# Respondents Brief — Gwinn v. Commissioner > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_0237%3A5 ## Record - **Collection:** Supreme Court brief - **Document type:** Respondents Brief - **Published:** January 1, 1932 - **Citation:** 287 U.S. 224 ## Text ai FIL FILE COPY CORRECTED Cor ( No. 31 Inthe Supreme Court of the United States OcToBER TERM, 1932 J. H. Gwixn, BENEFICIARY OF THE ESTATE OF M, A. GWINN, DECEASED, PETITIONER v. Davin BuRNET, COMMISSIONER OF INTERNAL REVENUE ON A WRIT OF CERTIORARI TO THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE NINTH CIRCUIT BRIEF FOR THE RESPONDENT Sk vs ine om “ . sega MOS Pe EE MRE EOIN l pce RRR 5p ANAM PEI PR BV OLE TASER GE LTT IE MES LER ERT 8 = MEEPS q = 2 4 3 y : EO eyes SRT RE eS cat a ey i on cen cohen cate ns se bka meee meee MR Et ere oe ee one Breet Luc abenaaNetean ek 1 MRNAS oo sn enone cme ce eeuccasccmmepmebunronn 2 Statutes and regulations involved_-_--._._------------------- 2 2 3 RMR NE DANIO So. ne ick omen nwaeae case ncescesce Argument: I. The statute requires the inclusion in the decedent’s gross estate of the value of his interest in the joint NN eee ek Contin cue ae ce penn one es 7 II. This Court has already rejected the petitioner’s contentions based on the fictions of the local law _- 9 III. During the lifetime of the decedent it was within his power to sever the joint tenancy and thus to destroy the right of survivorship; the termination of this power on the decedent’s death is the proper subject of the estate tax_.........----.-------- 11 IV. The decedent’s death brought about the shifting of the economic benefits of property, and this event, having taken place after the enactment of the taxing statute. is properly the subject of the estate Mite eet er eee waa eR eee eee Sees 18 Id poe SO Ca ees et oS aero mi 28 Appendix—Statutes and regulations involved____-......------ 29-40 CITATIONS Cases: Bowditch v. Commissioner, 23 B. T. A. 1265__..---------- 24 eer Us Deen, Uo a Ware) ©... 8. Sen ne on ee wenn ns 26, 27 Chase National Bank v. United States, 278 U.8.327_ 5, 15, 16, 18, 22 Commerce Union Trust Co. vy. Commissioner, 21 B. T. A. 174_- 24 Coolidge v. Long, 282 U.S. S62...-.........-=-.--.- ~ * (h) Subdivisions (b), (¢), (d), (e), (f), and (g) of this section shall apply to the transfers, trusts, estates, interests, rights, powers, and relinquishment of powers, as severally enumerated and described there- in, whether made, created, arising, existing, exercised, or relinquished before or after the enactment of this Act. (U.S. C., Title 26, Sec. 1094.) In the Revenue Act of 1926 (Act of February 26, 1926, c. 27, 44 Stat. 9, 70-71; U.S. C. App., Title 26, See. 1094) in Title III (Estate Tax), Section 302 (e) is the same as Section 302 (e) in the Revenue Act of 1924, set out above, except that in the two places in which it appears the phrase ‘‘a fair con- sideration”’ is replaced by the phrase ‘‘an adequate and full consideration’’; and Section 302 (h) is the same in the two Acts, except thet in the Revenue Act of 1926 the words ‘‘ Except as otherwise specifi- cally provided therein’ are inserted at the begin- ning of the subsection. No changes were made in this provision by the Revenue Act of 1928 (Act of May 29, 1928, ec. 852, 45 Stat. 791) or by the Revenue Act of 1932 (Act of June 6, 1932, Publie No. 154). CONGRESSIONAL COMMITTEE REPORT REVENUE ACT OF 1924 In the Report of the Committee on Finance, fen- ate Report No. 398, 68th Congress, 1st Session, it was said (p. 35): 33 Sec. 302 (e): The provisions of the House bill and the existing law have been reworded to secure greater clarity. Sec. 302 (h): This subdivision provides that the property interests which are in- cluded in the gross estate for purposes of the estate tax are those enumerated in this section, whether such interests were created or arose or were relinquished before or after the enactment of this act. A similar provision is included in subdivi- sion (c) [relating to trusts] of section 402 of the existing act [Revenue Act of 1921]. It has seemed desirable to extend this provision expressly to the other property interests set forth in this section. In the Confeience Report, House Report No. 844, 68th Congress, 1st Session, it was said (p. 25): The provision of the House bill with ref- erence to that part of the gross estate made up of property held by the decedent as a joint tenant or as a tenant by the entirety has been reworded for purposes of clarity. * * * REGULATIONS UNDER THE REVENUE Act oF 1924 anp SUBSEQUENT AcTs Regulations 68, promulgated March 26, 1925, un- der the Revenue Act of 1924, provided in part: _ ART. 22. Property held jointly or as ten- ants by the entirety.