Helvering v. Safe Deposit and Trust Co. of Baltimore
United States Supreme Court
316 U.S. 56 (1942)
- Written by Angela Patrick, JD
Facts
Zachary Reynolds was the beneficiary of three trusts. Each trust gave Reynolds a general testamentary power of appointment. Under this power, Reynolds could choose anyone to receive the trusts’ property when he died by appointing the property to that person in his will. Under the trusts’ terms, if Reynolds died without exercising this power, the assets would go to his children. When Reynolds died, his children and his siblings disagreed about whether Reynolds had exercised his testamentary power to appoint the trusts’ property to his siblings. The commissioner of Internal Revenue (commissioner) (defendant) determined that either way, because the trusts’ assets were subject to a general power of appointment, they were a taxable part of Reynolds’s gross estate. Reynolds’s estate (plaintiff) petitioned for a new determination that the trusts’ assets were not part of the gross estate. The estate claimed, among other arguments, that (1) Reynolds had not exercised his power of appointment and (2) an unexercised general power of appointment was not a taxable interest in property. The Board of Tax Appeals and the Circuit Court of Appeals each ruled for the estate, finding that the trusts’ property was not a taxable part of Reynolds’s gross estate. The United States Supreme Court agreed to review the issue.
Rule of Law
Issue
Holding and Reasoning (Black, J.)
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