Petition for Writ of Certiorari — Beattie ex rel. Beattie v. United States

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JOSEPH F. SPANIOL, JR,

CLERK

In The

Supreme Court of the United States

October Term, 1987

fy.

MARY ELIZABETH BEATTIE AND

CATHERINE ANNE BEATTIE, BY AND

THROUGH THEIR NEXT FRIEND,

J. PATRICK BEATTIE,

Petitioners,

Vs.

UNITED STATES OF AMERICA,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ra’

PETITION FOR WRIT OF CERTIORARI

Davin G. SHaFTEL

Suite 700

425 G Street

Anchorage, AK 99501

(907) 276-6015

Counsel for Petitioners

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

or call collect (402) 342-2831

QUESTIONS PRESENTED FOR REVIEW

I. Whether the permanent fund dividend payments

distributed by the State of Alaska to residents of the

State are excludable from gross income as gifts, under

LR.C. § 102.

II. Whether the determination of the dominant rea-

son for making the transfer is a question of fact which

should be decided by the trier of fact, rather than pur-

suant to summary judgment procedure.

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW WW.

TABLE OF CONTENTS

TABLE OF AUTHORITIES ...

OPINION AND ORDER BELOW .......

JURISDICTIONAL STATEMENT

STATUTES INVOLVED

STATEMENT OF THE CASE

REASONS FOR GRANTING THE WRIT...

II.

IU.

The Duberstein standard is inappropriate for a

legal entity transferor, such as a government ........

Taxability of Alaska permanent fund distribu-

tions affects every Alaska resident

The permanent fund dividend payments distrib-

uted by the State of Alaska to residents of the

State are excludable from gross income as gifts,

under I.R.C. § 102

A. The Duberstein Standard Establishes That

The Permanent Fund Distributions Are Gifts

Under LR.C. § 102 _......

B. The ‘‘Detached And Disinterested Generos-

ity’’ Standard (Duberstein) Is Inappropriate

For Analysis Of A Government Transfer.

The Quid Pro Quo Standard Provides A More

Helpful Test For Determining If A Transfer

Is A Gift ...... .

C. LR.C. § 102 Expressly Excludes From Gross

Income Distributions Of Excess Wealth

NAcc eo

IV.

ili

TABLE OF CONTENTS—Continued

Page(s)

. The State Of Alaska Did Not Have Any Type

Of ‘‘Duty”’ Or ‘‘Obligation’’ To Distribute A

Portion Of The State’s Energy Wealth To

The Residents Of Alaska ..

. The Permanent Fund Dividend Transfer Of

Funds Satisfies Both The Alaska Publie Pur-

pose Requirement And The I.R.C. § 102 Gift

Standard

. The State Of Alaska Has Not Taken The

Position That Permanent Fund Dividends

Are Taxable

The District Court erroneously decided this case

pursuant to summary judgment procedure ............

V. CONCLUSION

APPENDIX

OPINION (Ninth Cireuit Court of Appeals) ....App.

ORDER (District Court for the District of

SEO TEES eee C App.

TABLE OF AUTHORITIES

Page(s)

A. Casss:

Allen v. U.S., 541 F.2d 786, 787 (9th Cir., 1976) ............... 11

Bogardus v. Commissioner, 302 U.S. 34, 41, 82 L.

Ed. 32, 37, 58 Sup. Ct. 61 (363 U.S. 278, 2835) ............... 8, 9

Citizens & Southern National Bank of South Caro- -

lina, 243 F. Supp. at 904 12

Commissioner v. Duberstein, 163 U.S. 278, 4 L. Ed.

2d 1218, 80 Sup. Ct. 1190 (1960) ......... passim

Commissioner v. Lo Bue, 351 U.S. 243, 246, 100 L.

Ed. 1142, 1147, 76 Sup. Ct. 800 ..... 8

Dewling v. U.S., 101 F. Supp. 892 (Ct. Cl. 1952) 8

Robertson v. United States, 343 U.S. 71, 714, 96

L. Ed. 1237, 1240, 72 Sup. Ct. 994 8

Sankovich v. Life Ins. Co. of North America, 638

Fa: Rae Cette Pee sa ee: 17

Singer Company v. United States, 449 F.2d 413

(Ct. Cl., 1971) 11

Suber v. Alaska State Bond Comm., 414 P.2d 546

(Ak. 1966) 15

United States v. Hurst, 2 F.2d 73 (Dist. Wyo., 1924)... 8

United States v. Transamerica Corporation, 392

oe f.. oe Qe 12

Zobel v. Williams, 457 U.S. 55, 72 L. Ed. 2d 627,

102 S. Ct. 2309 (1982) 5

B. ConstTItTuTIONAL PROVISIONS:

Alaska Const., Art. 9, Sec. 15 ne eee ere 3,4

TABLE OF AUTHORITIES—Continued

Page(s)

C. Statutes, Session Laws:

L.R.C. § 102 and § 102(a) elated passim

L.R.C. § 170 10, 11

28 U.S.C. § 1346(a) (1) 6

Alaska Session Laws 1980, Cheap. 20 oi... ce cccccsssssssseessneee 2, 4

Alaska Session Laws 1980, Section 1(a) 15

D. OruHer AUTHORITIES:

Revenue Ruling 80-286, 1980-2 C.B. 180... 12

Revenue Ruling 76-185, 1976-1 C.B. 60 eee 12

Revenue Ruling 72-314, 1972-1 C.B. 44 oc 12

Revenue Ruling 57-233, 1957-1, C.B. 60, 61 0... i,

Revenue Ruling 55-609, 1955-2, C.B. 34 ceecceccceeesseeesseeseseeesee 8

EK. Texts anp ARTICLES:

Groh and Erickson, ‘‘The Permanent Fund Dividend

Program,’’ Alaska Journal (Summer 1983) .................. 4

Wright, Miller and Kane, ‘‘Federal Practice and Pro-

cedure’’ (West Pub. Co., 1983), Vol. 10A, p. 238 0. 17

esrerart

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

To the Chief Justice and the Associate Justices of the

Supreme Court of the United States:

Your Petitioners, Mary Elizabeth Beattie and Cath-

erine N. Beattie, hereby petition for a writ of certiorari

to review the decision of the United States Court of Ap-

peals for the Ninth Cireuit which held that the permanent

fund dividend payments distributed by the State of Alaska

to residents of the State are not excludable from gross in-

come as gifts, under I.R.C. § 102.

OPINION AND ORDER BELOW

The United States Court Of Appeals for the Ninth

Circuit filed its Opinion on November 5, 1987. The Opin-

ion has not yet been published. The Ninth Circuit zeview

was from an Order for Summary Judgment, dated March

13, 1986, entered by the United States District Court for

the District of Alaska. Copies of the above-referenced

opinion and order are included in the Appendix accom-

panying this Petition.

ray

JURISDICTION

The judgment sought to be reviewed was filed on No-

vember 5, 1987, by the United States Court of Appeals

For The Ninth Circuit. The statutory provision believed

to confer on the Supreme Court jurisdiction to review the

judgment in question is 28 U.S.C. See. 1254(1).

STATUTES WHICH THE CASE INVOLVES

Internal Revenue Code of 1954:

Sec. 102: Gifts and Inheritances.

(a) General rule-——Gross income does not include the

value of property acquired by gift, bequest, devise, or in-

heritance.

Chapter 21, Session Laws of Alaska (1980) :

Section 1. POLICY, PURPOSES AND FINDINGS.

(a) It is the duty and policy of the state with respect to

the natural resources belonging to it and the income de-

rived from those natural resources to provide for their

use, development, and conservation for the maximum bene-

fit of the people of the state.

(b) The purposes of this Act are:

(1) to provide a mechanism for equitable distri-

bution. to the people of Alaska of at least a portion of the

state’s energy wealth derived from the development and

production of the natural resources belonging to them as

Alaskans;

(2) to encourage persons to maintain their resi-

dence in Alaska and to reduce population turnover in the

state; and

(3) to encourage increased awareness and in-

volvement by the residents of the state in the management

and expenditure of the Alaska permanent fund (art. IX,

see. 15, state constitution).

nent fund dividends provided in AS 43.23 enacted in sec. 2

of this Act, based on full years of residency since January

1, 1959, fairly compensates each state resident for his

equitable ownership of the state’s natural resources since

the date of statehood. It is in the public interest to distri-

bute a portion of Alaska’s energy wealth to the people

of the state.

(d) The legislature also finds that state residents

have been paying increasingly high prices for fossil fuels,

while few have received direct monetary benefits from the

production and development of fossil fuels belonging to

them as Alaskans. It is in the public interest to return to

state residents a portion of the state’s income from oil,

gas, and other mineral production to help offset rising

fuel costs.

(e) The legislature also finds that there exists in the

state a serious problem of population turnover. A sub-

stantial portion of the state’s population is comprised of

individuals who reside in Alaska for only a relatively —

short time. This constant turnover in population leads to

political, economic, and social instability and is harmful

to the state. It is in the public interest for the state to

promote a stable resident population by providing an in-

centive to encourage Alaskans to maintain their residency

in the state.

STATEMENT OF THE CASE

After the discovery and development of oil on Alaska’s

North Slope, the State of Alaska received large surplus

revenues, far in excess of amounts needed for ordinary

governmental functions. In response, in 1976 the State

established the Permanent Fund, into which the State

made a constitutional dedication of at least 25 percent of

all oil and mineral revenues and royalties. (Alaska Const.,

Art. 9, § 15).

As this fund grew, the Alaska Legislature was faced

with public demands that some of the wealth be returned

to the citizenry through tax repeal and cash distributions.

(See generally Groh and Erickson, ‘‘The Permanent Fund

Dividend Program,’’ Alaska Journal (Summer 1983).)

The Legislature responded with a statute which became

law on April 15, 1980 wherein the State provided a means

to give away annually one-half of the earnings of that

fund to its citizenry. (Alaska Session Laws 1980, Chap.

21.)

The statements of Alaska legislators, in the legisla-

tive history of the above Act, established that most legis-

lators viewed the ‘‘dominant reason’’ for the permanent

fund distributions as the distribution of excess oil wealth

to the people of the State of Alaska. (CR 22, Exh. 3,

pp. 6, 8 and 9, Exh. 10, p. 4.) Such a distribution to the

people, who would then decide how the funds would be

spent,-was philosophically attractive to legislators. (Jd.)

The purposes of the Act were stated in the preamble.

Again, the first purpose and the finding in support of

it underscore the legislature’s dominant reason of distri-

buting excess oil wealth to the residents of the State.

Under the 1980 legislation, the amount which any

Alaska resident received was tied to the duration of his or

her residency in Alaska. This 1980 legislation was chal-

lenged as violating the rights of interstate travel and equal

protection. Upon appeal, after the Alaska Supreme Court

upheld the legislation, the Supreme Court of the United

States held that the 1980 Act violated the guarantees of

the Equal Protection Clause of the 14th Amendment.

(Zobel v. Williams, 457 U.S. 55, 72 L.Ed.2d 627, 102 S.Ct.

2309 (1982).)

During the above-described litigation challenging the

1980 legislation, the Alaska Legislature became impatient

with the fact that no distributions had taken place. The

legislature enacted so-called ‘‘backstop”’ legislation, which

was intended to trigger a distribution of funds upon the

Supreme Court’s decision. The ‘‘backstop’’ legislation,

which ultimately became law, directed that permanent

fund amounts be distributed to all residents who had lived

in Alaska for at least six months at the time of their ap-

plication.

Former Commissioner of Revenue, Thomas K. Wil-

liams, in his deposition, testified that all a person needed

to do to obtain a dividend was to file an application which

established that the person satisfied the six-months resi-

dency requirement. No attempt was made to find out

whether the individual applicant did anything positive for

the State in return for the dividend. Whether the person

was a productive member of the State was irrelevant. An

applicant was never required to enter into any kind of

agreement with the State of Alaska that the applicant

would remain in the State or would become a watchdog

of the investments of the permanent fund. (Williams dep.

at 61, 76-80.)

On May 3, 1985, Mary Elizabeth Beattie, a minor then

five years old, filed suit for refund of income taxes paid

with respect to the $1,000.00 and $386.00 permanent fund

distributions which she had received for 1982 and 1983.

