Gift tax

“ That in itself would be a legitimate ground for taxing all gifts at the same rates as legacies, as was done by the gift tax; but, since the object is to protect the revenue to be derived from the estate tax, the government is not bound to tax every gift without regard to its relation to the end sought or the convenience and expense of the government in levying and collecting it. It may aim at the evil where it exists and select for taxation that class of gifts which experience has shown tends most to defeat the estate tax. ”

“ Gifts of amounts in excess of $5,000 to one donee in any one year, which alone are taxed, are usually made from substantial fortunes which, in the generality of cases, are accumulated relatively late in life, and the great bulk of which, if not given away in life, would pass at death. Nor can it be denied that the cost and inconvenience of collecting the tax on earlier, generally smaller, and less frequent gifts, which led to the repeal of the gift tax, may not themselves require or justify a distinction between them and gifts made nearer to the time of death. ”

“ If the parties had without more gone ahead and voluntarily unravelled their business interests on the basis of this compromise, there would be no question that the gift tax would be payable. For there would have been a 'promise or agreement' that effected a relinquishment of marital rights in property. It therefore would fall under the ban of the provision of the estate tax [5] which by judicial construction has been incorporated into the gift tax statute. ”

“ When the gift tax was enacted Congress was aware that the essence of a transfer is the passage of control over the economic benefits of property rather than any technical changes in its title. See Burnet v. Guggenheim, 288 U.S. 280, 287, 53 S.Ct. 369, 371, 77 L.Ed. 748. Following the enactment of the gift tax statute this Court in Reinecke v. Northern Trust Company, 1929, 278 U.S. 339, 49 S.Ct. 123, 73 L.Ed. 410, 66 A.L.R. 397, held that the relinquishment at death of a power of revocation of a trust for the benefit of its donor was a taxable transfer. Cf. ”

“ The gift tax was imposed largely to prevent evasion of the estate tax by gifts inter vivos, and evasion of the income tax by the splitting up of fortunes and the consequent diminution of surtaxes. If, as is thought by the Court, Congress intended the gift tax to apply to all gifts during the calendar year, its purpose may well have been to prevent evasion of the gift tax itself, by the making of gifts after its introduction and prior to its passage. Is Congress powerless to prevent such evasion by the vigilant and ingenious? ”

“ Art. 8. Thus on finding that a transfer in the circumstances of a particular case is not made in the ordinary course of business, the transfer becomes subject to the gift tax to the extent that it is not made 'for an adequate and full consideration in money or money's worth'. ”

“ The present tax is not laid on the donor, but on the beneficiary; the gift taxed is not one long since completed, but one which never passed to the beneficiaries beyond recall until the death of the donor; and the value of the gift at that operative moment, rather than at some later date, is the basis of the tax.
So long as the privilege of succession has not been fully exercised it may be reached by the tax. ”

“ And they show that to impose liability for the tax, as a gift tax, upon the estate, as they in terms require, is, in effect, to exact tribute from the gains or property of one measured by the gains or property of another. ”

“ A gift would seem not to be complete, for purposes of the tax, where the donor has reserved the power to determine whether the donees ultimately entitled to receive and enjoy the property are of such a class as to exempt the gift from taxation. ”

“ Petitioner argues that since there were no donees in existence on the date of the creation of the trust who could accept the remainders, the transfers cannot be completed gifts. The gift tax law itself has no such qualifications. It imposes a tax 'upon the transfer * * * of property by gift.' And Treasury Regulation 79, Art. ”

“ A gift tax cannot be imposed on gifts consummated before the taxing statute was adopted. [241] A conclusive presumption that gifts made within two years of death were made in contemplation of death was condemned as arbitrary and capricious even with respect to subsequent transfers. [242] A tax may be made retroactive for a short period to include profits made while it was in process of enactment. A special income tax on profits realized by the sale of silver, retroactive for 35 days, which was approximately the period during which the silver purchase bill was before Congress, was held valid. ”

“ Single transactions, it is well known, may be susceptible to different, and inconsistent, theories of taxation. In the case before us, the taxpayer treated moneys derived from her deceased employer's estate as a gift and paid gift tax on the transfer. ”

“ Under the statute the gift tax amounts in some instances to a security, a form of down-payment on the estate tax which secures the eventual payment of the latter; it is in no sense double taxation as the taxpayer suggests. ”

“ For many years Congress has sought vigorously to close tax loopholes against ingenious trust instruments. [3] Even though these concepts of property and value may be slippery and elusive they can not escape taxation so long as they are used in the world of business. The language of the gift tax statute, 'property * * * real or personal, tangible or intangible', is broad enough to include property, however conceptual or contingent. ”

“ It seems to us clear that with the judicial history of the difficulties in estate and gift taxes as to the transfer of marital rights, when Congress expressly provided that relinquishment of dower, curtesy or other statutory estate was not 'consideration' for estate tax purposes and left the gift tax provision without such a limitation, it intended that these rights be accorded a different treatment under these sections. ”

“ If enforceability under the decree is the criterion, a gift tax is due to the extent this indebtedness is reflected in the amount determined by the Commissioner to represent the value attributable to release of marital rights.↑ In none of the twelve jurisdictions in which decisions in point have been found has it been held that a suit could not be brought on the contract in a situation like that before us. ”

“ And while today the Court sustains only a death transfer tax, its theories are equally serviceable to sustain an income or excise tax on dividends from such stock or interest on bonds or a sales tax, or a gift tax. Whether each chartering or issuing state will be permitted to calculate its tax on some formula that will consider the total property owned by the decedent, I do not know, but in the present trend of decision there is little restraint on such formulas. ”

