Court Opinion

ID: 9423431
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:07:42.373603+00
Date Added: 2024-06-11T17:22:44.095018
License: Public Domain

Mb. Justice Stewart,
whom Mr. Justice Black and Mr. Justice Harlan join, dissenting.
“Resolution of the question in this case, whether a qualifying 'specific portion’ can be computed from the monthly stipend specified in a decedent’s will, is,” says the Court, “essentially a matter of discovering the intent of Congress.” Ante, p. 219. Substituting “exclusively” for “essentially,” I entirely agree with the Court’s statement of the case. “The deduction was enacted in 1948, and the underlying purpose was to equalize the incidence of the estate tax in community property and common-law jurisdictions.” Ante, p. 219. Again I agree. But I must *226differ with the Court in its determination that the intent of Congress leads to the result the Court today reaches. For allowing the trust before us to qualify for the marital deduction will inevitably lead to the ironic and unjustified result of giving common-law jurisdictions more favorable tax treatment than community property States.
The Court holds that the widow in this case had an interest in “all the income from a specific portion” of the trust because the stream of payments to her could be capitalized by the use of assumed interest rates. This capitalized sum is then said to constitute the “specific portion” which qualifies for the marital deduction. A corollary of the Court’s theory is that a trust which gave the widow the right to the income from a fixed amount (in dollars) of corpus and the right to appoint the entire corpus would support a marital deduction.1 But if such a bequest qualifies, then one which limits her power of appointment to only that amount of corpus with respect to which she has income rights will also qualify for the marital deduction. For under the statute, the survivor must have only the right to “all the income from a specific portion . . . with power in the surviving spouse *227to appoint . . . such specific portion.”2 (Emphasis added.) The way in which such an estate allows a tax avoidance scheme not available to a community-property couple can be easily illustrated.
Assume a trust estate of $200,000, with the widow receiving the right to the income from $100,000 of its corpus and a power of appointment over that $100,000, and the children of the testator receiving income from the balance of the corpus during the widow’s life, their remainders to vest when she dies. Now suppose that when the widow dies the trust corpus has doubled in value to $400,000. The wife’s power of appointment over $100,000 applies only to make $100,000 taxable to her estate.3 The remaining $300,000 passes tax free to the children. Contrast the situation in a community property State. The wife’s 50% interest in the community property places $200,000 of the expanded assets in her estate and taxable as such; only $200,000, therefore, passes directly to the children. Thus, the Court’s interpretation of “specific portion” affords common-law estates a significant tax advantage that community property dispositions cannot obtain.
By changing “specific portion” from the fractional share, which is both described in the Treasury Regulation and used as the basis for community property ownership, into a lump sum bearing no constant relation to the corpus, the Court allows capital appreciation to *228be transferred from the wife’s to the children’s interest in the estate without any tax consequence. Thus, today’s decision is directly opposed to what we have previously recognized as the purpose of the marital deduction:
“The purpose ... is only to permit a married couple’s property to be taxed in two stages and not to allow a tax-exempt transfer of wealth into succeeding generations. Thus the marital deduction is generally restricted to the transfer of property interests that will be includible in the surviving spouse’s gross estate.” United States v. Stapf, 375 U. S. 118, 128.
The reference in the legislative history of the 1948 Act to the wife’s “virtual owner [ship]” of the interest qualifying for the deduction is explained by the purpose discerned in Stapf, supra.4 For only if she is the “virtual owner,” will the wife’s interest appreciate with the rest of the trust. Similarly, the congressional committee reports, in limiting their examples of “specific portions” to fractional shares, manifest an understanding that no tax avoidance was to be allowed via the marital deduction.5 In no other manner could Congress have “equalize[d] the incidence of the estate tax in community property and common-law jurisdictions,” as the Court so aptly puts it.
In ruling as it does today the Court not only frustrates the basic purposes of the marital deduction, it also ignores or brushes aside guideposts for deciding tax cases that have been carefully established in prior decisions of this Court. Thus, a 10-year-old interpretation of the statute contained in the Treasury Regulations is held invalid, although we have consistently given great weight *229to those regulations in the interpretation of tax statutes. See, e. g., United States v. Stapf, 375 U. S. 118, 127, n. 11.
Of even greater importance is the sharp change of attitude toward the marital deduction which today’s decision heralds. The Treasury’s interpretation of “specific portion” is held invalid because “Congress’ intent [was] to afford a liberal ‘estate-splitting’ possibility.” This finding of “liberalism” in the marital deduction leads the Court to reason that “[p]lainly such a provision should not be construed so as to impose unwarranted restrictions upon the availability of the deduction.” Ante, p. 221. But we have previously construed the marital deduction to mean what it says and have not discerned a liberal intent that allows us to write new words into the statute, as the Court does here in changing “specific portion” to “ascertainable amount.” For example, in Jackson v. United States, 376 U. S. 503, 510, eight members of the Court, speaking through Mb. Justice White, declared that “the marital deduction . . . was knowingly hedged with limitations” by Congress, and “ [t] o the extent it was thought desirable to modify the rigors of [such limitations], exceptions . . . were written into the Code.” Thus, the lesson announced in Jackson, but ignored today, was that “[c]ourts should hesitate to provide [other exceptions] by straying so far from the statutory language.” Cf. Meyer v. United States, 364 U. S. 410. One looks in vain through the Jackson, Meyer, and Stapf opinions, supra, for the roots of the liberalism which the Court today finds bursting forth from the marital deduction.
With this change in approach, uncertainty is now introduced into one of the areas of the law where long-range reliance upon the meaning of a statute is essential. Estate planners and tax lawyers are technicians schooled to view the marital deduction as a tightly drawn, precise provision. They are now shown a totally new statute *230that is to be construed in the manner of a workman’s compensation act. See Jackson v. Lykes Bros. S. S. Co., 386 U. S. 731. Such a construction will hardly promote “[t]he achievement of the purposes of the marital deduction [which] is dependent to a great degree upon the careful drafting of wills.” Jackson v. United States, 376 U. S., at 511.
Believing today’s decision to be at odds with the statutory purpose and the consistent interpretation of the marital deduction, I respectfully dissent.

 The only difference between a trust which gives the wife income from a fixed amount of corpus and the one the Court has before it today is that the former does not require capitalizing a stream of payments into a lump sum, since it defines the sum at the outset. Neither of these trusts would qualify for the marital deduction under current Treasury Regulations:
“Definition of ‘specific portion.’ A partial interest in property is not treated as a specific portion of the entire interest unless the rights of the surviving spouse . . . constitute a fractional or percentile share of a property interest so that such interest or share . . . reflects its proportionate share of the increment or decline in the whole of the property interest .... [I]f the annual income of the spouse is limited to a specific sum, or if she has a power to appoint only a specific sum out of a larger fund, the interest is not a deductible interest.” Treas. Reg. § 20.2056 (b)-5 (c).

 The Court describes the “specific portion” over which the wife has a power of appointment as involving a “quite different problem” from the question directly before us today. Ante, p. 225. But unless it could be held that “such specific portion” does not refer to “a specific portion” (and I do not see how such a holding is possible), the way in which the Court defines “specific portion” with regard to the survivor’s income rights will inevitably affect the meaning of “specific portion” with regard to the power of appointment.

 Section 2041 of the Internal Revenue Code of 1954.

 S. Rep. No. 1013, 80th. Cong., 2d Sess., pt. 2, p. 16 (1948).

 H. R. Rep. No. 1337, 83d Cong., 2d Sess., p. A319 (1954); S. Rep. No. 1622, 83d Cong., 2d Sess., p. 475 (1954).