On July 23, 1985, her sister, Catherine Anne Beattie, filed

a similar suit, as a class action. A request has not yet

been made for certification of the class. After the first

Beattie case was filed, David J. Greisen filed a refund suit,

which has been heard along with the Beattie cases, in the

courts below. Jurisdiction was conferred upon the federal

district court by virtue of 28 U.S.C. § 1846(a)(1). On

March 14, 1986, the United States District Court for the

District of Alaska granted summary judgment in favor

of the government and against the above-listed three tax-

payers. In an opinion filed on November 5, 1987, the

United States Court of Appeals for the Ninth Circuit af-

firmed the lower court’s order.

During 1982, the State of Alaska paid total permanent

fund dividends of approximately $330,000,000. It has been

estimated that the federal income tax collected on such

dividends was approximately 20 percent, or approximate-

ly $66,000,000. This trend has continued through the pre-

sent date. Therefore, very large amounts of funds have

been diverted from the Alaska economy into the federal

tax coffers.

Vereen

REASONS FOR GRANTING THE WRIT

I. The Duberstein standard is inappropriate for a legal

entity transferor, such as a government.

Analysis of the exeludability of the Alaska permanent

fund distributions under I.R.C. § 102 is hindered by the in-

appropriateness of the Duberstein standard in this type

of fact situation. That standard, framed in terms of emo-

tions such as affection and admiration, is not helpful when

analyzing a transfer by a government transferor, or in-

deed, a transfer by any legal entity.

The Duberstein standard needs to be supplemented by

a more rationally applicable standard for this type of fact

situation. An example of such a standard is the quid pro

quo test, developed by the Court of Claims. This test fo-

cuses on what the transferor received in return, and if such

consideration was substantial, then this test concludes that

a gift did not occur. Application of both the Duberstein

and the quid pro quo tests is discussed in Section III, be-

low, and both of these tests establish that the Alaska per-

manent fund dividend distributions are gifts under I.R.C.

§ 102.

II. Taxability of Alaska permanent fund distributious af-

fects every Alaska resident.

The Internal Revenue Service’s aggressive position

that the Alaska permanent fund distributions are taxable

has diverted a huge amount of funds from the residents of

Alaska to the federal tax accounts. This posture has af-

fected every Alaska resident. The funds are badly needed

in a state suffering severely from economic recession.

III. The permanent fund dividend payments distributed

by the State of Alaska to residents of the State are

excludable from gross income as gifts, under I.R.C.

§ 102.

A. The Duberstein Standard Establishes That The

Permanent Fund Distributions Are Gifts Under

I.R.C. § 102.

LR.C. § 102(a) states, in part: ‘‘Gross income does

not include the value of property acquired by gift, bequest,

devise, or inheritance.’’ Both the Internal Revenue Serv-

ice and the courts have established that a government en-

tity may make a gift under I.R.C. § 102. (Rev. Rul. 55-609,

1955-2 C.B. 34; Rev. Rul. 57-233, 1957-1 C.B. 60; Dewling

v. U.S., 101 F. Supp. 892 (Ct. el. 1952); United States v.

Hurst, 2 F.2d 73 (Dist. Wyo., 1924).)

The United States Supreme Court considered the defi-

nition of a gift under I.R.C. § 102 in the 1960 case of Com-

missioner v. Duberstein, 363 U.S. 278, 4 L. Ed. 2d 1218, 80

Sup. Ct. 1190. In making its decision, the Supreme Court

defined a ‘‘gift’’ under I.R.C. § 102, as follows:

And, importantly, if the payment proceeds primarily

from ‘‘the constraining force of any moral or legal

duty,’’ or from ‘‘the incentive of anticipated benefit’’

of an economic nature, Bogardus v. Commissioner,

302 U.S. 34, 41, 82 L.Ed. 32, 37, 58 Sup. Ct. 61, it is

not a gift. And conversely, ‘‘[w|here the payment is

in return for services rendered, it is irrelevant that

the donor derives no economic benefit from it.’’

Robertson v. Umted States, 343 U.S. 71, 714, 96 L.Ed.

1237, 1240, 72 Sup. Ct. 994. A gift in the statutory

sense, on the other hand, proceeds from a ‘‘detached

and disinterested generosity,’’ Commissioner v. Lo

Bue, 351 U.S. 243, 246, 100 L.Ed. 1142, 1147, 76 Sup.

Ct. 800; ‘‘out of affection, respect, admiration, char-

ity or like wmpulses.’’ Robertson v. United States,

supra (343 U.S. at 714). And in this regard, the most

critical consideration, as the Court was agreed in the

leading case here, is the transferor’s ‘‘intention.’’

Bogardus v. Commissioner, 302 U.S. 34, 43, 82 L.Ed.

32, 38, 58 Sup. Ct. 61. ‘‘What controls is the inten-

tion with which payment, however voluntary, has been

made.’’ (363 U.S. 278, 285.)

We take it that the proper criterion, established by

decision here, is one that inquires what the basic rea-

son for his conduct was in fact—the dominent reason

that explains his action in making the transfer. Fur-

ther than that we do not think it profitable to go. (363

U.S. 278, 286). [Emphasis added.]

The first purpose stated by the Alaska Legislature in

the 1980 Act was the equitable distribution to the people

of Alaska of a portion of the State’s equitable wealth,

which belonged to them as Alaskans. Most legislators

viewed the ‘‘dominant reason’’ for the payments as the

distribution of excess oil wealth to the people of the State

of Alaska. Therefore, pursuant to the Duberstein stan-

dard, this is the intention that should be analyzed when

determining if the payments are ‘‘gifts’’ under I.R.C.

§ 102.

Focusing upon the standards stated in Duberstein,

supra, there was no moral or legal duty requiring the State

of Alaska to make the permanent fund distributions. Nor

did the State have the incentive of anticipated benefit of an

economic nature. Nor were the payments transferred in

return for services rendered. From a positive standpoint,

the State’s distribution of excess natural resource wealt)

to its residents, wealth which is ‘‘belonging to them as

Alaskans,’’ is a transfer which could be described as pro-

ceeding from ‘‘detached and disinterested generosity .. .

out of affection, respect, admiration, charity or like im-

pulses.’’ Therefore, applying the general standards of

Duberstein, supra, the State of Alaska’s permanent fund

payments to its residents qualify as gifts under LR.C.

§ 102.

B. The ‘‘Detached And Disinterested Generosity”

Standard (Duberstein) Is Inappropriate For An-

alysis Of A Government Transfer. The Quid Pro

Quo Standard Provides A More Helpful Test For

Determining If A Transfer Is A Gift.

The Dubersteim case, supra, and the cases relied upon

by the Supreme Court in devising the Duberstein stan-

dards, involved typical business fact situations (employer-

~employee, business associate-business associate). In those

types of situations, transfers may well be motivated by

feelings such as ‘‘affection, respect, admiration, charity

or like impulses.’’ Those emotions are inappropriate to

“a government transferor. However, as has been discussed

above, the parties agree that a government entity may

make a gift under I.R.C. § 102. Therefore, the Duberstein

standard is inappropriate and unhelpful in the government

transferor fact situation.

The Court of Claims has developed a quid pro quo

standard for analysis of gratuitous transfers which pro-

vides a more rational analysis of the instant governmental

transferor type of fact situation. This standard was de-

veloped to analyze transfers made for charitable purposes,

under I.R.C. § 170. The courts have used the Duberstein

definition of a gift under I.R.C. § 102 to define a gift under

aon

a, oe wientavil

LR.C. $170. (Allen v. U.S., 541 F.2d 786, 787 (9th Cir.,

1976).) Therefore, the reverse should be equally correct.

In Singer Company v. United States, 449 F.2d 413

(1971), the Singer Sewing Machine Company distributed

sewing machines to two categories of recipients: schools,

and to various charities. The Court of Claims held that

the distributions to the non-school charities qnalified as

charitable gifts, and therefore were deductible. However,

the distributions to the schools did not so qualify. The

Court of Claims decided that a standard more specific than

that provided by Duberstein was needed. The court

pointed out that numerous other courts had relied on a

more specific standard, when appropriate fact situations

required it, explaining as follows:

In most of those instances where the disinterested

generosity test has not been used the cases have dealt

with the question of deductibility of a transfer as a

‘‘oift’’ in terms of whether the transferor received, or

expected to receive, something in return for that trans-

fer. If the transfer was made with the expectation of

receiving something in return as a quid pro quo for the

transfer then in such an instance the I.R.C. section 170

deduction was denied. (449 F.2d 413, 422).

The Court of Claims concluded that a standard should be

applied which directly focuses upon the specific and un-

usual type of relationship involved in that case. The stan-

dard is as follows:

It is our opinion that if the benefits received, or ex-

pected to be received, are substantial, and meaning by

that, benefits greater than those that inure to the gen-

eral public from transfers for charitable purposes

(which benefits are merely incidental to the transfer),

then in such case we fee! the transferor has received,

or expects to receive, a quid pro quo sufficient to re-

move the transfer from the realm of deductibility

under section 170. (449 F.2d 413, 423.)

* * * * * * * *

. . . however, we do not contend that absolutely no

benefits can be derived from an otherwise charitable

contribution or gift. (See Citizens & Southern Na-

tional Bank of South Carolina, supra, 243 F. Supp. at

904. It is only when the benefits derived are substan-

tial enough to provide a quid pro quo for the transfer

that the deduction is not allowed. (449 F.2d 413, 423.).

[Emphasis added. ]

The quid pro quo standard has been applied by the

Ninth Cireuit (United States v. Transamerica Corporation,

392 F.2d 522 (1968)) and by the Internal Revenue Service

(paraphrasing the quid pro quo standard, in Rev. Rul. 80-

286, 1980-2 C.B. 180, and Rev. Rul. 76-185, 1976-1 C.B. 60).

In addition, the Internal Revenue Service has applied the

exchange concept involved in the quid pro quo doctrine in

Revenue Ruling 72-314, 1972-1 C.B. 44, and in Revenue Rul-

ing 57-233, 1957-1 C.B. 60. In the latter ruling, the Internal

Revenue Service held that payments from the federal gov-

ernment to groups of American Indians, for relocation and

vocational training, were gifts under I.R.C. 4 102. The In-

ternal Revenue Service stressed that ‘‘The Government

receives no consideration for such grants and the Indians

incur no obligations other than to carry out the relocation

and vocational training plans... .’’ (1957-1 C.B. 60, 61.)

Application of the quid pro quo standard to the pres-

ent facts establishes that the permanent fund distribu-

tions are gifts under I.R.C. 4 102. First, a distribution of

excess energy wealth to the people of the State does not

produce a guid pro quo to the State. Second, the popula-

Pa Mey og” SIP MA BY on tog

tion stability goal was only a mere hope. (In fact, Alaska’s

population has declined since the program began.) The re-

cipients do not have to agree to remain in the State of

Alaska. There are no legal or moral obligations in support

of such a population stability concept. Almost all govern-

ment expenditures just as relevantly support such a popu-

lation stability concept. The mere hope, unsupported by

any legal or moral obligation, that the undiscriminated re-

cipients of the permanent fund payments will be deterred

from leaving the State because of receipt of such pay-

ments, cannot be considered a ‘‘substantial benefit.’’

Rather, this generalized, amorphous benefit received by

the State is much more accurately classified as incidental.

Third, nor may the tenuous and indirect benefits of citizen

interest in the management of the permanent fund be con-

sidered a substantial benefit received by the State. An in-

terest in well run government is an incidental benefit,

closely analogous to the benefits that inure to the general

public from transfers for charitable purposes. Therefore,

application of the quid pro quo standard to the instant sit-

uation again establishes that the permanent fund distribu-

tions made by the State of Alaska to its residents were

gifts under I.R.C. § 102.

C. IR.C. § 102 Expressly Excludes From Gross In-

come Distributions Of Excess Wealth.

I.R.C. § 102 expressly excludes from gross income not

only gifts but also property acquired by ‘‘. . . bequest, de-

vise, or inheritance.’’ Therefore, I.R.C. § 102 is stating

that a distribution which is in the nature of excess wealth,

no longer needed by the donor and therefore passed on to

the donee, is excludable from gross income. This is exactly

the instant permanent fund dividend situation. These divi-

dends are distributions of excess energy wealth by the

State of Alaska, which did not need this excess wealth, to

the residents of the State. Therefore, the Alaska Perman-

ent Fund Dividend Program is expressly covered by the

statute, and these distributions are excludable from gross

income.

D. The State Of Alaska Did Not Have Any Type Of

‘‘Duty” Or ‘‘Obligation’’ To Distribute A Portion

Of The State’s Energy Wealth To The Residents

Of Alaska.