—The foregoing provi- sions of the statute extend to joint owner- ships, wherein the right of survivorship ex- ists, and specifically reaches property held jointly by the decedent and any other per- son or persons, or by the decedent and spouse as tenants by the entirety, or deposited with any person or institution carrying on a 34 banking business in the name of the de- cedent and any other person and payable to either or the survivor, provided the de- cedent contributed towards the acquisition of the property so held or deposited, or ac- quired it by gift, bequest, devise, or inheri- tance. The statute applies to all classes of property, whether real or personal, where the survivor takes the entire interest therein by right of survivorship, and no interest therein forms a part of the decedent’s es- tate for purposes of administration. It does not include property held by the decedent and any other person or persons as tenants in common. Art. 23. Taxable portion.—The entire value of such property is prima facie a part of the decedent’s gross estate, but as it is not the intent of the statute that there should be so included a greater part or proportion thereof than is represented by an outlay of funds, which, in the first instance, were de- cedent’s own, or more than a fractional part equal to that of the other joint owner where neither had parted with any consideration in its acquirement, facts, which in a given ease bring it within any one of the excep- tions enumerated in the statute, may be submitted by the executor. Whether the value of the entire property, or only a part, or none of it, enters into the make-up of the gross estate, depends upon the following considerations: (1) So much of the property (whether the whole, or a part thereof) as originally belonged to the other joint owner, and which at no time in the past had been received or acquired by the latter from the decedent for less than a fair con- sideration in money or money’s worth, forms no part of the decedent’s gross estate. (2) 35 Where the facts are otherwise the same as in (1), but the decedent paid to such other joint owner a consideration for the interest by him (the decedent) acquired in the prop- erty, then such portion of the value of the property, proportionate to the consideration so paid, constitutes a part of the gross estate. (3) Where the property, or a part thereof, or a part of the consideration wherewith it was acquired, had at any time been acquired by the other joint owner from the decedent as a gift, or for less than a fair considera- tion in money or money’s worth, then such portion of the value of the entire property, proportionate to the consideration, if any, which in the first instance was paid from such other joint owner’s own funds, forms no part of the gross estate. (4) Where the property was acquired by the decedent and his or her surviving spouse as tenants in the entirety by gift, will, or inheritance, then but one-half of the value of the property becomes a part of the gross estate. (5) Where ac- quired by the decedent and the other joint owner as joint tenants by gift, will, or inheri- tance, and their interests are not otherwise specified, or fixed by law, then one-half only of the value of the esnigeaag is a part of the gross estate; or, where so acquired by the decedent and two or more persons, and the interests of the several joint tenants are not otherwise determinable, then the decedent and the other joint tenants surviving him shall each be deemed the owner of an equal fractional part, and the value of one only of such fractional parts is to be included in the gross estate. The following are given as illustrative: (a) Where the decedent furnished the en- tire purchase price, the entire property 36 should be included in the gross estate; (b) where the decedent furnished a part only of the purchase price, only a corresponding portion of the property should be so in- cluded; (c) where the decedent, prior to the acquisition of the property by himself and the other joint owner, gave the latter a sum of money which later constituted such other joint owner’s entire contribution to the pur- chase price of the property, the entire value of the property should be included; (d) where the other joint owner, prior to the ac- quirement of the property, received from the decedent, for less than a fair considera- tion in money or money’s worth, property which thereafter became, as such, or in a converted form, part of the purchase price of the property, the value of the property to be included is to be reduced proportionately to the consideration furnished by the other joint owner in the original transaction; (e) where the decedent furnished no part of the purchase price, no part of the property should be included; (f) where the decedent and spouse acquired the property by will as tenants by the entirety, one-half of the value of the property should be included. Articles 22 and 23 of Regulations 70 (1926 ed.), promulgated August 24, 1926, under the Revenue Act of 1926, are the same as Articles 22 and 23 of Regulations 68 set out above. Articles 22 and 23 of Regulations 70 (1929 ed.), promulgated March 23, 1929, under the Revenue Act of 1926, as amended by the Revenue Act of 1928, are the same as Articles 22 and 23 of Regu- lations 68 set out above, except that the first sen- tence of Article 22 of Regulations 70 (1929 ed.) reads as follows: —_— eset ate ORE BO ASSN ia ARCO MOR MRR ea i 37 The foregoing provisions of the statute ex- tend only to joint ownerships based