288 U.S. 436 (1933), 466, Porter v. Commissioner of Internal Revenue

Docket Nº:No. 466
Citation:288 U.S. 436, 53 S.Ct. 451, 77 L.Ed. 880
Party Name:Porter v. Commissioner of Internal Revenue
Case Date:March 13, 1933
Court:United States Supreme Court

Page 436

288 U.S. 436 (1933)

53 S.Ct. 451, 77 L.Ed. 880



Commissioner of Internal Revenue

No. 466

United States Supreme Court

March 13, 1933

Argued February 9, 1933




1. Section 301(a) of the Revenue Act of 1926 imposes a tax "upon the transfer of the net estate of every decedent," and § 302 requires that, in computing the tax, there shall be included in the gross estate the value at the time of death of all property

(a) To the extent of the interest therein of the decedent at the time of his death,


(d) To the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power, either by the decedent alone or in conjunction with any person, to alter, amend, or revoke. . . .


(1) Subdivision (d) is not limited by (a) to interests of decedent at time of his death. P. 442.

(2) Under subdivision (d), where the decedent had transferred property by deeds of trust reserving power in himself to make a complete revision of the trusts, even to the extent of taking the property from the trustees and beneficiaries named and transferring it absolutely or in trust for the benefit of others, although the

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reservation expressly excluded the making of any change in favor of himself or of his estate, the value of such property at the time of his death was properly included in the gross estate. Pp. 440, 443.

2. Where a gift has been made in trust subject to a power in the donor to change the terms and beneficiaries, although the power does not extend to any changes in favor of the donor or his estate, his death, by ending his control in other respects, serves to pass to the donees a valuable assurance of title. Therefore, Congress constitutionally may provide for including the property so transferred in the computation of the federal "estate tax" by a law passed after the trusts were established and before the death of the donor. P. 443.

60 F.2d 673 affirmed.

Certiorari, 287 U.S. 591, to review the affirmance of an order of the Board of Tax Appeals, 23 B.T.A. 1016, including in the gross estate of a decedent, in measuring the federal transfer tax, property which had been conveyed by him in trust before his death.

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BUTLER, J., lead opinion

MR. JUSTICE BUTLER delivered the opinion of the Court.

The question presented is whether, for the purpose of determining the tax liability of the estate of the deceased, § 302(d) of the Revenue Act of 19261 requires that there shall be included in the value of the gross estate certain bonds that he had transferred in trust.

October 18, 1918, and again on February 1, [53 S.Ct. 452] 1919, decedent transferred to the Bankers' Trust Company certain bonds for the benefit of his daughter and her son. Contemporaneously, he made similar transfers of bonds to the same trustee for the benefit of his son and his son's daughter. November 27, 1926, in order to make provision for two children of his daughter born after the creation of these trusts, he sent the trust company letters purporting to revoke the trusts of which she was a beneficiary, to terminate the interest of all persons therein, and to direct it to deliver the principal and income to itself as trustee according to a new deed then delivered. Each of the five trust agreements included provisions governing the management, investment, and disposition of principal and income, and contained a paragraph reserving to the donor power at any time to alter or modify the indenture and any or all of the trusts in any manner, but expressly excepting any change in favor of himself or his estate.2

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