The United States has argued that the State of Alaska

distributed the excess energy wealth because of some type

of duty or obligation. This argument is a strained attempt

by the Government to try to fit the instant situation within

the ‘‘moral or legal duty’’ language of the Duberstein

standard. (363 U.S. 278, 285.) The District Court, and

subsequently the Ninth Cireuit, concluded that some kind

of obligation existed, but then had an extremely difficult

time explaining this obligation, and failed to explain where

this obligation was grounded in the record. (635 F. Supp.

at 489; Ninth Circuit Slip Op., at p. 9.)

In fact, the State of Alaska had no legal, moral or

other obligation to distribute a portion of the State’s

energy wealth to Alaska residents. Rather, it was politi-

cally and philosophically advantageous to make such dis-

tributions. There was a substantial amount of public pres-

sure to return excess wealth to the public. Numerous legis-

lators and public officials thought such a distribution was

philosophically attractive.

Finally, the Government and the Ninth Circuit rely

upon the introductory language of the Alaska statute in an

attempt to conclude that a duty exists. This reliance and

reasoning is strained and erroneous. The statute only

states that ‘‘It is the duty and policy of this state with re-

spect to the natural resources belonging to it and the in-

come derived from those natural resources to provide for

their use, development, and conservation for the maximum

benefit of the people of the state.’’ (Chapter 21, Session

Laws of Alaska (1980), Section 1(a).) None of these func-

tions is relevant in any manner to the distribution of ex-

cess wealth involved in the Permanent Fund Dividend Pro-

gram. In summary, the Government’s and the lower

courts’ ‘‘duty’’ and ‘‘obligation’’ characterizations are

conclusions, which are not supported by the factual history

of the present case.

E. The Permanent Fund Dividend Transfer Of Funds

Satisfies Both The Alaska Public Purpose Re-

quirement And The I.R.C. § 102 Gift Standard.

The United States argues that the distributions of ex-

cess energy wealth satisfied the Alaska State Constitu-

tion’s requirement that any appropriation of public money

be made for a public purpose. As a result, the Government

concludes that if the funds were distributed for a public

purpose, they cannot be gifts under I.R.C. § 102.

The issue of whether the Permanent Fund Dividend

Program satisfied the public purpose requirement of the

Alaska Constitution is irrelevant to resolution of the in-

come tax issue under I.R.C. § 102. The Alaska public pur-

pose test is easily satisfied, and the Supreme Court of

Alaska has held that a legislative determination will only

be reviewed pursuant to an arbitrariness standard. (Suber

v. Alaska State Bond Comm., 414 P.2d 546 (Ak. 1966).)

Therefore, the standard to satisfy the minimal public pur-

pose requirement is quite different from the Duberstein

income tax standard under I.R.C. § 102.

F. The State Of Alaska Has Not Taken The Position

That Permanent Fund Dividends Are Taxable.

The United States attempts to argue that the State of

Alaska agreed that permanent fund dividends are taxable

under the federal income tax. This is a disingenuous argu-

ment. The United States has conveniently overlooked key

historical facts. Shortly after the permanent fund divi-

dend legislation was proposed, the Internal Revenue Ser-

vice took a very aggressive and explicit stance that the div-

idends were taxable. (Williams Dep. at 83; Cr 34, exhibit.)

As a result, the State of Alaska asked the Internal Rev-

enue Service for a ruling concerning this matter. The

LR.S. responded with a negative ruling, which concluded

that the permanent fund dividends were taxable. As a re-

sult, the State of Alaska provided notice of the I.R.S.’s

position to recipients of the permanent fund dividends.

Such notices in no way indicated that the State of Alaska

agreed with the LR.S.’s position. At most, the notices

establish the State’s good-faith effort to pass on the posi-

tion of another government entity.

IV. The District Court erroneously decided this case pur-

suant to summary judgment procedure.

In Commissioner v. Duberstein, 363 U.S. 278, 4 L. Ed.

2d 1218, 80 Sup. Ct. 1190, the Supreme Court concluded

that the donor’s intention is controlling as to whether a

‘‘oift’? has been made. (363 U.S. 278, 285.) The Supreme

Court emphasized that the determination of whether the

transfer constitutes a gift under I.R.C. § 102 is a question

of fact, to be determined by the trier of fact on a case-by-

ease basis. (363 U.S. 278, 289-291.) It is well established

that an issue of fact involving intention should not be de-

cided by summary judgment. (Sankovich v. Life Ins. Co.

of North America, 638 F.2d 136 (9th Cir., 1981); Wright,

Miller & Kane, ‘‘Federal Practice and Procedure’’ (West

Pub. Co., 1983), Vol. 10A, p. 238.) Therefore, this case

should have been decided by the trier of fact, after consid-

ering all of the factual evidence. This case should not have

been decided pursuant to summary judgment procedure.

V. CONCLUSION ~-

The Ninth Circuit and the District Court have force

analysis of their decisions through the use of the Duber-

stein standard. Unaided by the Duberstein emotion-based

guidelines, such as ‘‘affection’’ and ‘‘admiration,’’ the

courts focused upon the ‘‘moral or legal duty’’ aspect of

the Duberstein standard, and strained to find an obligation

on the part of the State of Alaska, where no such obliga-

tion existed. Neither the Ninth Circuit’s, nor the District

Court’s, factual conclusions are supported by the record.

The weakness and incorrectness of the lower courts’

opinions in this case are caused by the inappropriateness

of the Duberstein standard with respect to a factual situ-

ation involving a government transferor. The Duberstein

concepts cannot be expanded into the present type of fact

situation without forcing an almost irrational form of an-

alysis. The Duberstein standard needs to be supplemented

with an additional test, such as the quid pro quo standard.

Based upon the reasons and authorities discussed

above, petitioners Mary Elizabeth Beattie and Catherine

Anne Beattie respectfully request that the Supreme Court

grant certiorari; and reverse the judgment below.

RESPECTFULLY SUBMITTED, on this 23rd day of

December, 1987.

/s/ David G. Shaftel

David G. Shaftel

Counsel for Appellants

Mary Elizabeth Beattie and

Catherine Anne Beattie

425 G Street, Suite 700

Anchorage, AK 99501

(907) 276-6015

—

By ea.

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In The

Supreme Court of the United States

October Term, 1987

ray

MARY ELIZABETH BEATTIE AND

CATHERINE ANNE BEATTIE, BY AND

THROUGH THEIR NEXT FRIEND,

J. PATRICK BEATTIE,

Petitioners,

Vs.

UNITED STATES OF AMERICA,

Respondent.

ra’

ON PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CERCUIT

APPENDIX TO

PETITION FOR WRIT OF CERTIORARI

fay

Davin G. SHaFTEeL

Suite 700

425 G Street

Anchorage, AK 99501

(907) 276-6015

Counsel for Petitioners

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App. 1

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Davip J. Greisen, by and through

his father and natural guardian,

Unrrep States oF AMERICA, OPINION

Defendant-A ppellant.

)

Ronatp T. GREISEN, ) No. 86-3728

Plaintiff-Appellant, )

) D.C. No.

v. ) A-85-209-CV

)

Unitep Stares or AMERICA, )

Defendant-Appellant. )

)

Mary ExizaspetH Beattie and )

CaTHERINE ANNE Bzartik£, minors, ) No. 86-3828

through their next friend, J. )

Patrick Beattie, ) D.C. No.

Plainiffs-Appellants. ) CV-A85-209-HRH

v )

)

Argued and Submitted

August 4, 1987—Anchorage, Alaska

Filed November 5, 1987

Before: Alfred T. Goodwin, J. Blaine Anderson and

Melvin Brunetti, Circuit Judges.

Opinion by Judge Goodwin

Appeal from the United States District Court

for the District of Alaska

H. Russel Holland, District Judge, Presiding

SUMMARY

Taxation

Appeal from judgment. Affirmed.

App. 2

In 1976, the people of the State of Alaska established

the Alaska Permanent. , financed by at least 25% of

the state’s annual oil Rae proceeds. In 1980, the

state legislature enacted the Permanent Fund Dividend

Program to distribute annually a portion of the fund’s

earnings to each of the state’s adult residents. In 1982,

the Supreme Court 8truck down as violative of equal pro-

tection the 1980 Act. Anticipating a possible ruling by

the Supreme Court, the Alaska legislature enacted ‘‘back-

stop’’ legislation. The 1982 Act provided dividends to

each eligible resident, including minors. The three appel-

lants sued separately for refunds from the IRS for taxes

allegedly erroneously and illegally collected from them.

[1] The taxpayers contend that summary judgment

was inappropriate because the crucial issue of donative

intent is a question of fact. [2] Here, however, the state

is the transferor and the task of determining the legisla-

tive intent is creating the dividend program presents a

question of law. [3] Greisen claims that at the time of the

adoption of the sixteenth amendment the term ‘‘income’’

was commonly understood to mean a ‘‘coming in’’ of

wealth from a source exterior to the taxpayer. He argues

that Permanent Fund dividends do not come from an out-

side source because they derive from the state’s natural

resources, which already are owned by the people of the

state. [4] This court rejects this conclusion that the

people own the state’s natural resources. [5] Further, the

dividends represent interest from the Permanent Fund,

which consists of a portion of all mineral lease payments

made to the state. Even if the citizens of Alaska owned

the principal of the fund, the interest on that principal

would constitute gross income and thus would be subject

App. 3

to taxation. [6] The taxpayers argue that the dividends

are excludable as gifts. [7] For a transfer to be con-

sidered a gift, donative intent must be ‘‘the dominant rea-

son that explains the decision in making the transfer.’’

[8] This court finds that the preamble and the statement

of purpose of the 1980 Act demonstrate that the legisla-

ture did not intend the dividends to be gifts.

COUNSEL

Steven T. O’Hara and David G. Shaftel, Anchorage, Alas-

ka, for the plaintiffs-appellants.

Ernest J. Brown, Washington, D.C., for the defendant-

appellee.

OPINION

GOODWIN, Circuit Judge:

These three separate claims, consolidated in the dis-

trict court, challenge the assessment of federal income tax

on payments from Alaska’s Permanent Fund Dividend

Program. Plaintiffs seek refund of taxes paid, claiming

that Alaska’s distribution of its energy wealth to the

state’s residents through the program is a ‘“‘gift,’’ ex-

empt from federal taxation. On cross-motions for sum-

mary judgment, the district court granted the govern-

ment’s motion, finding that the payments were not gifts,

that they were ‘‘income’’ within the meaning of the six-

teenth amnedment and the Internal Revenue Code.

In 1976, the people of the State of Alaska amended

their constitution to establish thé Alaska Permanent Fund,

financed by at least 25 percent of the state’s annual oil

and mineral proceeds. Alaska Const., Art. LX, §15. The

App. 4

goals of the fund are: (1) to conserve a portion of the

revenues earned from mineral resources for all generations

of Alaskans; (2) to maintain the safety of the fund’s prin-

cipal while maximizing total return; and (3) to maintain

a savings device allowing maximum use of disposable in-

come from the fund for purposes designated by law. Alaska

Stat. § 37.13.020 (1983).

In 1980, the state legislature enacted the Permanent

Fund Dividend Program to distribute annually a portion

of the fund’s earnings to each of thet state’s adult resi-

dents. The 1980 Act was intended: (1) to provide equit-

able distribution of a portion of the state’s energy wealth

to Alaskans; (2) to encourage people to remain Alaska

residents, thereby reducing population turnover in the

state; and (3) to encourage awareness and interest in the

management of the fund. 1980 Alaska Sess. Laws Ch. 21

§ 1(b).

In 1982, the Supreme Court struck down as violative of

equal protection the 1980 Act, finding that no valid state

interest supported the payment of increased dividends to

long-term residents. Zobel v. Williams, 457 U.S. 55, 65

(1982). Anticipating a possible ruling by the Supreme

Court, the Alaska legislature enacted ‘‘backstop’’ legisla-

tion, which became operative shortly after Zobel, codified

at Alaska Stat. §§ 43.23.005-.095 (1983). The legislature

did not amend the stated purposes of the 1980 Act when

it adopted the 1982 legislation.

The 1982 Act provided dividends of 31,000 to each

eligible resident, including minors.’ The three appellants

'To be eligible, a person must have been a state resident

for at least six consecutive months preceding the date of appli-

cation for the dividend. Alaska Stat. § 43.23.005 (1983).

relied Eee

ER th hat Ea i ir ae EN a i sh

App. 5

sued separately for refunds from the Internal Revenue

Service for taxes allegedly erroneously and illegally col-

lected from them. Mary Elizabeth Beattie, a minor, sued

through her father, J. Patrick Beattie, for a refund of

$44.40 plus interest, costs, and attorney’s fees for taxes

paid on her 1982 and 1983 dividends, totalling $1,386.15.