on the right of survivorship and created subsequent to September 8, 1916. Treasury Decision 4248 (VII-2 Cumulative Bul- letin 358-359), promulgated November 23, 1928, provides: TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C. To Collectors of Internal Revenue and Others Concerned: Article 22 of Regulations 68 and 70 is hereby amended by adding thereto the fol- lowing sentence: The statute applies only to joint owner- ships based on the right of survivorship and created subsequent to September 8, 1916. D. H. Buair, Commissioner of Internal Revenue. Approved November 23, 1928. A. W. MELLon, Secretary of the Treasury. Treasury Decision 4294 (IX-2 Cumulative Bul- letin 425), promulgated July 3, 1930, provides: TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C. To Collectors of Internal Revenue and Others Concerned: The last sentence of article 22 of Regula- tions 68, added thereto by Treasury Decision 4248, is amended to read as follows: The statute extends to joint ownerships wherein the right of survivorship exists, re- — 38 gardless of when such joint ownerships were created. Rost. H. Lucas, Commissioner of Internal Revenue. Approved July 3, 1930. A. W. MELLON, Secretary of the Treasury. Treasury Decision 4295 (IX-2 Cumulative Bul- letin 426), promulgated July 3, 1930, provides: TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C. To Collectors of Internal Revenue and Others Concerned: Article 22 of Regulations 70 (1929 Edi- tion) is hereby amended by substituting in lieu of the first sentence thereof the follow- ing: The foregoing provisions of the statute extend to joint ownerships wherein the right of survivorship exists, regardless of when such joint ownerships were created. Rost. H. Lucas, Commissioner of Internal Revenue. Approved July 3, 1930: A. W. MELLon, Secretary of the Treasury. REGULATIONS UNDER Acts PREVIOUS TO THE REVE- NUE Act oF 1924 Articles 27 and 28 of Regulations 37 (Revised January, 1921), promulgated January 31, 1921, under the Revenue Act of 1918, and Articles 23 and 24 of Regulations 63, promulgated July 27, 1922, under the Revenue Act of 1921, are the same, so far as the present question is concerned, as Articles 22 TR ae a 39 and 23 of Regulations 68 set out above, supra, pp. 33-34. These Regulations have been twice amended by Treasury Decisions which are set out below. Treasury Decision 3951 (VI-1 Cumulative Bul- letin 314-315), promulgated December 29, 1926, provides : TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C. To Collectors of Internal Revenue and Others Concerned: Article 27 of Regulations No. 37 (revised January, 1921), and article 23, Regulations 0. 63, are hereby amended to read as follows: f “Property held jointly or as tenants by the entirety.—The statute provides for the inclusion in the gross estate of interests held jointly by the decedent and any other person or persons and of estates by the entirety. This provision applies only to a joint ten- ancy, or a tenancy by the entirety, created subsequent to the passage of the Revenue Act in force and effect at the time of the de- cedent’s death. This class of property in- cludes all interests, whether in real or per- sonal property, where the survivor takes the entire property by right of survivorship, and consequently the decedent’s interest therein forms no part of his estate for purpose of administration. It does not include inter- ests held as tenants in common where the interest of each tenant passes free from any right of survivorship. ‘The following are examples of this class: Real estate held by joint tenants; real estate held by husband and wife (known as an es- tate by the entirety) ; money deposited in a Se FUME AEE L IIIT BE ORM TOOL AN BK GIO BIT SRE Da ee Bg PLATED i 40 bank or trust company in the joint names of the decedent and another and payable to either or the survivor; and, in general, all securities and other personal property, where the title thereto was vested in the de- cedent and one or more other persons, subject to the right of survivorship.” These amendments apply only to the es- tates of decedents who died prior to the effec- tive date of the Revenue Act of 1924. D. H. Buatr, Commissioner of Internal Revenue. Approved December 29, 1926. A. W. MELLON, Secretary of the Treasury. Treasury Decision 4293 (IX-2 Cumulative Bul- letin 425), promulgated July 3, 1930, provides: TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C. To Collectors of Internal Revenue and Others Concerned: Article 27 of Regulations 37 (revised January, 1921), and article 23, Regulations 63, as amended by Treasury Decision 3951, are hereby amended by striking out the fol- lowing sentence: “This provision applies only to a joint tenancy, or a tenancy by the entirety, created subsequent to the passage of the Revenue Act in force and effect at the time of the decedent’s death.”’ Rost. H. Lucas, Commissioner of Internal Revenue. Approved July 3, 1930: A. W. MELLon, Secretary of the Treasury. U.S. GOVERNMENT PRINTING OFFICE: 1932 Siete & --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_0237%3A5. Public record. Not legal advice.