PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JOY B. PATTEN, Administrator of the
Estate of Marjory L. Blaney,
deceased,
Plaintiff-Appellee,
                                                                        No. 96-1846
v.

UNITED STATES OF AMERICA,
Defendant-Appellant.

Appeal from the United States District Court
for the Western District of Virginia, at Roanoke.
Jackson L. Kiser, Senior District Judge.
(CA-95-276-R)

Argued: May 8, 1997

Decided: June 26, 1997

Before HALL, WILKINS, and WILLIAMS, Circuit Judges.

_________________________________________________________________

Affirmed by published opinion. Judge Williams wrote the majority
opinion, in which Judge Wilkins joined. Judge Hall wrote a dissenting
opinion.

_________________________________________________________________

COUNSEL

ARGUED: Kenneth W. Rosenberg, Tax Division, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant.
Gregory Lee Lyons, MOSS & ROCOVICH, P.C., Roanoke, Virginia,
for Appellee. ON BRIEF: Loretta C. Argrett, Assistant Attorney
General, Kenneth L. Greene, Robert P. Crouch, Jr., United States
Attorney, Tax Division, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C., for Appellant. E. Elizabeth Downs,
MOSS & ROCOVICH, P.C., Roanoke, Virginia, for Appellee.

_________________________________________________________________

OPINION

WILLIAMS, Circuit Judge:

The United States (the Government) appeals from the district
court's ruling in favor of Joy B. Patten, administrator of the estate of
Marjory L. Blaney (Taxpayer). The district court concluded that the
effective date of 26 U.S.C. § 2040(b)(2) (1994), did not expressly or
impliedly repeal the effective date of 26 U.S.C.§ 2040(b)(1) (West
1994), and therefore Patten was entitled to claim a stepped-up basis
in a parcel of real property (the Property) equal to 100% of the fair
market value of the Property at the time that Taxpayer's husband
died. Because we agree that Congress did not expressly or impliedly
repeal the effective date of § 2040(b)(1), we affirm.

I.

The Government and Patten have stipulated to the relevant facts.
David Blaney, Taxpayer's husband, inherited the Property in 1952.
On December 24, 1955, Blaney deeded the Property to himself and
Taxpayer as tenants by the entirety. Blaney died on July 26, 1989, and
Taxpayer became the sole owner of the Property. When Blaney died,
the fair market value of the Property was $500,000. Blaney's estate
included 50% of the value of the Property on his federal estate tax
return.

In 1990, Taxpayer sold the Property for $625,000. She reported a
taxable gain from the sale of $199,133,1 based on an adjusted basis
of $256,982. Taxpayer died on June 16, 1993. Patten, the administra-
_________________________________________________________________
1 The parties do not explain the discrepancies in the numbers. Because
the parties have stipulated to the facts, we assume these values to be cor-
rect.

                     2
tor of Taxpayer's estate, filed an amended return for 1990 and sought
a refund of $127,384. Patten arrived at this figure in part by increas-
ing Taxpayer's adjusted basis in the Property from $256,982, the
amount originally claimed, to $500,000, the full fair market value of
the Property at the time of Blaney's death.

On December 1, 1994, the District Director of the Internal Revenue
Service (IRS) agreed to refund $95,672 of the amount sought by Pat-
ten. The IRS refused, however, to refund the final $31,712, which was
the amount of the refund attributable to Patten's claimed step-up in
basis in the Property. Patten sued to recover the difference.

II.

The district court granted summary judgment in favor of Patten,
reasoning that Congress has not expressly or impliedly repealed the
effective date of 26 U.S.C. § 2040(b)(1). We review the grant of sum-
mary judgment de novo, using the same standards as applied by the
district court. See Roe v. Doe, 

, 406-07 (4th Cir. 1994).
Because the parties have stipulated to the facts, our review is limited
to legal questions and is therefore de novo.

A brief introduction is in order. Gain from the sale of property is
computed by subtracting the seller's adjusted basis from the amount
realized. See 26 U.S.C. § 1001(a) (1994). Where property is acquired
from a decedent, the taxpayer's adjusted basis in the property is the
fair market value at the time of death. See 26 U.S.C. § 1014(a) (1994).
However, property held jointly with the decedent is considered to
have been acquired from the decedent only to the extent that the prop-
erty was included in the decedent's gross estate. See 26 U.S.C.
§ 1014(b)(9) (1994). Put simply, the surviving joint tenant ordinarily
gets a basis equal to that claimed on the estate tax return of the dece-
dent.