Her sister, Catherine Anne Beattie, also a minor, sued

through her father for a refund of $57.40, plus interest,

costs and attorney’s fees for taxes paid on the identical

dividend amounts.’

David J. Greisen, a minor, sued through his father,

Ronald E. Greisen, for the recovery of $2 taxes paid on his

1982 dividend of $1,000, plus interest, costs, and attorney’s

fees. Hach of the three appellants filed timely refund

claims with the Internal Revenue Service, all of which were

denied.

We review grants of summary judgment de novo. See

Bloom v. General Truck Drivers, 783 F.2d 1356, 1358 (9th

Cir. 1986). Summary judgment is appropriate when there

is no genuine issue of material fact and the moving party

is entitled to prevail as a matter of law. Fed. R. Civ. P.

56(c).

[1] The taxpayers contend that summary judgment

was inappropriate because the crucial issue of donative

intent is a question of fact. The taxpayers cite Commis-

sioner v. Duberstein, 363 U.S. 278, 289 (1960), which held

that the determination of an individual’s donative intent

2Although Catherine Beattie also sued on behalf of a class

of all similarly situated indivduals, she has not sought class cer-

tification and thus represents only herself at this time.

App. 6

‘‘must be based ultimately on the application of the fact-

finding tribunal’s experience with the mainsprings of hu-

man conduct to the totality of the facts of each case.’’

Duberstein, 363 U.S. at 289. See Olk v. United States, 536

F.2d 876, 878 (9th Cir.), cert. denied, 429 U.S. 920 (1976).

[2] The trial court properly distinguished Duber-

stein and Olk as cases where the property transfers were

motivated by interpersonal relations, thus necessitating a

factual inquiry into the transferor’s state of mind. Beattie

v. United States, 635 F. Supp. 481, 487 (D. Alaska 1986).

By contrast, the state is the transferor in this case, and the

task of determining the legislative intent in creating the

dividend program presents a question of law, not of fact.

Id. at 487-88. See Trustees of Amalgamated Ins. Fund v.

Geltman Indus., 784 F.2d 926, 929 (9th Cir.), cert. denied,

107 S.Ct. 90 (1986) (statutory interpretation is a question

of law); Heard v. Commissioner, 326 F.2d 962, 965-66 (Sth

Cir.), cert. denied, 377 U.S. 978 (1964) (rejecting a tax-

payer’s claim that the Duberstein analysis demonstrated

that his government-paid annuities were a gift, based on

the court’s examination of statutory language and legisla-

tive history). ‘‘Such statutory interpretation does not in-

volve fact-finding. It involves legal analysis beginning

with the plain language of the statute and, where appro-

priate, consideration of the underlying legislative his-

tory.’ Beattie, 635 F.Supp. at 487.

3American Constitutional Party v. Munro, 650 F.2d 184 (9th

Cir. 1981), the sole case relied upon by Griesen for the proposi-

tion that the dominant motivation underlying a legislative trans-

fer is a jury question, did not consider this issue and therefore

provides no support for his claim. That case involved the pro-

priety of a grant of attorneys fees.

App. 7

[3] Greisen argues that the trial court erred in find-

ing that the Alaska Permanent Fund dividends constituted

income for the purposes of the sixteenth amendment, even

if they fall within the definition of income set forth by

LR.C. § 61 (1982). Greisen claims that at the time of the

adoption of the sixteenth amendment the term ‘‘income’’

was commonly understood to mean a ‘‘coming in’’ of

wealth from a source exterior to the taxpayer. Beattie, 635

F. Supp. at 491. He argues that Permanent Fund divid-

ends do not come from an outside source because they de-

rive from the state’s natural resources, which already are

owned by the people of the state, as its ultimate sovereigns.

[4] Accepting arguendo Greisen’s premise that the

people of Alaska have ultimate sovereignty, we reject his

conclusion that the people own the state’s natural re-

sources. ‘‘[n adopting their constitution, the people of the

State of Alaska have very clearly constituted the state

as owner of the natural resources which give rise to the

fund in question.’’ Beattie, 635 F.Supp. at 491. See Alaska

Const. Art. VIII, §1 (proclaiming the state’s policy of

‘‘encourag[ing] the settlement of its land and the de-

velopment of its resources’’) (emphasis added); Alaska

Const. Art. VIII, § 2 (stating that ‘‘[t]he legislature shall

provide for the utilization, development, and conservation

of all natural resources belonging to the State, including

land and waters, for the maximum benefit of its people’’)

(emphasis added).

[5] In any event, Greisen is wrong in arguing that

the dividends would not constitute income if the citizens

owned the natural resources. The dividends represent in-

terest from the Permanent Fund, which consists of a por-

App. 8

tion of all mineral lease payments made to the state. Even

if the citizens of Alaska owned the principal of the fund,

the interest on that principal would constitute gross in-

come and thus would be subject to taxation. See LR.C.

§ 61(a) (4) (1982) (gross income includes interest). As the

trial court observed, if all Alaska citizens owned equal

shares of a corporation that leased out the rights to the

natural resources of Alaska, they still could be taxed on

any dividends paid to them by the corporation. See LR.C.

§ 61(a)(7)(1982) (gross income ineludes_ dividends) ;

Beattie, 635 F.Supp. at 492. In short, if we accept Grei-

sen’s argument that Alaska citizens own the state’s natural

resources, we must conclude that the dividends constitute

income.

[6] Because we hold that the dividend program pay-

ments constitute income, the taxpayers may avoid tax lia-

bility here only if the payments are encompassed within

one of the Internal Revenue Code’s exclusions. See LR.C.

§§ 101-131 (1982). The taxpayers argue that the dividends

are excludable as gifts.4 See LR.C. § 102(a) (1982) (ex-

cluding gifts from the gross income of donees).

[7] Duberstein defines a gift as a transfer resulting

from a ‘‘detached and disinterested generosity .. . out of

‘The Beatties make the novel and unsupported argument

that we should interpret § 102, which excludes from gross in-

come property acquired by “gift, bequest, devise, or inheri-

tance,” as meaning ‘‘that a distribution which is in the nature

of excess wealth, no longer needed by the donor, and there-

fore passed on [to] the donee, is excludable from gross income.”

Given the absence of any indication that Congress intended us

to read the statute as we might a common law precedent, we

may not adopt the Beatties’ interpretation.

App. 9

affection, respect, admiration, charity or like impulses.’’

Duberstein, 363 U.S. at 285 (citations omitted). A transfer

will not be deemed to be a gift it it results from ‘‘the con-

straining force of any moral or legal duty,’’ is given ‘‘in

return for services rendered,’’ or is given from ‘‘the in-

centive of an anticipated [economic] benefit.’’> Id. (cita-

tions omitted). For a transfer to be considered a gift, do-

native intent must be ‘‘the dominant reason that explains

{the decision] in making the transfer.’’ Id. at 286.

[8] We find that the preamble and the statement of

purpose of the 1980 Act demonstrate that the legislature

did not intend the dividends to be gifts.6 The preamble in-

dicates that the dividends were given out of a sense of

moral or legal duty:

It is the duty and policy of the state with respect to

the natural resources belonging to it and the income

derived from those natural resources to provide for

their use, development, and conservation for the maxi-

mum benefit of the people of the state.

1980 Alaska Sess. Laws Ch. 21 § 1(a).

‘The Beatties argue at length that the general standards pro-

vided by Duberstein are not satisfactory for analyzing gifts out-

side of the context of interpersonal relations. They invite us to

adopt what they characterize as a “refinement” of Duberstein

in the quid pro quo analysis of gratuitous transfers under I.R.C.

§ 170, involving gifts made for charitable purposes. See Singer

Co. v. United States, 449 F.2d 413, 423 (Ct.Cl. 1971). No prece-

dent requires us to employ the quid pro quo test, and we de-

cline to make such a sweeping change in the law.

6The 1982 Act was adopted without a preamble or a state-

ment of purpose. Because the 1982 Act was enacted as a result

of the decision in Zobel v. Williams, 457 U.S. 55 (1982), that the

1980 Act was unconstitutional, we find the language of the 1980

Act to be relevant in determining the intent of the legislature

that enacted the 1982 Act.

App. 10

The taxpayers argue that the term ‘‘duty’’ applies to

the use, development, and conservation of the state’s na-

tural resources but not to the disbursement of the pro-

ceeds of those resources to the citizens. However, the plain

language of the preamble belies the taxpayers’ attempt to

parse the statute. Furthermore, the preamble is prefatory

to the statutes setting forth the purposes of the dividend

program, 1980 Alaska Sess. Laws Ch. 21 §1(b), and its

placement demonstrates that it is applicable to the divid-

end program.

The taxpayers also claim that the state had no moral

or legal duty to issue the dividends, regardless of the lan-

guage of the preamble. We agree with the trial court that

[w]hether the obligation felt by the legislature did or

did not exist in law or fact, or whether it was a moral

obligation or some other kind of obligation, makes no

difference. What is important is that the legislature

clearly conveyed the notion that it felt constrained—

that is, required—to make the payments. Such is not

the stuff of which ‘‘gifts’’ are made. Rather than be-

speaking a ‘‘detached and disinterested generosity,’’

we are left with the clear understanding that the legis-

lature saw itself transferring what was due and ow-

ing (although not in a legal sense) to the residents of

the State of Alaska.

Beattie, 635 F.Supp. at 489 (citations omitted).

Because the legislature did not intend to make a gift,

we may not find the dividends to be gifts. See Dubersteim,

363 U.S. at 284-85; Bogardus v. Commissioner, 302 U.S. 34,

41 (1937).

We find the language of the preamble to be disposi-

tive of the issue of donative intent. Furthermore, we also

App. 11

find that the statement of purpose to the 1980 Act demon-

strates that the legislature did not intend to make a gift.

According to the statement of purpose, the 1980 Act was

intended: (1) to allow equitable distribution of part of

the state’s wealth to Alaskans; (2) to encourage people to

remain Alaska residents; and (3) to encourage awareness

and interest in the management of the fund. 1980 Alaska

Sess. Laws Ch. 21 § 1(b)(1).

The taxpayers, noting that the rationale of equit-

able distribution is listed first, argue that the legislature

considered this purpose most important. They claim that

the other two stated goals are merely secondary by-prod-

ucts of the desire to achieve equitable distribution and that

the state would have accomplished these goals through

more effective means if they had been the primary moti-

vation.

Although the legislature may have acted in part out

of ‘‘disinterested generosity,’’ we disagree that such do-

native intent was the ‘‘dominant reason”’ for the dividend

program. See Dubersteim, 363 U.S. at 285-86. The state-

ment of purpose demonstrates that the legislature intended

the dividends to bring the state economic benefits result-

ing from reduced population turnover, as well as less di-

rect benefits arising from increased public awareness of

the fund.’ We may accept the taxpayers’ argument that

7We reject the taxpayers’ argument that this purpose, al-

though stated in the 1980 Act, is inapplicable to the 1982 Act

because the provision differentiating among recipients accord-

ing to length of residence had been declared unconstitutional

by Zobel v. Williams, 457 U.S. 55 (1982). Under the 1982 Act,

individuals still have an incentive to remain in the state to col-

lect the yearly dividends.

App. 12

donative intent was dominent only if we make the imper-

missible assumption that the state legislature included the

latter two purposes only as window dressing.’ We find

that the state legislature lacked the donative intent neces-

sary for a transfer to be considered a gift under Duber-

stem.

The two cases and several revenue rulings relied upon

by taxpayers for the proposition that disbursements to in-

dividuals by a government entity may constitute gifts were

predicated upon findings that Congress had intended to

make gifts. See Dewling v. United States, 101 F.Supp.

892, 893-94 (Ct.Cl. 1952); United States v. Hurst, 2 F.2d

73, 78 (10th Cir. 1924); Rev. Rul. 57-233, 1957-1 C.B. 60,

61; Rev. Rul. 55-609, 1955-2 CB 34, 35. These precedents

have no relevance where, as here, the legislature did not

intend to make gifts.

The district court properly held that payments re-

ceived under Alaska’s Permanent Fund Dividend Program

are subject to federal income tax.

Affirmed.

8Given the express inclusion of the latter two purposes, we

are not swayed by the Beatties’ argument that most Alaska leg-

islators understood the purpose of the dividend program to

be the distribution of excess oil wealth.

App. 13

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ALASKA

MARY ELIZABETH BEATTIE, )

a minor, through her next friend, )

J. PATRICK BEATTIE, No. A85-209 Civil

Plaintiff,

(Consolidated)

vs.

