RESPONDENT: United States
LOCATION: Alabama State Capitol
DOCKET NO.: 361
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Ninth Circuit
CITATION: 376 US 503 (1964)
ARGUED: Mar 04, 1964
DECIDED: Mar 23, 1964
Facts of the case
Media for Jackson v. United States
Audio Transcription for Oral Argument - March 04, 1964 in Jackson v. United States
Number 361 et al. Jackson with et al petitioners versus United States.
Mr. Chief Justice, may it please the Court, counsel for respondent.
This case is here for a review of a decision of the Ninth Circuit Court of Appeals which held that support allowance payments to a decedent's widow did not qualify for the marital deduction under the estate tax laws.
The Revenue Act of 1916 which was the beginning of the modern estate tax law contained a provision allowing a deduction and computing the net estate for amounts paid to those dependants upon the decedent during the administration of the estate.
The wording was slightly changed in the Revenue Act of 1918, but it thereafter remained the same until that deduction ceased to be allowed as a standard deduction by the Revenue Act of 1950.
It appeared in the 1939 Internal Revenue Code as Section 812 (b) (5) and it provided as I recall it that should be allowed as a deduction for amounts reasonably required and actually expended for the support during the administration of the estate of those dependant upon the decedent.
The Revenue Act of 1948 by Section 811 (e) introduced the marital deduction concept into the federal estate tax law.
The 1948 Revenue Act did not repeal Section 812 (b) and from then until 1950, that deduction for support payments continued to be allowed in addition to the marital deduction.
During that two year period, it was possible to channel more than half of a decedent's estate to his or her surviving spouse without payment of the estate tax because the support payments under Section 812 (b) were 100% deductible and the marital deduction was limited to 50% of the decedent's adjusted gross estate.
Now, Section 812 (b) payments -- 812 (b) (5) payments were deducted in computing the adjusted gross estate, but because Section 812 (b) (5) payments were 100% deductible and the marital deduction was limited to 50% of the adjusted gross estate, it was nevertheless possible to channel more than half the decedent's property to his/her surviving spouse free of estate tax and in many estates that made the difference between the payment of estate tax and no payment of estate tax.
Congress acted quickly and in 1950, 812 (b) (5) was eliminated as a standard deduction, but at that time, Congress said, amounts heretofore allowed under the marital deduction provision will nevertheless be allowed – Congress said that amounts previously we allowed under 812 (b) (5) would be allowed under the marital deduction provisions subject to the conditions and limitations of that Section.
Now the purpose of the marital deduction of course was to equalize the state tax treatment between residents of Common Law and Community Property Estates and the substantive conditions and limitations of the marital deduction provisions were the condition that the property be included in the decedent's taxable estate, the condition that it go to the surviving spouse in such a manner as to be taxed in the estate of the surviving spouse if not consumed and the limitation that the total amount allowed under the marital deduction provision not exceed 50% of the decedent's adjusted gross estate.
And that it not be a terminable interest or have you already mentioned that?
I haven't come to that sir.
But that is one of the provisions.
That is one of the provisions of Section 812 (b), yes sir.
Mr. Justice Stewart I think I did say something related to that.
I said that the property had to go to the surviving spouse in such a way as to be taxed in the surviving spouse's estate and I believe that, that was the reason for the terminable interest rule.
Section 812 (b) (1) (2) I believe it is, is entitled life estates or other terminable interests and that I believe was designed to prevent an interest such as a life estate from qualifying for the marital deduction because it then would not be taxed in the estate of the surviving spouse.
I am not sure I follow.
A life estate to a surviving spouse is not qualified as a marital deduction?
But it is taxable I heard.
It's taxable in the decedent's estate.
In decedent's estate.
Yeah, that's right.
But, it doesn't go to the surviving spouse in such a way as to be taxed in the estate of the surviving spouse.