remanding T.C. Memo. 1986-3. The Circuit Court said: Jewett shows that a belated disclaimer may be a taxable gift even though the person disclaiming has no current access to the money and may never receive it. The IRS believes that this compels a conclusion that Pearl Kennedy had only a “reasonable” time after 1953 to disclaim and to have the transaction treated as a gift from Frank Kennedy to their daughter. The problem with this position is that the interests of the different generations of Jewetts were fixed in 1939. One could get out the actuarial tables in 1939 or 1972 and determine how much each person’s share was worth. Frank’s gift to Pearl in 1953 did not fix the rules for succession, however, because of the right to partition the property. [804 F.2d at 1334.] In other words, the Jewett interests become irrevocable with the creation of the trust at Mrs. Jewett’s death, whereas Frank Kennedy’s gift to Pearl, i.e., the right of Pearl to receive Frank’s interest when Frank died, was revocable until Frank’s death, when it became irrevocable.1 Under section 2518(b)(2)(A), taxpayer then had 9 months within which to disclaim, which she did. It is not perfectly clear from the majority opinion to what extent the McDonald joint interests created under North Dakota law parallel the Illinois joint interests in Kennedy. Nevertheless, the majority concedes that North Dakota law permits partition or severance of joint tenancies under some conditions. In this connection, it may be stated as a general proposition that in most common law jurisdictions, at least, a joint tenancy in real estate is entirely distinguishable from a tenancy by the entirety between husband and wife with right of survivorship. In the latter case, there is no power of severance based, no doubt, upon the “amiable fiction” of common law that husband and wife are one person. See United States v. Jacobs, 306 U.S. 363, 369 (1939). It may also be noted that the timing in the case before us is worlds apart from that in Jewett. In Jewett, the various interests were fixed in 1939 when Mrs. Jewett died, but George, the disclaimant, then waited 33 years to disclaim. Here, petitioner promptly disclaimed within the 9-month period following her husband’s death, as permitted by section 2518(b)(2)(A). The decedent’s interest was, of course, found in the gross estate for estate tax purposes, and a tax-defective disclaimer by petitioner would have attracted an additional and immediate gift tax. It is exactly this kind of result which I believe Congress intended to mitigate when it adopted section 2518 in 1976. See H. Rept. 94-1380, 1976-3 C.B. (Vol. 3) 738, 800-801. I can perceive of no policy reason for discriminating against disclaimers of joint interests includable in the gross estate vis-a-vis other types of interests, e.g., tenancies-in-common, general powers of appointment, etc. I would therefore hold for petitioners. Clapp, Jacobs, and Wells, JJ., agree with this dissent.   See United States v. Jacobs, 306 U.S. 363, 371 (1939): “Until the death of her co-tenant, the wife could have severed the joint tenancy and thus have escaped the application of the estate tax of which she complains. Upon the death of her co-tenant she for the first time became possessed of the sole right to sell the entire property without risk of loss which might have resulted from partition or separate sale of her interest while decedent lived. * * * ”