United States v. Carlton

PETITIONER:United States
LOCATION:Jackson Circuit Court

DOCKET NO.: 92-1941
DECIDED BY: Rehnquist Court (1993-1994)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 512 US 26 (1994)
ARGUED: Feb 28, 1994
DECIDED: Jun 13, 1994

Kent L. Jones – on behalf of the Petitioner
Russell G. Allen – on behalf of the Respondent

Facts of the case


Media for United States v. Carlton

Audio Transcription for Oral Argument – February 28, 1994 in United States v. Carlton

Audio Transcription for Opinion Announcement – June 13, 1994 in United States v. Carlton

William H. Rehnquist:

The opinion of the Court in No. 92-1941, United States against Carlton will be announced by Justice Blackmun.

Harry A. Blackmun:

This case comes to us from the Court of Appeals for the Ninth Circuit.

A federal statute which we know as Title 26 U.S.C. Section 2057 adapted in October of 1986 granted an estate tax deduction for half the proceeds of a sale of employer securities by the executor of the will of a decedent to an employee stock ownership plan.

Respondent Carlton, as executpr, purchased shares, sold them to the company, and its plan had a loss and claimed a substantial deduction on the estate tax return.

The year later however, the statute was amended to provide that in order to qualify for the deduction, his securities sold must have been directly owned by the decedent immediately before death.

The amendment applied retroactively as if it were incorporated in the original 1986 provision.

The Internal Revenue Service disallowed the deduction.

The District Court entered summary judgment in the ensuing refund action rejecting the executor’s contention of the retroactive application violated the Due Process Clause of the Fifth Amendment.

The Court of Appeals, by a divided vote, reversed.

It held that retroactive application here was harsh and oppressive, and therefore unconstitutional.

In an opinion filed with the Clerk today, we reverse that judgment and hold that the retroactive application did not violate due process.

To be sure a tax statute’s retroactive application must be supported by a legitimate legislative purpose furthered by rational means.

But here, the amendment was neither illegitimate nor arbitrary.

Congress intended the amendment to correct what it reasonably viewed as a mistake in the original statute.

The retroactive application is rationally related to the legitimate purpose.

Congress acted promptly and the retroactivity period extended only slightly longer than one year.

Justice O’Connor has filed an opinion concurring in the judgment, and Justice Scalia also has filed an opinion concurring in the judgment and is joined by Justice Thomas.