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HELVERING V. BULLARD, 303 U. S. 297 (1938)

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U.S. Supreme Court

Helvering v. Bullard, 303 U.S. 297 (1938)

Helvering v. Bullard

No. 349

Argued February 1, 1938

Decided February 28, 1938

303 U.S. 297

Syllabus

1. A decree in Illinois, entered by consent in compromise of litigation, operated to abrogate a trust as violative of the rule against perpetuities and to establish the trustor's absolute ownership of the assets. Held, that a new deed of trust made by the trustor pursuant to the compromise and conveying to some of the parties the same beneficial interests that they would have received under the original conveyance if valid cannot be related back to the creation of the original trust, but must stand independently for the purpose of determining the application of a federal tax provision enacted between the dates of the two conveyances. P. 303 U. S. 300.

2. Sec. 302(c) of the Rev. Act of 1926, as amended by Joint Resolution of March 3, 1931, requires the inclusion in a decedent's gross taxable estate of property of which the decedent has at any time made a transfer, by trust or otherwise, under which the transferor retained for life the possession or enjoyment of the income from the property, except in case of a bona fide sale for an adequate and full consideration in money or money's worth.

Held:

(1) That the exception did not apply where the transferee gave up nothing but an interest in an earlier transfer, which was adjudged void by a consent decree entered in pursuance of a compromise. P. 303 U. S. 300.

(2) The joint resolution is valid as to future nontestamentary transfers in the nature of gifts, since:

(a) Congress may lay an excise on gifts at different rates for those which are and those which are not subject to reservation of a life estate; calling it an estate tax does not affect its validity. P. 303 U. S. 301.

(b) Congress may treat such transfers as testamentary to prevent avoidance of estate taxes. P. 303 U. S. 301.

90 F.2d 144 reversed.

Certiorari, 302 U.S. 671, to review the reversal by the court below of a decision of the Board of Tax Appeals, 34 B.T.A. 243, upholding an estate tax. chanrobles.com-red

Page 303 U. S. 298


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