(Filed March

Plaintiff,

Vs.

UNITED STATES OF

AMERICA,

Defendant.

)

UNITED STATES OF ) 13, 1986)

AMERICA, )

)

Defendant. )

)

DAVID J. GREISEN, by and )

through his father and natural )

guardian, RONALD E. GREISEN, )

)

Plaintiff, )

)

vs. )

)

UNITED STATES OF )

AMERICA, ) ORDER

)

Defendant. )

) (Motion for

CATHERINE ANNE ) Summary

BEATTIE, a minor, through her _) Judgment by

next friend, J. PATRICK ) United States

BEATTIE, ) of America

) Granted)

)

App. 14

FACTUAL BACKGROUND

In 1969 after Alaska received $900 million for Prudhoe

Bay oil leases, Governor Keith Miller proposed an ‘‘ Alaska

Permanent Resources Fund”’ to be invested and its earnings

used to fund future state budgets. The plan did not receive

legislative support. Instead these funds and some $400 mil-

lion in interest were used by the state in its operation and

capital budgets. The ‘‘disappearance’’ of this fund caused

a public outery which resulted in the creation of a state

savings account. The bill creating this account was vetoed

by Governor Jay Hammond because it ran afoul of the

Constitution of the State of Alaska which prohibits the

dedication of public revenue for special purposes. There-

after, a constitutional amendment, title LX, section 7, was

passed by the voters to overcome this impediment. The

Alaska Permanent Fund was established on November 2,

1976.

The goals of the Permanent Fund as outlined in AS

37.13.020 are: (1) conservation of a portion of the state’s

mineral resource revenues to benefit all generations of

Alaskans; (2) maintenance of the safety of the principal

while maximizing total return; and (3) management of the

‘Permanent Fund as a savings device to allow maximum

use of disposable income for purposes defined by law.

Funding is derived from three sources: dedicated revenue,

legislative appropriations, and interest earnings.

The Alaska Constitution requires that at least 25%

of all mineral lease rentals, royalties, royalty sale pro-

ceeds, federal mineral revenue sharing payments and

App. 15

bonuses be placed in the fund. Title IX, section 15. Sub-

sequent legislation provided that this percentage be in-

creased to 50% for certain types of oil and gas receipts.

The legislature has made two special appropriations

to the Permanent Fund. The first was for $900 million

in 1981 (ch. 35 SLA 1980) and the second was for $1.8

billion in 1982 (ch. 101 SLA 1982).

In 1980, the state legislature enacted the Permanent

Fund dividend program (ch. 21 SLA 1980, hereinafter

‘*the 1980 Act’’)' to distribute annually a portion of the

Permanent Fund’s earnings directly to the state’s adult

residents. Under the 1980 Act, each Alaska resident 18

years of age or older would receive one dividend per each

year of residency since 1959, the year of statehood. The

dividends would be paid yearly, starting with a value

of $50 per dividend in 1979. The initial payment to long-

term residents would be $1,050 each, while a new resident,

having lived only one month of 1979 in Alaska, would re-

ceive $4 (1/12th of the $50 dividend for 1979).

The legislative intent of the dividend program was:

(1) to provide a mechanism for equitable distribution to

the people of Alaska of at least a portion of the state’s

energy wealth derived from the development and pro-

duction of natural resources belonging to them as Alas-

kans; (2) to encourage persons to maintain their residence

in Alaska and to reduce population turnover in the state;

and (3) to encourage increased, long-term awareness and

involvement by the residents of the state in management

$ Ch. 21 SLA 1980 is set forth in the appendix to this opinion.

App. 16

and expenditure of the Alaska Permanent Fund. Ch. 21

SLA 1980 §1(b).

In 1980 two relatively new residents, Ronald M. Zobel

and Patricia L. Zobel, challenged the Permanent Fund

dividend program (the 1980 Act) on the grounds that the

dividend plan discriminated between new and old resi-

dents of the state without adequate justification. They

claimed that the dividend plan violated their rights to equal

protection and to migrate freely and enjoy equal rights

with other citizens of the state.

The Alaska Supreme Court, in Williams v. Zobel, 619

P.2d 448 (Alaska 1980), held the 1980 Permanent Fund

income distribution statute did not violate the equal pro-

tection clauses of the Alaska and United States Constitu-

tions. Id. at 464. That court carefully examined the stat-

ute’s purposes (listed in the statute itself, ch. 21 SLA

1980 §1(b)) and held ‘‘that the purposes underlying this

statute are legitimate under state law.’’ Id. at 459.

It is important to note that under article [X, section

6 of the Alaska Constitution, no appropriation of public

money may be made ‘‘except for a public purpose’’. It

is therefore clear that there was a ‘‘public purpose’’ be-

hind the Permanent F'und dividend program.

The United States Supreme Court reversed Williams

v. Zobel, supra, holding ‘‘that the Alaska dividend distri-

bution plan violates the guarantees of the Equal Protec-

tion Clause of the Fourteenth Amendment.’’ Zobel v. Wil-

liams, 457 U.S. 55, 65 (1982). The Court pointed out that

the Alaska Supreme Court had relied on a single justifica-

tion to support the retrospective application of the dividend

App. 17

program favoring established residents over new resi-

dents. The justification—to reward citizens for past con-

tributions—was found to be constitutionally unacceptable

by the United States Supreme Court. As stated by the

Court:

In our view Alaska has shown no valid state interests

which are rationally served by the distinction it makes

between citizens who established residence before 1959

and those who have become residents since then.

Id.

Section 4 of the 1980 Act provided that invalidation of

any portion of the dividend distribution plan rendered the

whole plan invalid.

See. 4. If any provision enacted in sec. 2 of this

Act is held to be invalid by the final judgment, de-

cision or order of a court of competent jurisdiction,

then . . . all provisions enacted in sec. 2 of this Act

are invalid and of no force or effect.

Ch. 21 SLA 1980 § 4. Consequently, the decision in Zobel

v. Williams, supra, would have rendered the whole dividend

program invalid if the Alaska legislature had not enacted

substitute legislation.

In anticipation of a possible reversal of the Alaska

Supreme Court decision, the Alaska legislature considered

and passed a bill amending the 1980 Act so that, in the

event the United States Supreme Court found any of its

terms unconstitutional, they would immediately be replaced

with constitutionally sound provisions. This ‘‘backstop’’

legislation (ch. 102 SLA 1982) hecame operative shortly

after the United States Supreme Court decision in Zobel

and was codified as AS 43.23.005-.095. The legislature did ©

App. 18

not amend the purposes of the 1980 Act when it enacted

the ‘‘backstop”’ legislation in 1982.

The 1982 Act provided payment of $1,000 as a 1982

dividend to each eligible resident, including children. The

1983 dividend payment to each resident Alaskan was $386.

In 1983 and thereafter, each Alaskan resident receives, by

law, a pro rata share of the total amount available for dis-

tribution.

The amount available for distribution is one-half of the

average net income of the Permanent Fund over a five-

year period. An individual is eligible for a Permanent

Fund dividend so long as he or she is a state resident of

at least six months’ duration (AS 43.23.005) and intends to

remain permanently in the state (AS 43.23.095(7)).

After enactment of the Permanent Fund dividend pro-

gram, the Department of Revenue sought advice from the

Internal Revenue Service by letter dated November 19,

1980, concerning the tax treatment of the dividends. In

Private Letter Ruling 8121122, dated February 27, 1981,

the IRS informed the state that the dividends were uot

gifts but would be taxable as income. The IRS has also

issued Revenue Ruling 85-39, 1985-13 I.R.B. 5, in which

it determined that monies received by Alaskans from the

Alaska natural resource wealth through the dividend pro-

gram would be taxed as income under section 61 of the

Internal Revenue Code.

After Zobel was decided and the ‘‘backstop’’ legisla-

tion went into effect, it became apparent that some minors

who received only the $1,000 dividend were required to

file an income tax return, even though they would owe no

App. 19

tax. United States Senator Murkowski proposed an amend-

ment to pending federal. legislation that would require a

tax return only of someone who received more than $1,000

in income. Then, as now, a tax return was required of

anyone receiving income in the amount of $1,000 or more.

As ultimately passed on January 6, 1983, section 542(a)

of Public Law No. 97-424 provides that:

Nothing in section 6012(a) of the Internal Revenue

Code of 1954 shall be construed to require the filing

of a return with respect to income taxes ... by an

individual whose only gross income for the taxable

year is a grant of $1,000 received from a State which

made such grants generally to residents of such State.

96 Stat. 2195 (1983). This legislation obviated the need

- for some minors to file returns.

The state began mailing dividend checks after the

Zobel decision. Attached to each check was a statement

that the dividend amount must be reported as taxable

federal income.

II.

THE LAWSUITS

The three cases presently before the Court, which have

been consolidated for purposes of resolving dispositive

motions, each raise the question of the correct tax treat-

ment of dividends received from the Alaska Permanent

Fund. The central issue is whether the Alaska Permanent

Fund dividends are included in gross income.

Case No. A85-209 Civil was brought by Plaintiff Mary

Elizabeth Beattie, an Alaska resident and a minor. J.

Patrick Beattie is Plaintiff’s father. The suit is for the

App. 20

refund of taxes alleged to have been erroneously and il-

legally assessed against and collected from Plaintiff.

In Plaintiff’s income tax return for the calendar year

1983, Plaintiff reported as gross income two payments

from the Alaska Permanent Fund: a $1,000 payment re-

lating to 1982 and a $386.15 payment relating to 1983.

Plaintiff paid the appropriate federal income tax on these

payments. Thereafter, Plaintiff filed a refund claim for

the year 1983 with respect to the payments described above.

On March 14, 1985, the district director mailed to Plaintiff

a formal notice of disallowance of Plaintiff’s claim for

refund.

Plaintiff argues she has no liability for the aforemen-

tioned income tax and is entitled to recover from Defendant

the sum of $44 plus interest, costs, and attorney’s fees.

Plaintiff further states that she is the sole owner of her

claim against the Defendant and has made no assignment

of that claim.

Case No. A85-359 Civil was brought by Plaintiff David

J. Greisen, a minor, by and through his father and natural

guardian, Ronald E. Greisen, for the recovery- of IRS taxes

and interest alleged to have been erroneously and illegally

collected from Plaintiff.

Plaintiff Greisen was born in Anchorage, Alaska, on

August 30, 1982. In order to verify his son’s eligibility for

the Alaska Permanent Fund dividend program, Plaintiff’s

father submitted a form to the State of Alaska on which

Plaintiff’s eligibility for the dividend was verified.

Plaintiff Greisen received $1,000 from the Alaska

Permanent Fund dividend program in 1982. For the cal-

App. 21

endar year ending December 31, 1982, Plaintiff timely filed

a federal income tax return in which the $1,000 Alaska

Permanent Fund dividend was included as gross income.

Plaintiff timely paid the tax shown to be due on his 1982

federal income tax return in the amount of $2. Plaintiff

filed a timely claim for refund of such tax paid for the

year endine December 31, 1982, which claim was filed in .-

May of 1985.

Plaintiff Greisen alleges in his complaint that the

aforementioned $1,000 Alaska Permanent Fund dividend

received by him was not gross income under section 61

of the Internal Revenue Code, 26 U.S.C. § 61, because the

$1,000 constitutes a gift and thus is excludable under sec-

tion 102 of the Code, 26 U.S.C. § 102, and furthermore that

the $1,000 is not of the nature of income as defined by

section 61.

Plaintiff Greisen prays for judgment in the amount

of $2 plus interest, costs, and attorney’s fees, and asks

that the United States and the IRS be enjoined from in-

eluding Alaska Permanent Fund dividends in the gross

income of persons who receive such dividends. Plaintiff

further states that he is the sole owner of his claim against

Defendant and has made no assignment of that claim.

Case No. A85-387 Civil was brought by Plaintiff

Catherine Anne Beattie, an Alaska resident and a minor.

J. Patrick Beattie is Plaintiff’s father. The suit is for

the refund of taxes alleged to have been erroneously and

illegally assessed against and collected from Plaintiff.

This action is brought by Plaintiff Beattie as a class

action, on her own behalf and on behalf of all others simi-

App. 22

larly situated, under the provisions of Rule 23, Federal

Rules of Civil Procedure, for a determination of whether

payments from the Alaska Permanent Fund are gross in-

come under the federal income tax. To date, Plaintiff has

not sought certification of the class as required by Rule

23. Consequently, she currently represents only herself.

In Plaintiff Beattie’s income tax return for the ecal-

endar year 1983, she reported as gross income two pay-

ments from the Alaska Permanent Fund: a $1,000 pay-

ment relating to 1982 and a $386.15 payment relating to

1983. Plaintiff paid the appropriate federal income tax

on these payments.

