Twining v. COMMISSIONER OF INTERNAL REVENUE
| Decision Date | 01 June 1936 |
| Docket Number | No. 323.,323. |
| Citation | 83 F.2d 954 |
| Parties | TWINING v. COMMISSIONER OF INTERNAL REVENUE. |
| Court | U.S. Court of Appeals — Second Circuit |
Watson Washburn, of New York City (Perkins, Malone & Washburn, of New York City, of counsel), for petitioner.
Robert H. Jackson, Asst. Atty. Gen., and Sewall Key and Francis I. Howley, Sp. Assts. to Atty. Gen., for respondent.
Before MANTON, SWAN, and CHASE, Circuit Judges.
This proceeding relates to the petitioner's income tax for the year 1930. The dispute involves the amount of gain realized on a sale of real estate acquired by the taxpayer under the will of his father who died in 1923, survived by his widow and two sons. By his will the father left the residue of his estate, which included real estate on Long Island, to trustees, to pay the income thereof to his widow during her life, and upon her death the residue was devised one-half to the petitioner, with limitations over if he should not then be living, and one-half to trustees for the other son. The widow died in 1926, survived by the two sons. In 1930 the petitioner sold his half interest in the Long Island real estate. The sole issue in dispute is whether the proper cost basis for computing his gain is the value of the real estate at the date of his father's death or its value at the date of his mother's death. The commissioner and the board took the former date; the petitioner contends it should be the latter.
Section 113(a)(5) of the Revenue Act of 1928 (45 Stat. 818, 819, 26 U.S.C.A. § 113 note) reads in part as follows: The question at issue turns upon whether the first sentence or the last sentence of the above-quoted portion of the section applies to the facts at bar.
By the law of New York, where the land was located, the petitioner took under the will of his father a vested remainder even though enjoyment and possession were postponed until the termination of his mother's equitable life estate and his interest was subject to being divested if he should die before her. New York Real Property Law (Consol.Laws, c. 50) § 40; Moore v. Littel, 41 N.Y. 66, 80. Indeed, it is not disputed that the petitioner took a vested remainder under the will of his father.
In Warner v. Commissioner, 72 F. (2d) 225, this court held that the test for determining when a remainder was "acquired," within the meaning of the Revenue Act, is whether it is vested or contingent. It is true that the revenue act there under consideration was the 1926 act, but the problem of what was meant by the word "acqu...
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