Court Opinion

ID: 9650667
Source: CourtListenerOpinion
Date Created: 2023-08-23 15:48:07.464567+00
Date Added: 2024-06-11T13:21:35.793541
License: Public Domain

*755HANEY, Circuit Judge
(dissenting).
The statute authorizes a deduction of the amount of bequests to political divisions and subdivisions for public purposes and of bequests to religious, charitable, scientific and other specified purposes. The applicable regulations provide that if the “trustee is empowered to divert the property or fund, in whole or in part, to a use or purpose which would have rendered it, to the extent that it is subject to such power, not deductible had it been directly so bequeathed, devised, or given by the decedent, deduction will be limited to that portion, if any, of the property or fund which is exempt from an exercise of such power”. Under the terms of the trust the trustee was directed to pay the sister “in case she should, by reason of accident, illness, or other unusual circumstances so require, such additional sum or sums as in the judgment of said trustee may be necessary and reasonable under the existing conditions.”
It is obvious that the trustee is empowered to divert the property to or for the use of the sister, and if the regulation is applied the deduction claimed is not permissible. It is not contended that the'regulation is void. Art. 50, Reg. 63 (1922 Ed.) promulgated under the Revenue Act of 1921, Art. 47, Reg. 68 (1924 Ed.) promulgated under the Revenue Act of 1924, Art. 47, Reg. 70 (1926 Ed.) promulgated under the Revenue Act of 1926, Art. 47, Reg. 80 (1934) promulgated under the Revenue Act of 1926 as amended and supplemented by the Revenue Acts of 1928, 1932 and 1934, all contain the identical provision quoted above. Section 403(a) (3) of the Revenue Act of 1921, 42 Stat. 279, § 303(a) (3) of the Revenue Act of 1924, 26 U.S.C.A. Int.Rev.Acts, page 68, and § 303 (a) (3) of the Revenue Act of 1926, 26 U. S.C.A. Int.Rev.Acts, page 232, all contain a provision practically identical to the one in question. In addition, §§ 401-404 of the Revenue Act of 1928, 26 U.S.C.A. Int.Rev. Acts, page 438, 439; §§ 401-403 of the Revenue Act of 1932; 26 U.S.C.A. Int. Rev.Acts, pages 573-579; §§ 401-406 of the Revenue Act of 1934, 26 U.S.C.A. Int. Rev.Acts, pages 759-765; and §§ 201-203 of the Revenue Act of 1935, 26 U.S.C.A. Int.Rev.Acts, pages 803-806, all made amendments of the estate tax statutes, but none of them bears on the question here involved.
In view of this long-continued interprer tation of that statute by the regulation and the failure of Congress to change it, I think it must be held that the regulation is a part of the statute. Helvering v. J. R. Reynolds Co., 306 U.S. 110, 115, 59 S.Ct. 423, 83 L.Ed. 536; Helvering v. Winmill, 305 U.S. 79, 83, 59 S.Ct. 45, 83 L.Ed. 52. Under the regulation, the existence of the power to pay the sister in whole or in part the entire 'principal, is sufficient to defeat the deduction, regardless of the probability of exercise of that power.
The decision should be reversed.