Black v. Commissioner

765 F.2d 862 (1985)

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Black v. Commissioner

United States Court of Appeals for the Ninth Circuit
765 F.2d 862 (1985)

Facts

In June 1977, Richard and Phyllis Black, who were married, created a revocable trust into which they transferred various assets, including multiple securities that they held as joint tenants. The trust gave the Blacks the unrestricted ability to amend or revoke the trust, or to use the trust assets as they wished. It also said that upon the death of the first spouse, the trust assets would be divided into two trusts, the “Decedent’s Trust” and the “Survivor’s Trust.” The survivor’s trust would hold all of the surviving spouse’s separate assets, his or her share of the community property, and some of the decedent’s assets, and it would be unrestricted in its uses. The decedent’s trust, on the other hand, would hold the remaining assets and was more limited in its uses. The surviving spouse could not use the principal of the decedent’s trust without the permission of an independent trustee, shared the right to income and principal with another beneficiary, and held only a power of appointment over the disposition of the trust assets. When Richard died in August 1977, the trust still held the securities that Richard and Phyllis had held as joint tenants. Phyllis reported only half the value of the securities as a part of Richard’s gross estate. The Internal Revenue Service (IRS) (defendant) determined that Phyllis should have included the full value of the securities in Richard’s estate based on the theory that the full value of assets held in joint tenancy is counted in the gross estate of the decedent. Phyllis petitioned the United States Tax Court for a redetermination, and the tax court upheld the determination of the IRS. Phyllis appealed.

Rule of Law

Issue

Holding and Reasoning (Canby, J.)

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