449 U.S. 292 (1981), 80-243, United States v. Darusmont
|Docket Nº:||No. 80-243|
|Citation:||449 U.S. 292, 101 S.Ct. 549, 66 L.Ed.2d 513|
|Party Name:||United States v. Darusmont|
|Case Date:||January 12, 1981|
|Court:||United States Supreme Court|
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF CALIFORNIA
Held: The 1976 amendments of the minimum tax provisions of §§ 56 and 57 of the Internal Revenue Code of 1954 -- increasing the rate of the minimum tax and decreasing the allowable exemption as to enumerated items of tax preference, including the deduction for 50% of any net long-term capital gain, and making the amendments effective for the taxable years beginning after December 31, 1975 -- may be applied to appellee taxpayers' sale of a house, resulting in a long-term capital gain, that took place in 1976 prior to the enactment of the amendments, without violating the Due Process Clause of the Fifth Amendment. The retroactive application of an income tax statute to the entire calendar year in which enactment takes place does not per se violate that Clause. Nor is the retroactive imposition of the minimum tax amendments so harsh and oppressive here as to deny due process, even though appellees would not have owed any minimum tax under the prior provisions. Assuming, arguendo, that personal notice of tax changes is relevant, appellees cannot claim surprise, since the proposed increase in the minimum tax rate had been under public discussion for almost a year before its enactment. And the amendments to the minimum tax did not create a "new tax," since the minimum tax provision was imposed in 1969, and one of the original items of tax preference subjected to the minimum tax was the untaxed portion of any net long-term capital gain.
80-2 USTC ¶ 9671, p. 85,208, 47 AFTR2d ¶ 81-366, p. 81-519, reversed and remanded.
Per curiam opinion.
Appellees instituted this federal income tax refund suit, claiming that the 1976 [101 S.Ct. 550] amendments of the minimum tax provisions contained in §§ 56 and 57 of the Internal Revenue Code of 1954, 26 U.S.C. §§ 56 and 57, could not be applied to a transaction that had taken place in 1976, prior to the enactment of the amendments, without violating the Due Process Clause of the Fifth Amendment.
Appellees prevailed in the District Court. The United States has taken an appeal to this Court pursuant to 2 U.S.C. § 1252, which authorizes a direct appeal from the final judgment of a court of the United States holding an Act of Congress unconstitutional in any civil action to which the United States is a party. And a direct appeal may be taken when, as here, a federal statute has been held unconstitutional as applied to a particular circumstance. Fleming v. Rhodes, 331 U.S. 100 (1947). See United States v. Christian Echoes National Ministry, Inc., 404 U.S. 561, 563 (1972).
The appellees, E. M. Darusmont and B. L. Darusmont, are husband and wife. Mrs. Darusmont is a party to this action solely because she and her husband filed a joint federal income tax return for the calendar year 1976. We hereinafter sometimes refer to the appellees in the singular, either as "appellee" or as "taxpayer."
In April, 1976, Mr. Darusmont was notified by his employer that he was to be transferred from Houston, Tex., to Bakersfield, Cal. Appellee, accordingly, undertook to dispose of his Houston home. That home was a triplex. One of the three units was occupied by the Darusmonts; taxpayer rented the other two. Appellee retained a real estate firm to list the property and to give him advice as to the most advantageous way to sell it. The firm suggested various alternatives (sale as separate condominium units, or as a whole, and either for cash or on the installment basis). The firm and appellee discussed the income tax consequences of each alternative, including the tax on capital gain, the installment method of reporting, and the possibility of deferring a portion of any capital gain by the timely purchase of a replacement home in California.
After considering the several possible methods of structuring the sale, and after computing the projected income tax consequences of each method, appellee decided on an outright
sale. That sale was effected on July 15, 1976, for cash. This resulted in a long-term capital gain to the taxpayer. Because, however, appellee purchased a replacement residence in California, he was able, under § 1034 of the Code, 26 U.S.C. § 1034, to defer recognition of that portion of the gain attributable to the unit of the Texas house that the Darusmonts had occupied. Appellee's recognized gain on the sale of the other two units was $51,332. After taking into account the deduction of 50% of net capital gain then permitted by § 1202 of the Code, 26 U.S.C. § 1202, appellee included the remainder of the gain in his reported taxable income. The Darusmonts timely filed their joint federal income tax return for...
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