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HELVERING V. NEW YORK TRUST CO., 292 U. S. 455 (1934)

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U.S. Supreme Court

Helvering v. New York Trust Co., 292 U.S. 455 (1934)

Helvering v. New York Trust Co.

No. 873

Argued May 8, 9, 1934

Decided May 28, 1934*

292 U.S. 455


1. A father transferred securities irrevocably to a trustee, in trust, to pay income and eventually the principal to his son. Within less than two years, the trustee sold the securities for a price which exceeded their value at the time of the creation of the trust and exceeded still more the price for which the trustor had acquired them.


(1) That the shares were "acquired by gift," by the trustee, within the meaning of § 202(a)(2) of the Revenue Act of 1921, and, under that Act, the basis for ascertaining the gain derived from the sale was "the same as that which it would have been in the hands of the donor" -- i.e., the cost of the shares to the trustor. P. 292 U. S. 462.

(2) The shares were "capital assets," defined by § 206(a)(6) of the Act as "property acquired and held by the taxpayer for profit or investment for more than two years," and the gain was therefore taxable under that section at 12 1/2%, and not at the normal and surtax rates. In applying the definition, the tenures of donor and trustee must be treated as continuous. P. 292 U. S. 463.

(3) The purpose of this provision of § 206 was to lessen the discouragement of sales of capital assets caused by high normal and surtaxes, in which respect there is no distinction between gains derived from a sale made by an owner who has held the property for more than two years and those resulting from one by a donee whose tenure plus that of the donor exceeds that period. P. 292 U. S. 466. chanroblesvirtualawlibrary

Page 292 U. S. 456

(4) No valid ground has been suggested for requiring tenures of capital assets to be added to get the base under § 202(a)(2) and forbidding their combination for finding the rate under § 206(a)(6). P. 292 U. S. 467.

2. The rule requiring that an unambiguous statute shall be given effect according to its language is not to be put aside to avoid hardships that may result from carrying out the legislative purpose. P. 292 U. S. 464.

3. But adherence to the letter of a statutory provision without regard to other parts of the Act and to the legislative history will often defeat its object. P. 292 U. S. 464.

4. Generally, questions as to the meaning intended do not arise until the language used is compared with the facts or transactions in respect of which the intent and purpose are to be ascertained. P. 292 U. S. 465.

5. Mere change of language in a reenactment does not necessarily indicate an intention to change the law. The purpose may be to prevent misapprehension of the existing law by clarifying what was doubtful. P. 292 U. S. 468.

68 F.2d 19 affirmed.

Certiorari to review a judgment modifying a decision of the Board of Tax Appeals, 27 B.T.A. 1127. chanroblesvirtualawlibrary

Page 292 U. S. 460

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