Starrett v. Commissioner of Internal Revenue
| Decision Date | 06 June 1955 |
| Docket Number | No. 4919.,4919. |
| Citation | 223 F.2d 163 |
| Parties | T. Everett STARRETT, Executor, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. |
| Court | U.S. Court of Appeals — First Circuit |
Walter F. Gibbons, Providence, R. I., with whom James F. Armstrong, Providence, R. I., was on brief, for petitioner.
Melva M. Graney, Special Asst. to the Atty. Gen., with whom H. Brian Holland, Asst. Atty. Gen., and Ellis N. Slack and Lee A. Jackson, Sp. Assts. to Atty. Gen., were on brief, for respondent.
Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.
Frank E. Tingley, a resident of Rhode Island, died October 3, 1948. In the estate tax return filed by his executor, a so-called "marital deduction" under § 812 (e) (1) (F) of the Internal Revenue Code, 26 U.S.C.A. was claimed in the full amount of the value of certain property which passed to the surviving spouse pursuant to paragraph 3, § 1, of Tingley's will, quoted hereinafter. The Commissioner of Internal Revenue ruled that such marital deduction was not allowable, and determined a deficiency accordingly. In the Tax Court of the United States this ruling of the Commissioner was upheld. The executor then duly petitioned this court for review of the Tax Court decision.
The elaborate provisions for this marital deduction were inserted in the Internal Revenue Code by § 361 of the Revenue Act of 1948, 62 Stat. 117, which added a new subsection (e) to § 812 of the Code, reading in part as follows:
As explained in the Report of the Senate Committee on Finance (1948-1 Cum. Bull. 305-06, 332 et seq.), in order to accord to estates of decedents dying in common law states the same favorable treatment, as nearly as may be, that is accorded to estates of decedents dying in community property states, a marital deduction is allowed, speaking generally, for an amount equal to the value of any interest in property which passes or has passed from the decedent to his surviving spouse, up to a maximum of 50 per cent of the value of the adjusted gross estate, subject, however, to certain important qualifications and limitations. In subparagraph (A) of § 812(e) (1) is given the basic rule for the marital deduction in an amount equal to the value of any interest in property which passes or has passed from the decedent to his surviving spouse, but only to the extent that such interest is included in determining the value of the decedent's gross estate. Subparagraph (B) of § 812(e) (1) then restricts the operation of the basic rule in subparagraph (A) by disallowing a marital deduction where, upon the lapse of time, or upon the occurrence of an event or contingency, or upon the failure of an event or contingency to occur, the interest passing to the surviving spouse will terminate. Under subparagraph (B), as written, one of the most usual common law testamentary transfers would not have qualified for the marital deduction, i. e., a life estate to the surviving spouse coupled with a general power of appointment by deed or will and with a devise over in the event of a failure to appoint. Subparagraph (F) of § 812(e) (1) was designed to provide a marital deduction for such a transfer; in other words, subparagraph (F) provides an exception to the terminable interest provisions of subparagraph (B). In explanation, the Report of the Senate committee stated (1948-1 Cum.Bull. 342):
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