On approximately May 8, 1985, Plaintiff Beattie filed

a claim for refund for the year 1983 with the appropriate

IRS office. In this claim she requested refund of the in-

come taxes paid with respect to the payments described

above. On approximately June 14, 1985, the district di-

rector mailed to Plaintiff by registered mail a formal no-

tice of Plaintiff’s claim for refund.

Plaintiff Beattie argues that she has no liability for

the income tax and is entitled to recover from Defendant

the sum of $57.40, plus interest, costs, and attorney’s fees.

Plaintiff further states that she is the sole owner of her

claim against Defendant and that she has made no assign-

ment of the claim.

Jurisdiction is conferred upon this Court in all three

eases by virtue of 28 U.S.C. § 1346(a) (1).

Defendant United States of America (hereinafter ‘‘the

Government’’) denies in all three cases that taxes were

assessed or collected erroneously or illegally from the

App. 23

Plaintiffs. Although the Government has denied ‘‘for lack

of knowledge or information’’ that Plaintiff May Eliza-

beth Beattie is the sole owner of her claim against the

United States and has made no assignment of that claim,

it is evident from the memoranda now before the Court

that there realiy is no controversy involving her owner-

ship and non-assignment of her claim. All other basic

facts are admitted with the exception that the Government

maintains that the Plaintiffs are liable for the taxes that

were paid,

Plaintiffs Mary Elizabeth Beattie and David J. Grei-

sen have moved for summary judgment. The Government

opposes these motions and has cross-moved for summary

judgment in its favor. Plaintiff Catherine Anne Beattie

has not moved for summary judgment. The Government

seeks summary judgment against her.

Plaintiff Mary Elizabeth Beattie’s motion for sum-

mary judgment requests the court to hold that, under fed-

eral income tax law and the facts of this case, the Per-

manent Fund dividend is a gift excluded from federal tax-

ation. She argues that the Permanent Fund dividend pay-

ments distributed by the State of Alaska to residents of

the state are excludable from gross income as gifts under

the Internal Revenue Code, section 102. The rationale be-

hind her argument is as follows.

According to Plaintiff, the state’s dominant reason for

making the Permanent Fund dividend payments was to

distribute excess oil wealth. The payments were made

out of detached and disinterested generosity. Neither the

state’s dominant reason, nor its two subsidiary reasons

App. 24

(population stability and interest in management), pro-

vided the State of Alaska with substantial benefits accord-

ing to Plaintiff. Rather, any benefits which accrued to

the state were incidental and closely analogeus to the bene-

fits that inure to the general public from transfers for

charitable purposes.

In his motion for summary judgment, Plaintiff David

J. Greisen moves that the Court hold that the payments

made by the State of Alaska under the Permanent Fund

dividend program are not ‘‘income’’ within the meaning

of the sixteenth amendment to the Constitution of the

United States, and thus Revenue Ruling 85-39, 1985-13

I.R.B. 5, is unconstitutionaland void. In short, his motion

presents the question whether, by virtue of the sixteenth

amendment, Congress has the power to tax as income to

the recipient the payments made by the State of Alaska

under the Permanent Fund dividend program.

Plaintiff Greisen, in his opposition to the Govern-

ment’s cross-motion for summary judgment, more or less

adopts the Beattie ‘‘gift’’ argument and requests the court

to find that the payments made by the state under the

Permanent Fund dividend program are gifts and thus

excludable from gross income under section 102 of the

Internal Revenue Code.

The Government has moved for summary judgment in

its own behalf in all three cases, taking the position that

the Permanent Fund payments are income and they are

not a ‘‘gift’’.. The Government’s argument is founded

upon section 61 of the Internal Revenue Code which states

that, except as otherwise provided, gross income means

App. 25

‘fall income from whatever source derived’’, 26 U.S.C.

§61(a). In defining gross income as broadly as it did,

Congress intended, it is argued, to tax all gains except

those specifically exempted. The Government’s position

is that the only possible exemption of any application in

the present case is the gift exemption; however, the Gov-

ernment views the gift exemption as having no application

to state paid dividends made pursuant to the express legis-

lative purposes outlined in ch. 21 SLA 1980 § 1(b).

Il.

DISCUSSION

This Case May Properly Be Decided

By Summary Judgment

Plaintiff Mary Elizabeth Beattie argues that the de-

termination of whether a transfer constitutes a gift under

section 102 of the Internal Revenue Code is a question of

fact to be determined by a jury. She further argues that

a decision concerning intention is a question of fact which

generally should not be decided by summary judgment.

Sankovich v. Life Insurance Co. of North America, 638

F.2d 136, 140 (9th Cir. 1981); Hotel & Restaurant Em-

ployees & Bartenders International Union v. Rollison, 615

F.2d 788, 793 (9th Cir. 1980).

In support of her position, she quotes the Supreme

Court’s statement in Commissioner v. Duberstein, 363 U.S.

278 (1960) :

Decision . . . must be based ultimately on the appli-

cation of the fact-finding tribunal’s experience with

the mainsprings of human conduct to the totality of

the facts of each case. .. .{T]he multiplicity of rele-

App. 26

vant factual elements, with their various combina-

tions, creating the necessity of ascribing the proper

force to each, confirm us in our conclusion that pri-

mary weight in this area must be given to the con-

clusions of the trier of fact.

Id. at 289. She also refers the court to Wright, Miller,

and Kane’s view that:

Inasmuch as a determination of someone’s state of

mind usually entails the drawing of factual inferences

as to which reasonable men might differ—a function

traditionally left to the jury—summary judgment often

will be an inappropriate means of resolving an issue

of this character.

10A C. Wright, A. Miller & M. Kane, Federal Practice and

Procedure § 2730 at 238 (2d ed. 1983), emphasis added.

Plaintiff Beattie’s conclusion—that this case cannot

be decided on motion for summary judgment but instead

must be decided by a jury after consideration of all the

factual evidence—is incorrect.

While Duberstein does stand for the proposition that

intent is determinative in the gift context and that intent

is a question of fact, the Supreme Court in Duberstein was

dealing with gifts in a business setting where interpersonal

relations motivated transfers of property. Given the inter-

personal context of the transfer in Duberstein, it was im-

portant for the Supreme Court to emphasize that a de-

cision be based on the ‘‘fact-finding tribunal’s experience

with the mainsprings of human conduct.’’ In short, the

focus of inquiry was on the state of mind or intent of an

individual concerning a transfer of property in an inter-

personal context.

App. 27

Similarly, Plaintiff’s aforementioned quotation from

Wright, Miller, and Kane was also directed to an evalua-

tion of an individual’s state of mind.

In the present case, however, the transferor is a

state rather than an individual, and therefore notions of

intent applicable in an interpersonal context have no bear-

ing. Cf., Joshel v. Commissioner, 296 F.2d 645, 647-48

(10th Cir. 1961) (a personal-emotions test is inapplicable

in the case of corporations). We are not dealing with a

normal gift situation where a natural person makes a gift

to someone else under circumstances which may or may not

reflect the motives or intent of the donor. Rather, the State

of Alaska has made Permanent Fund dividend payments

pursuant to the express legislative purposes outlined in

ch. 21 SLA 1980, section 1(b). The nature and purpose

of these Permanent Fund dividend payments must be

gleaned from an interpretation of the authorizing statute.

Such statutory interpretation does not involve fact finding.

It involves leral analysis beginning with the plain language

of the statute and, where appropriate, consideration of

the underlying legislative history.

Plaintiff David J. Griesen argues that a determina-

tion of the legislature’s dominant motivation for making

the Permanent Fund dividend payments is a question of

fact to t » decided by a jury. Plaintiff Greisen’s citation

to Olk v. United States, 536 F.2d 876, 878 (9th Cir. 1976),

cert. denied, 429 U.S. 920 (1976), is inapposite for the

same reason that Plaintiff Beattie’s reliance on Duber-

stein was misplaced. Olk, like Duberstein, involved a de-

termination of the intent of an individual concerning the

transfer of property in an interpersonal context. It did

App. 28

not involve a determination of legislative intent as does

the instant ease.

Legislative intent is a question of law for the court,

not a question of fact for a jury. The court’s task in all

eases of statutory construction is to interpret the words

of the statute in light of the purposes the legislature

sought to serve. Norfolk Redevelopment & Housing Au-

thority v. Chesapeake & Potomac Telephone Co. of Vir-

ginia, — U.S. —, 104 S.Ct. 304, 307 (1983); Chapman v.

Houston Welfare Rights Organization, 441 U.S. 600, 608

(1979).

The court, therefore, concludes that there are no fac-

tual issues to be decided concerning whether the legislature

intended the Permanent Fund dividend payments to be

gifts. Furthermore, the court points out that the parties

taking the position that there are factual issues have not

filed any statement of genuine issues as required by the

local rules.

For the aforementioned reasons, the court is free to

decide this case on motion for summary judgment and will

now proceed to an analysis of the legislative intent behind

the Permanent Fund dividend payments.

Alaska Permanent Fund Dividends

Are Not ‘‘Gifts’’

The leading case concerning whether a transfer of

property is a gift is Commissioner v. Dubersteim, 363 U.S.

278 (1960). In Duberstein, the Court reviewed the estab-

lished cases and made the following series of observations

concerning the meaning of the term ‘‘gift’’ in section

102(a) of the Internal Revenue Code:

App. 29

[T]he statute does not use the term ‘‘gift’’ in the com-

mon-law sense, but in a more colloquial sense. This

Court has indicated that a voluntary executed trans-

fer of his property by one to another, without any con-

sideration or compensation therefor, though a com-

mon-law gift, is not necessarily a ‘‘gift’’ within the

meaning of the statute. For the Court has shown that

the mere absence of a legal or moral obligation to

make such a payment does not establish that it is a

gift. Old Colony Trust Co. v. Commissioner, 279 U.S.

716, 730. And, importantly if the payment proceeds

primarily from ‘‘the constraining force of any moral

or legal duty,’’ or from ‘‘the incentive of anticipated

benefit’’ of an economic nature, Bogardus v. Commis-

stoner, 302 U.S. 34, 41, it is not a gift. And, converse-

ly, ‘‘{w]here the payment is in return for services

rendered, it is irrelevant that the donor derives no

economic benefit from it.’? Robertson v. United

States, 343 U.S. 711, 714. A gift in the statutory sense,

on the other hand, proceeds from a ‘‘detached and dis-

interested generosity,’? Commissioner v. LoBue, 351

U.S. 243, 246; ‘‘out of affection, respect, admiration,

charity or like impulses.’’ Robertson v. United States,

supra, at 714. And in this regard, the most critical

consideration, as the Court was agreed in the leading

ease here, is the transferor’s ‘‘intention’’. Bogardus

v. Commissioner, 302 U.S. 34, 43. ‘‘What controls is

the intention with which payment, however voluntary,

has been made.’’ Jd. at 45 (dissenting opinion).

. . . Moreover, the Bogardus case itself makes it

plain that the donor’s characterization of his action

is not determinative—that there must be an objective

inquiry as to whether what is called a gift amounts to

it in reality. 302 U.S. at 40. It scarcely needs add-

ing that the parties’ expectations or hopes as to the

tax treatment of their conduct in themselves have

nothing to do with the matter.

.. . We take it that the proper criterion, estab-

lished by decision here, is one that inquires what the

App. 30

basic reason for his conduct was in fact—the dominant

reason that explains his action in making the transfer.

363 U.S. 278 at 285-86.

Plaintiffs here argue that the Permanent Fund divid-

end payments were gifts. The Government contends other-

wise. Everyone, by and large, relies upon traditional con-

cepts of what is or is not a gift for purposes of the tax

laws, even though these concepts do not ‘‘fit’’ particularly

well when the alleged donor is a governmental entity.

It should be noted at the outset that the State of Alas-

ka can, in a sense, give away money or land to citizens of

the state without consideration so long as the giving is

supported by a public purpose. Alaska Const. art. IX, § 6.

