McFeely v. Commissioner, 296 U.S. 102 (1935)
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McFeely v. Commissioner
No. 24
Argued October 24, 1935
Decided November 11, 1935 *
296 U.S. 102
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE THIRD CIRCUIT
1. The meaning of the term "capital assets" defined in the Revenue Act of 1921, § 206(a)(6), as property "acquired and held" by the taxpayer for more than two years, was not changed by omission of the word "acquired" in the corresponding sections of the Acts of 1924, 1926, and 1928; that word in the earlier Act was surplusage. P. 107.
2. In common understanding, to "hold" property is to own, it, and the length of time for which property has been "held" by its owner is computed from the date when he acquired it. P. 107.
3. Property acquired from a decedent through intestacy or general bequest is acquired and "held" from the date of the death, rather than from the date of distribution. Construing § 101(c)(8), Revenue Act, 1928. P. 107.
4. This is true as to personal property whether, under local law, the title passes from the decedent to the legatee or next of kin at death, subject to a withholding of possession for the purposes of administration, or goes first to the personal representative, for the purposes of administration, and then passing to the beneficiary, relates back to the date of the death. P. 107.
5. The repetition in a later Revenue Act of a provision in earlier Revenue Acts which has received a uniform administrative interpretation by the Commissioner of Internal Revenue, amounts to confirmation of that interpretation. P. 108.
6. The Revenue Acts of 1924 and 1926, in dealing with the subject of capital gain or loss, defined capital assets as property "held" by the taxpayer for more than two years, and prescribed as the basis for determining gain or loss from a sale of property acquired by bequest, devise, or inheritance, the value of the property at the time of such acquisition -- i.e., at the date of the death. The Revenue Act of 1928, § 101(c)(8), reenacted this definition of capital assets, but, apparently because of doubts as to what might in fact be the moments of acquisition by persons holding various relations to decedents’ estates, arbitrarily fixed basis dates for determining gain or loss at the time of the decedent’s death for some cases, and at the time of distribution to the taxpayer for others. Revenue Act, 1928, § 113(a)(5). Held, that this alteration in basis dates does not imply an intention to make similar alterations of the origin date of the holding period prescribed for capital assets. Helvering v. New York Trust Co., 292 U.S. 455, distinguished. P. 108.
7. A taxing statute, if of doubtful intent, should be construed favorably to the taxpayer. P. 111.
74 F.2d 1017 reversed.
76 id. 200 affirmed.
76 id. 203 affirmed.
79 id. 24 reversed.
75 id. 617 reversed.
Certiorari to review judgments of the Circuit Courts of Appeals in five cases involving the right of taxpayers to have their income assessed at the special rate of 12 1/2%, rather than the normal and surtax rates, in respect of gains from sales of stock which they had acquired from decedents through intestacy or by general bequest.
In No. 24, the judgment, 74 F.2d 1017, sustained an order, 29 B.T.A. 998, approving an additional assessment on gain from a sale by the donee of a widow who had elected to take against her husband’s will.
In No. 110, the judgment, 76 F.2d 200, reversed a judgment of the District Court, 7 F.Supp. 915, upholding an additional tax on gains from sales of stock willed to trustees by a residuary bequest. The suit was brought by them to recover the money paid.
In No. 111, the judgment, 76 F.2d 203, reversed an unreported Board of Tax Appeals order approving an additional tax on gains from sales of stock by a residuary legatee.
In No. 439, 79 F.2d 24, the judgment affirmed an unreported Board of Tax Appeals order approving an additional assessment on gains from the sale of stock acquired under the intestate laws.
In No. 494, the judgment, 75 F.2d 617, reversed 29 B.T.A. 1070, approving an additional assessment on gains from the sale of stock acquired by general bequest.