“ Reform of the Estate and Gift Tax.— A decrease in revenues of an amount not to exceed $72,033,000,000 in fiscal years 2010 through 2014 and of an amount not to exceed $256,244,000,000 in fiscal years 2010 through 2019 resulting from reform of the Estate and Gift Tax so that only a minute fraction of estates owe tax, by extending the law as in effect for 2009 for the Estate and Gift Tax. ”

“ Estate and Gift Tax.— (1) Criteria.—Legislation that includes provisions amending the Estate and Gift Tax under subtitle B of the Internal Revenue Code of 1986 shall trigger the current policy adjustment required by this title. (2) Adjustment.—The amount of the maximum current policy adjustment shall be the difference between-- (A) total revenues projected to be collected under the Internal Revenue Code of 1986 (as scheduled on December 31, 2009, to be in effect) ”

“ Her husband paid his federal gift tax on the $50,000. The fact that the partnership 'brought about no real change in the economic relation of the husband and his wife to the income n question' cannot affect taxability any more in the present than in any other marital situation where individual incomes exist within the intimate family circle. When a stockholder in a corporation gives stock to his wife, the family's gross income remains the same. ”

“ No reason is apparent why husband and wife should be under a heavier handicap absent a statute which brings all marital property settlements under the gift tax.
We are now advised that since submission of the case on October 16, 1950, petitioner has died, and that it will take some weeks before an administrator of her estate can be appointed. ”

“ Petitioner in November and December, 1935, purchased single-premium policies of insurance on her own life and late in December, 1935, irrevocably assigned them as gifts. The Commissioner determined a deficiency, claiming that the value of the policies for gift-tax purposes was the cost of duplicating them at the dates of the gifts, not the cash-surrender value as reported by petitioner. The Board of Tax Appeals held that the value of the gifts was their cash-surrender value. ”

“ While at its core the tax conception of a gift no doubt reflected the non-legal, non-technical notion of a benefaction unentangled with any aspect of worldly requital, the divers blends of personal and pecuniary relationships in our industrial society inevitably presented niceties for adjudication which could not be put to rest by any kind of general formulation. ”

“ The exclusion of property acquired by gift from gross income under the federal income tax laws was made in the first income tax statute [4] passed under the authority of the Sixteenth Amendment, and has been a feature of the income tax statutes ever since. The meaning of the term 'gift' as applied to particular transfers has always been a matter of contention. ”

“ One must strike a balance of advantage. It happens that the taxpayer before us made his deeds in 1917, before a transfer by gift was subject to a tax. We shall alleviate his burden if we say that the gift was then complete. On the other hand, we shall be heightening the burdens of taxpayers who made deeds of gift after the act of 1924. In making them, they had the assurance of a treasury regulation that the tax would not be laid, while the power of revocation was uncanceled, except upon the income paid from year to year. ”

“ And, if the gift of it may be taxed, it is difficult to see upon what constitutional grounds the power to tax the receipt of it, whether as the result of inheritance or otherwise, may be denied to a state, whatever name may be given the tax, and even though the right to receive it, as distinguished from its actual receipt at a future date, antedated the statute. Receipt in possession and enjoyment is as much a taxable occasion as the enjoyment of any other incident of property. ”

“ Such an outstanding power residing exclusively in a donor to recall a gift after it is made is a limitation on the gift which makes it incomplete as to the donor as well as to the donee,and we think that the termination of such a power at death may also be the appropriate subject of a tax upon transfers.
But the plaintiff says that the tax here must be deemed to be a tax on property because the beneficiaries' interests in the policies were not transferred to them from the decedent, but from the insurer, and hence there was nothing to which a transfer or privilege tax could apply. ”

“ We do not rightly avoid giving the answer by saying that, by some statute other than that under review, the state could constitutionally tax its citizen for his action in avoiding the tax, by making the gift in a form of property which is by hypothesis beyond the taxing power. If the state has by its statute undertaken to lay a tax on gifts of banknotes outside the state without more-and we are without jurisdiction if it has not-no purpose is served by saying to the state that it could have reached the same result by another route, which, under its laws, does not appear to be open to it. ”

“ It is evident that the practice of disposing of property by gift inter vivos, if generally adopted, would, regardless of the age or motive of the donor, defeat or seriously impair the operation of the estate tax, and that the practice would be encouraged if such gifts, made shortly before the death of the donor, were left free of any form of taxation. ”

“ Apart from other considerations we should hesitate to accept as correct a construction under which it could plausibly be maintained that a gift in trust for the benefit of charitable corporations is then complete so that the taxing statute becomes operative and the gift escapes the tax even though the donor should later change the beneficiaries to the non-exempt class through exercise of a power of modify the trust in any way not beneficial to himself. ”

“ One may freely give his property to another by absolute gift without subjecting himself or his estate to a tax, but we are asked to say that this statute means that he may not make a gift inter vivos, equally absolute and complete, without subjecting it to a tax if the gift takes the form of a life estate in one with remainder over to another at or after the donor's death. ”

“ It can hardly be supposed that Congress intended to impose personal liability upon the donee of a gift of property, so incomplete that he might be deprived of it by the donor the day after he had paid the tax. ”

“ But we think it quite another matter to say that the beneficiary of a trust who makes a single gift of a sum of money payable out of the income of the trust does not realize income when the gift is effectuated by payment, or that he escapes the tax by attempting to clothe the transaction in the guise of a transfer of trust property rather than the transfer of income where that is its obvious purpose and effect. ”