In its preamble to the statement of purpose for the

Permanent Fund dividend program, the legislature of the

State of Alaska expressly characterizes its undertaking

as being one arising out of ‘‘the duty and policy of the

state with respect to the natural resources belonging to it’’,

ch. 21 SLA 1980 § 1(a). While we may well debate whether

or not the state was in fact under such a duty, it is abun-

dantly clear that the legislature considered itself under

some form of obligation to make the payments in ques-

tion. Whether the obligation felt by the legislature did or

did not exist in law or fact, or whether it was a moral

obligation or some other kind of obligation, makes no dif-

ference. What is important is that the legislature clearly

conveyed the notion that it felt constrained—that is, re-

quired—to make the payments. Such is not the stuff of

which ‘‘gifts’’ are made. Rather than bespeaking a ‘‘de-

tached and disinterested generosity’’, we are left with the

clear understanding that the legislature saw itself trans-

App. 31

ferring what was due and owing (although not in a legal

sense) to the residents of the State of Alaska. Conversely,

there is nothing in the acts authorizing the dividend pay-

ments (ch. 21 SLA 1980 and ch. 102 SLA 1982) or in the

legislative history of those acts which expresses the in-

tent or purpose of effecting a ‘‘gift’’.

For purposes of section 102 of the Internal Revenue

Code and Duberstein, gifts must proceed ‘‘out of affection,

respect, admiration, charity, or like impulses’’. The Per-

manent Fund dividend payments did not proceed from

such considerations. Instead, they proceeded from a legis-

latively perceived coneept of duty in furtherance of a pub-

lie purpose—without which purpose the gift of money

could not be constitutionally possible. Alaska Const. art.

IX, § 6. Had the Alaska Supreme Court not found a sup-

porting public purpose in Williams v. Zobel, supra, 619

P.2d 448, the disbursement would have been unconstitu-

tional by state standards.

The stated public purposes of the acts authorizing

the dividend payments were to: (a) effect an equitable

distribution of a portion of the state’s wealth, (b) en-

courage residential longevity in Alaska, and (c) encour-

age involvement by residents in the management and ex-

penditure of the Permanent Fund. It is clear from the

foregoing stated public purposes that there is no sugges-

tion whatsoever of the payments being made on account

of affection, respect, admiration, charity, or like impulses.

To the extent that the Duberstein concepts of ‘‘gift’’

for purposes of the tax laws are here applicable, the court

concludes that the Permanent Fund dividend payments are

not ‘‘gifts’’. Furthermore, as previously mentioned, these

App. 32

traditional concepts of ‘‘gift’’ for purposes of the tax

laws do not ‘‘fit’’ particularly well when the alleged donor

is a governmental entity. For this reason, the court con-

cludes that a public transfer of money by act of a state

legislature in furtherance of a public purpose is sui generis

—that is, in a class by itself. Such a transfer by a state

legislature of public money for a public purpose is simply

not a gift.

On the other hand, Congress which imposes the federal

income tax can indicate explicitly or through legislative

intent that a payment it makes shall be treated as a gift

and excluded from gross income. See Dewling v. United

States, 101 F. Supp. 892, 893 (Ct. C. 1952), where pay-

ments to citizens for past services constructing the Panama

Canal were determined to be gifts based upon the con-

gressional intent that the payments be viewed as a ‘‘thank-

offering’’ for services rendered. Also see, United States

v. Hurst, 2 F.2d 73 (Wyo. 1924), where the court employed

a similar ‘‘compensation for past services’’ rationale for

establishing the basis of a gift. As stated by the court,

‘¢‘fijf there can be a reward offered . . . for past services

to the government, upon the same theory why cannot a

reward be offered to a discoverer of mineral deposits?’’

Id. at 80. Dewling and Hurst, however, are inapposite to

the present case which involves payments made pursuant

to the act of a state legislature. Although Congress may

indicate that a payment be treated as a gift and excluded

from gross income, a state legislature does not have the

power to control the meaning of federal tax legislation,

nor did the Alaska legislature purport to do so in this

case.

App. 33

The Court concludes that the Permanent Fund divi-

dend payments were made for a public purpose and were

not gifts for purposes of section 102 of the Internal Reve-

nue Code. The court can find in the acts authorizing such

payments no express or other clear legislative intent to

effect a gift.

Permanent Fund Dividend Payments

Are Income

The sixteenth amendment provides that ‘‘incomes,

from whatever source derived,’’ may be taxed. In further-

ance of the sixteenth amendment, Congress in 1954 adopted

section 61(a) of the Internal Revenue Code, which pro-

vides that gross income includes ‘‘all income from what-

ever source derived.’’

The legislative history of section 61 clearly indicates

a congressional intent to tax income to the fullest extent

permitted under the sixteenth amendment. The house re-

port speaks of the ‘‘all-inclusive nature of statutory gross

income’’ and states that the definition of gross income

found in section 61(a) ‘‘is based upon the 16th Amend-

ment [with] the word ‘income’. . . used in its constitu-

tional sense.’’ H.R. Rep. No. 1337, 88d Cong., 2d Sess.

A18; see also, S. Rep. No. 1622, 83d Cong., 2d Sess. 168;

Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 432

(1955) ; Commissioner v. LoBue, 351 U.S. 243, 246 (1956).

Plaintiff Greisen argues that the only reliable defini-

tions of ‘‘income’’ for the purposes of this case are those

formed in the context of construing the Constitution. Defi-

nitions of income made in the context of construing the

Internal Revenue Code are viewed by Plaintiff as ap-

App. 34

plicable in the instant case only to the extent they are con-

sistent with those formed in the context of construing the

Constitution.

Plaintiff argues that the United States Supreme

Court’s definition of income in Commissioner v. Glenshaw

Glass Co., 348 U.S. 426 (1955) cannot be applied in this

case because it was made in the context of construing the

Internal Revenue Code, not the sixteenth amendment.

In Glenshaw Glass the Supreme Court was confronted

with the question of whether punitive or treble damage

awards are taxable. In holding that punitive damages and

the multiplier effect (two-thirds) of treble damages were

income and taxable, the Supreme Court characterized those

damage payments as:

[U]ndeniable accessions to wealth, clearly realized,

and over which the taxpayers have complete dominion.

Td. at 431.

The Government relies upon Glenshaw Glass’s ‘‘un-

deniable accessions to wealth’’ definition of income for

support of its proposition that the Permanent Fund divi-

dend payments are income and are taxable. There is no

question but that the Permanent Fund dividend payments

received by Plaintiffs fit the Glenshaw Glass definition

of income. The difficulty with applying Glenshaw Glass

to the argument made in the instant case is that in Glen-

shaw Glass the taxpayers had conceded that there was no

constitutional barrier to imposition of a tax upon punitive

damages. Accordingly, the United States Supreme Court

never addressed the question of whether such payments

were within the purview of the sixteenth amendment. The

Supreme Court quite properly held:

App. 35

We would do violence to the plain meaning of the

statute and restrict a clear legislative attempt to bring

the taxing power to bear upon all receipts constitu-

tionally taxable were we to say that the payments in

question here are not gross income.

Td. at 482-33. emphasis supplied.

Thus Glenshaw Glass is a statutory construction case

that does not answer the question: Is the pavment made

to the taxpayer ‘‘income’’ for purposes of the sixteenth

amendment to the United States Constitution? While the

above-quoted language may be susceptible to some mis-

understanding since it makes reference to that which is

‘‘constitutionally taxable’’, a careful reading of Glenshaw

Glass leaves no doubt but that the United States Supreme

Court was not asked to and did not address the constitu-

tional question of what is income.

Plaintiff Greisen points to a number of U.S. Supreme

Court decisions to support his conclusion that ‘‘income’”’

as used in the sixteenth amendment means the fruits of

labor and capital, and that it is the ‘‘ecommonly under-

stood meaning of the term’’ income that is appropriate in

the context of construing the Constitution. Merchants’ Loan

& Trust Co. v. Smietanka, 255 U.S. 509, 519 (1921) ; Hisner

v. Macomber, 252 U.S. 189, 207 (1920); United States v.

Safety Car Heating & Lighting Co., 297 U.S. 88, 89 (1936).

See also, Roberts v. Commissioner, 176 F.2d 221, 225 (9th

Cir. 1949).

Employing this definition, Plaintiff Griesen argues

that the Permanent Fund dividend payments are neither

the fruits of labor or capital, nor are they ‘‘income”’ in

the layman’s sense of the word. Plaintiff contends that

App. 36

the commonly understood meaning of the term income at

the time of the adoption of the sixteenth amendment was

such that ‘‘any payment must be from a source external

to the recipient’’. As Plaintiff points out, this is con-

sistent with the term’s entymology as ‘‘a coming in’’ of

wealth from a source exterior to the taxpayer. He argues

that the Permanent Fund dividend payments are not from

an outside or third-party source since it is the people’s

natural resources and the people’s income from those re-

sources which the legislature is disbursing to the people

of the State of Alaska.

If we accept, and for purposes of this discussion the

court does accept, Greisen’s definition of ‘‘income’’, there

is no question but that the payment from the State of

Alaska is an addition or a ‘‘coming in”’’ to the taxpayer’s

wealth. However, it is clear that the payment in question

comes from an exterior source.

Neither the resources in question, nor the proceeds

from the same, nor the income from those proceeds, are the

‘‘property’’ of any person who resides in the State of

Alaska. As Greisen argues, the people in some very real

sense do have ultimate sovereignty and are the ultimate

masters of the state. But that does not make the people

the ‘‘owners’’ of that property which is the subject of this

diseussion. In adopting their constitution, the people of

the State of Alaska have very clearly constituted the state

as owner of the natural resources which give rise to the

fund in question. Alaska Const. art. VIII, §§ 1 and 2.

Article VIII of the Constitution of the State of Alas-

ka deals generally with natural resources which are, of

course, the source from which the Permanent Fund has

App. 37

grown. Article VIII, section 1, provides that ‘‘[i]t is the

policy of the State to encourage the settlement of its land

and the development of its resources by making them avail-

able for maximum use consistent with the public interest.’’

Alaska Const. art. VIII, 41, emphasis added. Section 2

mandates that:

The legislature shall provide for the utilization, de-

velopment, and conservation of all natural resources

belonging to the State, including land and waters, for

the maximum benefit of its people.

Alaska Const. art. VIII, § 2, emphasis added.

It is clear from the plain language of Article VIII

that the people of Alaska have constituted the State of

Alaska as owner of the natural resources which are the

source of the Permanent Fund dividend payments.

Surely the Plaintiffs here would not argue that corpo-

rate dividends are not taxable because the shareholders of

a corpo: ition own the underlying assets and are therefore

simply taking what is already theirs when they receive

dividend checks. While the analogy may not be perfect,

the Court does not see the State of Alaska Permanent

Fund dividends as being substantially different from a

corporate dividend insofar as Greisen’s argument is con-

cerned. Private individuals form corporations, charter

them to own certain assets, and hopefully see the corpo-

ration prosper. The shareholders of the corporation have

the ultimate power to require the corporation to pay divi-

dends. Yet we do not for a moment think that the indi-

vidual shareholders ‘‘own’’ the corporate assets or that

the dividends, when declared, are not taxable. Just as

App. 38

one can create a corporation and by law have it constituted

a separate legal person, so too the people of the State of

Alaska have created a distinct legal person, capable of

owning property and receiving the income from that prop-

erty when they chartered the State of Alaska through the

constitution. The people still hold the ultimate power;

but they do not ‘‘own”’ the natural resources nor the pro-

ceeds from the same nor the Alaska Permanent Fund so

as to be able to claim dividend payments as their own

property before distribution.

Although Greisen does not really address the broader

question of ‘‘what are the outside parameters of ‘in-

comes’ ’’ as used in the sixteenth amendment, the court is

satisfied that payments by the State of Alaska of income

from its Permanent Fund are ‘‘income’”’ to the recipients.

The sixteenth amendment expressly provides that income

‘‘from whatever source derived’’ is taxable, and the plain

meaning of those words is broad enough to encompass

a monetary payment from a state to its residents. Thus

this court concludes that the Alaska Permanent Fund divi-

dend payments are income for purposes of the sixteenth

amendment to the United States Constitution. It neces-

sarily follows that these payments are gross income under

section 61 of the Internal Revenue Code.

IV.

CONCLUSION

Since the Alaska Permanent Fund dividend payments

are income and since these payments are not excludable

from gross income as ‘‘gifts’’, they are therefore subject

to the federal income tax.

App. 39

The motions of Mary Elizabeth Beattie and David J.

Greisen for summary judgment are denied. The Govern-

ment’s cross-motion for summary judgment against Mary

Elizabeth Beattie and David J. Greisen and its motion for

summary judgment against Catherine Anne Beattie are

granted. The Clerk of Court shall enter judgment dis-

missing all three complaints with prejudice.

DATED at Anchorage, Alaska, this 13th day of March,

1986.

