United States v. Pelzer

Decision Date03 March 1941
Docket NumberNo. 393,393
Citation85 L.Ed. 913,312 U.S. 399,61 S.Ct. 659
PartiesUNITED STATES v. PELZER
CourtU.S. Supreme Court

Messrs. Francis Biddle, Sol. Gen., and Robert H. Jackson, Atty. Gen., for petitioner.

Mr. Robert A. Littleton, of Washington, D.C., for respondent.

Mr. Justice STONE delivered the opinion of the Court.

Decision in this case turns on the question whether certain gifts of property in trust for the benefit of several beneficiaries are gifts of 'future interests' which, in the computation of the gift tax, are, by § 504(b) of the 1932 Revenue Act, 47 Stat. 169, 247, 26 U.S.C.A. Int.Rev.Acts, page 585, denied the benefit, otherwise allowed, of exclusion from the compu- tation to the extent of the first $5,000 of each gift 'made to any person by the donor' during the calendar year.

Sections 501(a) and 502(1) of the 1932 Act, 26 U.S.C.A. Int.Rev.Acts., page 580, impose for each calendar year a tax upon the net amount of transfers 'by any individual * * * of property by gift'. For the purpose of computing the tax § 504(b) provides 'In the case of gifts (other than of future interests in property) made to any person by the donor during the calendar year, the first $5,000 of such gifts * * * shall not * * * be included in the total amount of gifts made during such year'.

In 1932 the taxpayer, respondent here, created a trust for the benefit of his eight grandchildren and any other grandchildren who might afterward be born during the term of the trust. The trustee was directed to accumulate the income for a period of ten years and thereafter to pay an 'equal grandchild's distributive share' of the income to each of the named grandchildren who were then living and twenty-one years of age and to pay a like share of income to each other named grandchild for life after that child should reach the age of twenty-one years. Provision was made whereby grandchildren born after the creation of the trust and during its life were to receive like participation in the income of the trust except as to distributions of income made prior to the birth of such after-born grandchildren, and except that the after-born grandchildren should be paid their shares of the income during their respective minorities after the termination of the ten-year accumulation period. The trust instrument also made gifts over of the share of the income of each grandchild at death, the details of which are not now material. It was further provided that the trust should terminate twenty-one years after death of the last survivor of the named grandchildren, when the corpus of the trust, with accumulated income, was to be distributed in equal shares among the surviving grandchildren and the issue per stirpes of the deceased grandchildren.

During the years 1933, 1934, and 1935, the taxpayer added further amounts of property to the 1932 trust. In 1934 he also made gifts directly to his three granddaughters and created a trust to pay the income in equal shares to his wife and three daughters with gifts over of each share of the corpus of the trust upon the death of the life tenant.

Upon claims for refunds of overpaid taxes upon the transfers made in the years 1933, 1934, and 1935, the commissioner recomputed the tax and allowed one $5,000 exclusion only from the net amounts subject to gift tax given or added in each year to each trust. In the present suit, brought in the Court of Claims, respondent sought to recover overpaid taxes for the years in question on the grounds that the gifts to the beneficiaries were gifts of present not future interests and that the taxpayer in the computation of the tax for each year was entitled to one exclusion of $5,000 for each beneficiary. The court sustained both contentions and gave judgment for respondent accordingly. 31 F.Supp. 770. We granted certiorari October 21, 1940, 311 U.S. 634, 61 S.Ct. 65, 85 L.Ed. —-, to resolve the conflict of the decision below with that of the Seventh Circuit in Ryerson v. United States, 114 F.2d 150.

The Government challenges both grounds of decision below. It argues that only a single $5,000 exclusion is allowable under § 504(b) from the total gifts made to the trust in each calendar year and that if the gifts are deemed to be made to the named beneficiaries of the trust no deduction can be allowed in the case of gifts to the 1932 trust because they were of future interests for which no exclusion is allowed by § 504(b).

We have this day decided the first question, in Helvering v. Hutchings, 312 U.S. 393, 61 S.Ct. 653, 85 L.Ed. —-, in which we held that in the case of gifts in trust the beneficiaries are the persons to whom the gifts are made and that for purposes of computation of the tax § 504(b) excludes the first $5,000 in value of the gift to each beneficiary from the taxable amount of the gifts made in the calendar year. For the reasons stated in our opinion in that case we hold that the first beneficiaries of the trusts in this case are the persons to whom the...

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232 cases
  • Helvering v. Stuart
    • United States
    • United States Supreme Court
    • 16 Noviembre 1942
    ...subject to state law 'unless the language or necessary implication of the section involved' so requires. United States v. Pelzer, 312 U.S. 399, 402, 403, 61 S.Ct. 659, 661, 85 L.Ed. 913. This decision applied federal definition to determine whether an interest in property was called a 'futu......
  • Phelan v. Middle States Oil Corporation
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • 16 Abril 1946
    ...Geist, 316 U.S. 89, 62 S.Ct. 978, 86 L. Ed. 1293; United States v. Forness, 2 Cir., 125 F.2d 928, 937-940; United States v. Pelzer, 312 U.S. 399, 402, 403, 61 S.Ct. 659, 85 L.Ed. 913; Morgan v. Commissioner, 309 U.S. 78, 80, 81, 626, 60 S.Ct. 424, 84 L.Ed. 585; Lyeth v. Hoey, 305 U.S. 188, ......
  • Doll v. Commissioner of Internal Revenue, 12773.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • 11 Mayo 1945
    ...200. 2 Same citations as in note 1. 3 Helvering v. Stuart, 317 U.S. 154, 161, 63 S.Ct. 140, 87 L.Ed. 154; United States v. Pelzer, 312 U.S. 399, 402, 61 S.Ct. 659, 85 L.Ed. 913; Lyeth v. Hoey, 305 U.S. 188, 194, 59 S.Ct. 155, 83 L.Ed. 119, 119 A.L.R. 410. 4 Putnam's Estate v. Commissioner o......
  • Davies Warehouse Co. v. Brown, 5.
    • United States
    • U.S. Temporary Emergency Court of Appeals
    • 28 Mayo 1943
    ...state law. That assumption is based on the fact that the application of federal legislation is nation wide (United States v. Pelzer, 312 U.S. 399, 402, 61 S.Ct. 659, 85 L.Ed. 913) and at times on the fact that the federal program would be impaired if state law were to 8 Spokane & I. E. R. C......
  • Request a trial to view additional results
2 books & journal articles
  • Brief for the petitioners: Gonzales v. State of Oregon *.
    • United States
    • Issues in Law & Medicine Vol. 21 No. 1, June 2005
    • 22 Junio 2005
    ...Turley, 352 U.S. 407 (1957) (same for the word "stolen" in the National Motor Vehicle Theft Act, 18 U.S.C. 2312); United States v. Pelzer, 312 U.S. 399 (1941) (same for the phrase "future interests" in the Revenue Act of 1932, ch. 209, [section] 504(b), 47 Stat. 247). Because nothing in eit......
  • A comparative proposal to reform the United States gift tax annual exclusion.
    • United States
    • Vanderbilt Journal of Transnational Law Vol. 30 No. 5, November 1997
    • 1 Noviembre 1997
    ...No. 72-6635 (1932), reprinted in 1939--1 (Part 2) C.B. 496, 526. (199.) Treas. Reg. [sections] 25.2503-3(a) (as amended in 1983). (200.) 312 U.S. 399 (201.) Treas. Reg. [sections] 25-2503-3(b) (as amended in 1983). (202.) United States v. Pelzer, 312 U.S. 399, 404 (1941). (203.) Id. at 403.......

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