Wheeler v. United States
United States Court of Appeals for the Fifth Circuit
116 F.3d 749 (1997)
- Written by Tom Squier, JD
Facts
In 1984, 60-year-old Elmore K. Melton, Jr., sold a remainder interest in his ranch to his two adopted sons, John and David Wheeler (plaintiffs), while Melton retained a life estate. The price that the Wheelers paid was based on actuarial tables published by the United States Treasury, giving a discounted value based on the life expectancy of a 60-year-old. Melton died from heart failure at age 67, but there was no evidence to indicate that Melton’s death was imminent or anticipated at the time of the sale. Upon review of Melton’s estate-tax return, the Internal Revenue Service (IRS) (defendant) found that the sale for the actuarial value was not adequate and full consideration and issued a notice that Melton’s estate was deficient for estate taxes. No party disputed that the correct actuarial value was used. Instead, the IRS asserted that the full date-of-death value of the ranch, minus the payment that the Wheelers had made for the sale, should have been included in Melton’s taxable estate, based on its interpretation of § 2036(a) of the Internal Revenue Code. The Wheelers appealed the decision to the district court, which affirmed the IRS’s decision. The Wheelers appealed again.
Rule of Law
Issue
Holding and Reasoning (Garwood, J.)
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