Court Opinion

ID: 4476207
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:11:54.252597+00
Date Added: 2024-06-11T08:49:00.151450
License: Public Domain

Mellott, J,. dissenting: My oft-expressed view is that the Commissioner may not wait until the statute of limitations prevents him from proceeding against a solvent donor — one who remains wholly solvent and able to pay his gift tax liability during the full period — and then enforce collection of the tax from a donee under the transferee provisions. (See dissent in Evelyn N. Moore, 1 T. C. 14, 17, on appeal C. C. A. 2d Cir.) The liability of a transferee is secondary; and. while it may be enforced within one year after the expiration of the period of limitation for assessment against the donor, it is nevertheless incumbent upon the Commissioner to show that there is “a liability, at law or in equity, of a transferee.” Since there is no liability of the donee in equity unless the transfer has rendered the donor insolvent, the Commissioner has heretofore urged and this tribunal has held that the lien statute (sec. 510, Revenue Act of 1932) has made the donee liable at law. This primary liability of the donee has been warped into and enforced, not as a primary liability under the lien statute by a suit in the United States District Court as contemplated by the statute, but as a secondary liability under the transferee provisions. In my judgment this is erroneous. Whether the tax of the donor, which may be collected under the transferee provisions, includes the tax on gifts to others than the one against whom the liability is asserted does not seem to be troublesome. The statute is plain: If the transfers have made the donor insolvent all recipients — transferees—are liable in equity. If any one (or more) of the transferees has assumed and agreed to pay the tax. on the transfers he is liable in law. In either case the tax may be collected under section 526 of the Revenue Act of 1932. If, however, the transfers did not make the donor insolvent and none of the transferees has made himself liable at law, then the Commissioner’s sole remedy — which incidentally is efficacious — is to enforce the lien statute.