/s/ H. Russel Holland

United States District Judge

ec: David Shaftel

Ron Zobel

Steven O’Hara

U.S. Attorney

App. 40

LAWS OF ALASKA

SEAL

1980

Source Chapter No.

FCCSSB 122 21

AN ACT

Providing for the payment of Alaska permanent fund

income to state residents; and providing for an effec-

tive date.

BE IT ENACTED BY THE LEGISLATURE

OF THE STATE OF ALASKA:

THE ACT FOLLOWS ON PAGE 1, LINE 10

Approved by the Governor: April 15, 1980

Actual Effective Date: April 16, 1980 with Sections 1 and

2 retroactive to January 1, 1979.

Chapter 21

AN ACT

Providing for the payment of Alaska permanent fund

income to state residents; and providing for an effec-

tive date.

* Section 1. POLICY, PURPOSES AND FIND-

INGS. (a) It is the duty and policy of the state with re-

spect to the natural resources belonging to it and the in-

come derived from those natural resources to provide for

their use, development, and conservation for the maximum

benefit of the people of the state.

(b) The purposes of this Act are

(1) to provide a mechanism for equitable dis-

tribution to the people of Alaska of at least a portion of

App. 41

the state’s energy wealth derived from the development

and production of the natural resources belonging to thein

as Alaskans;

(2) to encourage persons to maintain their res-

idence in Alaska and to reduce population turnover in the

state; and

(3) to encourage increased awareness and _ in-

volvement by the residents of the state in the management

and expenditure of the Alaska permanent fund (art. LX,

sec. 15, state constitution).

manent fund dividends provided in AS 43.23 enacted in

sec. 2 of this Act, based on full years of residency since

January 1, 1959, fairly compensates each state resident for

his equitable ownership of the state’s natural resources

since the date of statehood. It is in the public interest to

distribute a portion of Alaska’s energy wealth to the peo-

ple of the state.

(d) The legislature also finds that state residents

have been paying increasingly high prices for fossil fuels,

while few have received direct monetary benefits from the

production and development of fossil fuels belonging to

them as Alaskans. It is in the public interest to return to

state residents a portion of the state’s income from oil,

gas, and other mineral production to help offset rising fuel

costs.

(e) The legislature also finds that there exists in the

state a serious problem of population turnover. A sub-

stantial portion of the state’s population is comprised of

individuals who reside in Alaska for only a relatively short

— a CO ee a ee

App. 42

time. This constant turnover in population leads to politi-

cal, economic, and social instability and is harmful to the

state. It is in the public interest for the state to promote a

stable resident population by providing an incentive to en-

courage Alaskans to maintain their residency in the state.

* Sec, 2. AS 43 is amended by adding a new chapter

to read:

CHAPTER 23. PERMANENT FUND DIVIDENDS.

Sec, 43.23.010. ELIGIBILITY FOR PERMAN-

ENT FUND DIVIDEND. (a) An individual who is

eligible under (b) of this section is entitled to one per-

manent fund dividend for each full year that the indi-

vidual is a state resident after January 1, 1959.

(b) For each year, an individual is eligible to re-

ceive payment of the permanent fund dividends for

which he is entitled under this section if he

(1) is at least 18 vears of age; and

(2) is a state resident during all or part of

the year for which the permanent fund dividend is

paid.

dividends to which an individual is entitled under (a)

of this section, a year in which the individual is a state

resident for less than 12 months may not be counted,

but a payment of a permanent fund dividend may be

made for that year under (f) of this section. A year

for which an individual was entitled to payment of a

dividend but failed to file a claim may be counted to

determine the number of dividends under (a) of this

section.

(d) An individual may receive payment of a per-

manent fund dividend-in-a single payment or in 12

equal installments paid monthly by the department.

App. 43

(e) An individual eligible to receive payment of

a permanent fund dividend may elect to defer receipt

of that payment. The commissioner shall adopt by

regulation a plan which, to the extent permitted under

federal law, will allow an individual to defer payment

of federal and state income taxes on the payment of

permanent fund dividends until the individual actually

receives the payment.

(f) If an individual who is eligible under (b) of

this section was a state resident for less than 12

months during the year immediately preceding the

year in which a claim is filed, the individual is entitled

to payment of one prorated dividend. If that individ-

ual is also entitled to dividends under (a) of this sec-

tion based on previous years as a state resident, he is

entitled to receive a prorated payment for the total

number of permanent fund dividends to which he is

entitled under (a) of this section. A prorated dividend

or prorated payment under this subsection shall be

prorated on the basis of the number of months that the

individual was a state resident during the year im-

mediately preceding the year in which the dividend is

claimed.

See. 43.23.020. PROOF OF ELIGIBILITY. (a)

The commissioner shall adopt regulations under the

Administrative Procedure Act (AS 44.62) for deter-

mining the eligibility of individuals. The commis-

sioner may require an individual to provide proof of

eligibility, or he may use other information available

to him from other state departments or agencies to de-

termine the eligibility of individuals. The commis-

sioner may establish procedures for paying the per-

manent fund dividends along with other payments of

money or state benefits.

(b) The department may prescribe and furnish

an application form for claiming a permanent fund

dividend which contains

(1) astatement of eligibility and a certifica-

tion of residency in substantially the following form:

App. 44

I certify that I am a state resident on the date of

this application and I have been a state resident

for — full years and that I understand that my

claim for a permanent fund dividend is deter-

mined by the length of my residence in the state

after January 1, 1959. I also understand that a

false claim of residency to obtain a permanent

fund dividend is a criminal offense and. that if

convicted I will forfeit all permanent fund divi-

dends and that I must repay all permanent fund

dividends which have been paid to me. I under-

stand that this penalty is in addition to any crim-

inal penalties imposed.

(signature of individual)

and

(2) a statement advising the individual that he

may choose to receive the payment of a permanent

fund dividend in a single payment or in 12 -install-

ments payable monthly and a space where the indi-

vidual may indicate his choice of payment.

See. 43.23.0830. AMOUNT OF DIVIDEND. By

December 1 of each year the commissioner shall give

public notice of the value of each permanent fund

dividend to be paid in the following year. The com-

missioner shall determine the value of a permanent

fund dividend by

(1) determining the amount of income of the

Alaska permanent fund transferred to the dividend

fund under AS 43.23.050(b) in the current year, less

the amount, if any, to be repaid in the current year

to the general fund under AS 43.23.050(c) ;

(2) determining the number of permanent fund

dividends paid during the current year; and

(3) dividing the amount determined in (1) of

this section by the amount determined in (2) of this

section.

App. 45

Sec. 43.23.040. PENALTIES AND ENFORCE-

MENT. (a) In addition to any criminal penalties im-

posed by state law, if an individual is convicted of

unsworn falsification for a statement made in a cer-

tification of residency made for purposes of this chap-

ter, and the conviction is not reversed, that individual

is not, and may never become, eligible for a permanent

fund dividend, and he forfeits all permanent fund

dividends paid to him.

(b) If the commissioner determines that a per-

‘ manent fund dividend should not have been claimed by

or paid to an individual, he may use any collection

procedures or remedies available under this title to

recover the payment of a permanent fund dividend

‘vhich was improperly made.

Sec. 43.23.050. DIVIDEND FUND ESTAB-

LISHED. (a) The dividend fund is established as a

separate fund in the state treasury. The dividend

fund shall be administered by the commissioner and

‘may be invested by the commissioner in the same man-

ner provided for the investment of the Alaska per-

manent fund under AS 37.13.120. Money in the div-

idend fund and any interest earned from investment

of money in the dividend fund shall be used to pay

permanent fund dividends annually and to repay loans

from the general fund as provided in (c) of this sec-

tion.

(b) Each year the commissioner shall transfer

to the dividend func 50 percent of the income of the

Alaska permanent fund which was earned during the

fiscal year ending on June 30 of the preceding year

and which is available for distribution under AS 37.-

13.140.

money from the general fund to the dividend fund if

there is not enough money in the dividend fund to pay

each eligible individual an anrual permanent fund

App. 46

dividend valued at $50. One-fifth of the amount trans-

ferred to the dividend fund each vear under (b) of

this section shall be annually withdrawn from the div-

idend fund by the commissioner and deposited in the

general fund to repay appropriations made under this

subsection.

Sec. 43.23.060. DUTIES OF THE DEPART-

MENT. The department shall

(1) by the 10th day of each regular legis-

lative session, present a request to the legislature for

an appropriation from the general fund to the div-

idend fund to satisfy the requirements of AS 43.33.-

050 ;

(2) annually pay permanent fund dividends

from the dividend fund;

(3) adopt regulations under the Adminis-

trative Procedure Act (AS 44.62) which establish pro-

cedures and time limits for claiming a permanent fund

dividend; the department shall set the time limit for

applications for permanent fund dividends so that

single-payment permanent fund dividends for a year

are paid before October 15 of the following year and

so that installment-payment permanent fund dividends

for a year begin by October 15 of the following year;

and

(4) assist residents of rural areas who be-

cause of language, illness, old age, or inaccessibility

to public transportation need assistance to establish

eligibility and to apply for permanent fund dividends.

See. 43.23.070. EXEMPTION OF PERMA-

NENT FUND DIVIDENDS. (a) An eligible indi-

vidual may assign, pledge, or encumber not more than

50 percent of the annual permanent fund dividends

which are due and payable or which may become due

and payable to the individual.

App. 47

(b) Fifty percent of the annual permanent fund

dividends payable to an individual is exempt from

levy, execution, garnishment, attachment, and any

other remedy for the collection of a debt.

dividends paid to an individual which are not held

separately from other money of the individual is ex-

empt from levy, execution, garnishment, attachment

and any other remedy for the collection of a debt.

Sec. 43.23.080. ELIGIBILITY FOR STATE

PUBLIC ASSISTANCE PAYMENTS. In determin-

ing the eligibility of an individual for old age assist-

ance under AS 47.25.4380 - 47.25.610, aid to the blind

under AS 47.25.620 - 47.25.780, or aid to the »perma-

nently and totally disabled under AS 47.25.790-

47.25.970, the Department of Health and Social Serv-

ices may include as income of the individual only the

amount of the permanent fund dividends in excess of

$1,500 paid to the individual for a year.

Sec. 43.23.090. TAX EXEMPTION. Permanent

fund dividends provided under this chapter are ex-

empt from taxation under AS 43.20.

Sec. 43.23.100. DEFINITIONS. In this chapter,

(1) ‘‘Alaska permanent fund’’ means the

fund established by art. LX, sec. 15, of the state con-

stitution ;

(2) ‘‘ecommissioner’’ means the commission-

er of revenue;

(3) ‘*department’’ means the Department of

Revenue;

(4)‘‘dividend fund’’ means the fund estab-

lished by AS 43.23.050;

(5) ‘‘individual’’ means a natural person;

(6) ‘‘permanent fund dividend’’ means a

right to receive a payment of money from the dividend

fund;

App. 48

(7) ‘‘state resident’? means an individual

who is physically present in the state witk the intent to

remain permanently in the state or, if he is not phy-

sically present in the state, intends to return to the

state and he is absent for the following reasons:

(A) voeational, professional or other

special education for which a comparable pro-

gram was not reasonably available in the state,

(B) postsecondary education,

(D) medical treatment,

(E) service in Congress, or

(F) other reasons which the commis-

sioner may establish by regulation under the Ad-

ministrative Procedure Act (AS 44.62) ;

(8) ‘‘year’’ means a calendar year.

* Sec. 3. For 1979 the value of a permanent fund

dividend is $50. The payment of permanent fund divid-

ends for 1979 shall be made from an appropriation from

the general fund to the dividend fund for that purpose.

The amount appropriated from the general fund to pay

permanent fund dividends for 1979 less 50 percent of the

income of the Alaska permanent fund earned during the

fiscal year ending June 30, 1978, is a loan to the dividend

fund from the general fund which shall be repaid as pro-

vided in AS 43.23.050(¢) enacted by sec. 2 of this Act. The

Department of Revenue shall by July 1, 1980, prescribe

and make available an application form for claiming per-

manent fund dividends for 1979. The Department of

Revenue shall mail the form to each individual who, before

July 1, 1980, filed a resident or part-year resident Alaska

App. 49

net income tax return for the 1979 tax year under AS 43.20.

An eligible individual may receive payment of permanent

fund dividends for 1979 if he applies to the Department

of Revenue on the form prescribed by the department no

later than September 1, 1980. The application must be ac-

companied by a statement of eligibility as required by

AS 43.23.020 enacted it.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.