Court Opinion

ID: 9450452
Source: CourtListenerOpinion
Date Created: 2023-08-04 16:48:19.216775+00
Date Added: 2024-06-11T17:32:19.722162
License: Public Domain

KILEY, Circuit Judge
(concurring).
I concur in the result achieved by the majority, because I think the stability of the law in this circuit requires that, generally speaking, no panel in this court ought to overrule the decision of another panel, and that only the court en banc should exercise this power.
I share the view of the district court, however, which reluctantly followed Mc-Dermott in its decision, since I have grave doubt about the correctness of the McDermott decision in its reliance upon Gidwitz. In the Gidwitz case the Tax Court had found as a matter of fact that the transfer was in contemplation of death and accordingly was complete in the transferor’s lifetime and thus not includible in his gross estate. There was no reservation by Gidwitz of any dominion over the property transferred. Mc-Dermott, however, as settlor-trustee, reserved the right to distribute or accumulate income from the trust corpus. Yet this court held that the income was not includible in his gross estate because the transfer was as complete “as it was in the Gidwitz case” with no power reserved to “revoke, change or modify” the trust for the settlor’s benefit or by which he could ever acquire any interest in the income from the corpus.
This holding was rejected, after analysis, by the First Circuit in Round v. C. I. R., 332 F.2d 590 (1964), and its soundness has been questioned by legal scholars, Lowndes and Kramer, Federal Estate and Gift Taxes, at 434-35 (1962). The views of the First Circuit and of Lowndes and Kramer are support for the Commissioner’s contention, in the case before us, that the Fabrice transfer, because he reserved dominion over the income until his death, was incomplete until the time of his death. The reservation of dominion over the income in the McDermott ease and in the case before us is what distinguishes them from Gidwitz. The fact that a settlor does not or cannot benefit from the retained power is, in my opinion, immaterial to the precise question here.