Citation. 305 U.S. 188, 59 S. Ct. 155, 83 L. Ed. 119
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Petitioner was the grandson of Mary Longyear. Longyear had a sizable estate to which Petitioner claimed to be an heir. The will was contested during probate and Petitioner and the other heirs reached a compromise on the settlement of the estate.
Synopsis of Rule of Law.
The value of property acquired by gift, bequest, devise, or inheritance is exempt from taxable income.
Facts.
Mary Longyear died in 1931, and Petitioner is her grandson. She left four children as heirs and Petitioner and his brother, who were sons of a deceased daughter. Decedent left more than $3 million to a trust. During probate, heirs objected that there was a lack of testamentary capacity and undue influence. A compromise was reached wherein Petitioner received $80 in cash and shares of a corporation valued at $141,484. The Commissioner of Internal Revenue treated this as income.
Issue.
Whether property received by Petitioner from the estate is taxable as income?
Held.
Chief Justice Hughes delivered the opinion for the Supreme Court of the United States in holding for Petitioner and finding that the value of the property should not count as taxable income.
Discussion.
The Supreme Court noted that what Petitioner received and the reason he received it was because of his status as an heir. It does not matter that Petitioner received less than he claimed. Congress used clear language in crafting the law and indicated an intent not to again tax a decedent’s property.
