Court Opinion

ID: 9847114
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:54:13.136093+00
Date Added: 2024-06-11T09:17:01.220258
License: Public Domain

SHEPHERD, Circuit Judge,
dissenting.
As the majority concedes, Congress enacted section 2057 in order to effectuate the remedial purpose of preserving family-owned farms and businesses' — such as the Farnam’s business — by reducing the need for the liquidation of all or part of such family enterprises to pay federal estate taxes. See ante at 584-85. Nevertheless, through today’s opinion, this court ignores not only congressional intent but also the clear meaning of the broad language which Congress selected in order to bring about this purpose.
[O]ur starting point in interpreting a statute is always the language of the statute itself. If the plain language of the statute is unambiguous, that language is conclusive absent clear legislative intent to the contrary. Therefore, if the intent of Congress can be clearly discerned from the statute’s language, the judicial inquiry must end. If, on the other hand, the language of a statute is ambiguous, we should consider “the purpose, the subject matter and the condition of affairs which led to its enactment.” When the meaning of a statute is questionable, it should be given a sensible construction and construed to effectuate the underlying purposes of the law.
United States v. McAllister, 225 F.3d 982, 986 (8th Cir.2000) (quoting United States v. S.A., 129 F.3d 995, 998 (8th Cir.1997)) (internal citations omitted).
Turning to the language of the statute itself, it can not be argued that the term “qualified family-owned business interest” as defined by section 2057(e)(l)(B)’s phrase “an interest in an entity” excludes, by its express terms, an interest in the form of loan indebtedness owed by the family business to family shareholders. Further, in my view, nothing in section 2057 indicates that Congress intended to limit the term “interest” to less than its full meaning, which would include both debt and equity interests. I can only conclude that, had Congress intended to limit the scope of “an interest in an entity” in the way found by the majority, it would have inserted the terms “equity,” “common stock,” “real property,” or the like, before the word “interest” in section 2057, as it has done in limiting the types of interests referred to in other sections of the Internal Revenue Code. See I.R.C. §§ 150(d)(3)(D)(iv) (“equity interest”); 332(d)(4) (“ownership interest”); 351(e)(l)(B)(ii) (“equity interests”). To the *586contrary, the broad language of the statute is sufficient to encompass ownership interest in the form of shareholder loans such as those made by the appellant’s decedents, Lois and Duane Farnam, and entities owned by them, as part of the structuring of their rural auto parts business.
The broad scope of “qualified family-owned business interest” is further evidenced by the House-Senate Committee Conference report on section 2057, which states that a qualified family-owned business interest includes “any interest in a trade or business (regardless of the form in which it is held) with a principal place of business in the United States if ownership of the trade or business is held at least 50 percent by one family.” H.R.Rep. No. 105-220, at 396 (1997) (Conf.Rep.). I agree with the appellants that the parenthetical language from the report demonstrates that Congress intended for the tax deduction to apply to more than equity interests.
No one questions that prior to the deaths of Lois and Duane Farnam, they, along with their son, were vested with full ownership of their family auto parts supply business. Part of that ownership interest was in the form of indebtedness owing to the Farnams, not as mere creditors of the family corporation, but by virtue of family shareholder loans made by the Farnams as part of the family’s plan for the structure and ownership of this family business. To determine, as has the majority, that such debt interest does not constitute a “qualified family-owned business interest” ignores the real life practicalities of family business planning and is directly opposed to the congressional intent reflected in section 2057.
Respectfully, I dissent.