Ross v. United States
Decision Date | 12 November 1963 |
Docket Number | Civ. A. 14597. |
Citation | 226 F. Supp. 333 |
Parties | Nell K. ROSS, Individually, and James G. Harris and Elizabeth Ross Harris, Independent Executors of the Estate of James H. Ross, Deceased, Plaintiffs, v. UNITED STATES of America, Defendant. |
Court | U.S. District Court — Southern District of Texas |
Trotter, Childs, Fortenbach & McClure, Jack B. Manning, Houston, Tex., for plaintiffs.
Robert L. Waters, Atty., Tax Division, Dept. of Justice, Ft. Worth, Tex., and John H. Baumgarten, Asst. U. S. Atty., Houston, Tex., for defendant.
This action for recovery of internal revenue taxes, Title 28, U.S.C.A., Sections 1346(a) (1) and 1402(a) (1), presents the question whether certain gifts to minors are gifts of "future interests in property" within the meaning of Title 26, U.S.C.A., Section 2503(b) and (c).
The plaintiff Nell K. Ross and her now deceased husband made certain gifts in the years 1956 and 1957 to trust funds theretofore created by them for the benefit of their three minor grandchildren. These donations were in the form of cash, realty and securities. This suit turns upon the plaintiff's right to claim the $3,000.00 tax exclusion of Section 2503 (b) in respect to these gifts. Section 2503(b) and (c) reads as follows:
The trust instruments operative at the time of the gifts in question, which were identical in their provisions and different only in respect to the names of the beneficiaries, provided in material parts as follows:
The trust instruments did not expressly authorize the Trustees to invade the corpus of the trusts. The instruments were amended at a later time to expressly authorize them to distribute corpus as well as income in their discretion for the support, maintenance, and education of the beneficiaries. This amendment, being made in 1958, is immaterial to the issue at bar.
"`Future interests' is a legal term, and includes reversions, remainders, and other interests or estates, whether vested or contingent, and whether or not supported by a particular interest or estate, which are limited to commence in use, possession, or enjoyment at some future date or time." Treasury Regulations 79, Article 11, (1936 ed.).
A definitive test of what is necessary to avoid the "future interest" prohibition in the gift tax exclusion statute was enunciated in the landmark case of Fondren v. Commissioner of Internal Revenue, 324 U.S. 18, 20-21, 65 S.Ct. 499, 500-501, 89 L.Ed. 668, decided January 29, 1945:
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Ross v. United States
...The district court granted a summary judgment in favor of the United States, dismissing the taxpayers' claim for a gift tax refund. 226 F.Supp. 333. We The facts are stipulated. November 15, 1956, the taxpayers, Nell K. Ross and her husband James H. Ross, now dead, set up three trusts, one ......
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Quatman v. Comm'r of Internal Revenue
...Court; or unless the trust agreement establishes a guardianship. Ross v. United States, 348 F.2d 577 (C.A. 5, 1965), reversing 226 F.Supp. 333 (S.D. Tex. 1963). The trust instrument in the instant case did not establish a guardianship, nor did it provide for any method by which the trustee ......
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Rollman v. United States
...732 (1961), aff'd 303 F.2d 780 (3d Cir. 1962); Jacob Konner, 35 T.C. 727 (1961); Carl E. Weller, 38 T.C. 790 (1962); Ross v. United States, 226 F.Supp. 333 (S.D.Tex.1963); Josephine N. Thebaut, Memo 1964-102, T.C., April 21, 1964; we agree with the rationale set forth in these Prior to the ......