313 US 441 Cary v. Vcommissioner of Internal Revenue

313 U.S. 441

61 S.Ct. 978

85 L.Ed. 1446


Nos. 734—737.

Argued May 1, 1941.

Decided May 26, 1941.

Messrs. Roswell L. Gilpatric and Joseph C. White, both of New York City, for petitioners.

Mr. Thomas I. Emerson, of Washington, D.C., for respondent.

Mr. Justice DOUGLAS delivered the opinion of the Court.

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Henry M. Flagler died on May 20, 1913. Petitioners are legatees under a testamentary trust created under his will. The trust continued for a period of ten years from his death and terminated on May 20, 1923. As of that time the trustees delivered to petitioners1 certain securities which were sold by them in 1934 and 1936. The question presented is whether the basis for computing gain or loss on such sales under § 113(a)(5) of the Revenue Acts of 1934, 48 Stat. 680, and 19362, 49 Stat. 1648, is the value of the securities when delivered to the legatees or their value on the date of death of the decedent. Petitioners make substantially the same argument for application of the former criterion as did respondent in Helvering v. Reynolds, No. 684, 313 U.S. 428, 61 S.Ct. 971, decided this day. And they contend that under Florida law they had at the date of death only contingent interests. But assuming they are correct in the latter contention, it is of no avail. For the reasons stated in Helvering v. Reynolds, supra, the proper basis was the value of the securities at the death of the decedent. Accordingly, the judgments of the court below (2 Cir., 116 F.2d 800) must be affirmed.


The CHIEF JUSTICE and Mr. Justice ROBERTS dissent for the reasons stated in their dissent in Helvering v. Reynolds, No. 684, 311 U.S. —-, 61 S.Ct. 971, decided this day.


Some securities had previously been delivered to Harry Harkness Flagler, petitioner in No. 735, on April 26, 1921. Annie L. Flagler, whose estate is the petitioner in No. 736, received the securities here involved as a gift from her husband, Harry Harkness Flagler. The situation therefore is the same as to both these parties, since it is stipulated that he had received the securities as indicated above.


Sec. 113(a)(5) of the 1936 Act, 26 U.S.C.A. Int.Rev.Acts, page 860, is the same as § 113(a)(5) of the 1934 Act, 26 U.S.C.A. Int.Rev.Acts, page 697. Art. 113(a)(5)-1 of Treasury Regulations 94, promulgated under the 1936 Act, contains provisions identical with those of Art. 113(a)(5)-1 of Regulations 86 under the 1934 Act. The relevant portions of that section and regulation under the 1934 Act are set forth in Helvering v. Rey olds, supra.