The estate tax treatment, in turn, is governed by 26 U.S.C. § 2040
(1994). It is this section that is the heart of the controversy here. The
section currently reads:

                     3
         (a) General rule

          The value of the gross estate shall include the value of all
         property to the extent of the interest therein held as joint ten-
         ants with right of survivorship by the decedent and any other
         person, or as tenants by the entirety by the decedent and
         spouse . . . except such part thereof as may be shown to have
         originally belonged to such other person and never to have
         been received or acquired by the latter from the decedent for
         less than adequate and full consideration in money or
         money's worth . . . .

         (b) Certain joint interests of husband and wife

         (1) Interests of spouse excluded from gross estate

          Notwithstanding subsection (a), in the case of
         any qualified joint interest, the value included in
         the gross estate with respect to such interest by
         reason of this section is one-half of the value of
         such qualified joint interest.

         (2) Qualified joint interest defined

          For purposes of paragraph (1), the term "quali-
         fied joint interest" means any interest in property
         held by the decedent and the decedent's spouse as
         --

           (A) tenants by the entirety, or

          (B) joint tenants with right of survivorship,
         but only if the decedent and the spouse of the
         decedent are the only joint tenants.

26 U.S.C. § 2040. In other words, if the transaction here were gov-
erned by current law, Blaney should have included only one-half of
the value of the parcel in his estate tax return because the Blaneys
held a "qualified joint interest" within the meaning of § 2040(b)(2).
Therefore, under § 1014(b)(9), Ms. Blaney could claim only one-half
of the value of the parcel as her adjusted basis.

                    4
The difficulty arises from the history of § 2040. Under the original
§ 2040, the entire value of the joint interest was included in the estate
of a decedent, subject to a "tracing" rule virtually identical to that in
the current § 2040(a). See Gallenstein v. United States, 

,
288-89 (6th Cir. 1992) (discussing the history of§ 2040). Therefore,
unless the surviving spouse could trace the contribution she made to
acquire the property, the decedent's estate included the entire value
of the jointly held property. As a result, the surviving spouse was enti-
tled to an adjusted basis equal to the entire fair market value of the
jointly held property at the time of death.

In 1976, Congress amended § 2040 by designating the existing pro-
visions as § 2040(a) and by adding § 2040(b) ("1976 Amendment"),
the precursor to the modern provisions governing qualified joint inter-
ests. As enacted in 1976, § 2040(b) read:

          (b) Certain interests of husband and wife

          (1) Interests of spouse excluded from gross
          estate

           Notwithstanding subsection (a), in the case of
          any qualified joint interest, the value included in
          the gross estate with respect to such interest by
          reason of this section is one-half of the value of
          such qualified joint interest.

          (2) Qualified joint interest defined

           For purposes of paragraph (1), the term "quali-
          fied joint interest" means any interest in property
          held by the decedent and the decedent's spouse as
          joint tenants or as tenants by the entirety, but only
          if . . . such joint interest was created by the dece-
          dent, the decedent's spouse, or both . . . .

26 U.S.C. § 2040(b) (1976) (current version at 26 U.S.C. § 2040(b)
(1994)). That is, the 1976 Amendment created a special rule for quali-
fied joint interests, requiring that only one-half of the fair market

                    5
value of jointly held property be included in the decedent's estate. As
a necessary corollary, the surviving spouse was entitled to only one-
half of the fair market value as an adjusted basis in the property. The
1976 Amendment included an effective date, stating that it "shall
apply to joint interests created after December 31, 1976." In other
words, joint interests created prior to December 31, 1976 remained
subject to the "tracing" rule still in place in § 2040(a), while joint
interests between spouses created after December 31, 1976, were sub-
ject to treatment as qualified joint interests under§ 2040(b). Section
2040 was further amended in 1978 by the addition of subsections (c),
(d), and (e), which allowed an election for joint interests created prior
to December 31, 1976. To make such an election, the joint tenants
had to pay a gift tax for the "deemed gift" resulting from a fictitious
severance and re-creation of the joint interest. The 1978 amendment
is only tangentially at issue here, in that the Government argues that
the subsequent elimination of the 1978 amendment supports its read-
ing of the statute.

The final relevant amendment occurred in 1981 ("1981 Amend-
ment"), as part of the Economic Recovery Tax Act of 1981, "the
sweeping tax reform legislation abolishing estate and gift taxes
between spouses." 

. The 1981 Amend-
ment modified old § 2040(b)(2) to read:

          (2) Qualified joint interest defined

           For purposes of paragraph (1), the term "qualified joint
          interest" means any interest in property held by the decedent
          and the decedent's spouse as

           (A) tenants by the entirety, or

          (B) joint tenants with right of survivorship,
          but only if the decedent and the spouse of the
          decedent are the only joint tenants.

26 U.S.C. § 2040(b)(2) (1976 & Supp. V 1981) (current version at 26
U.S.C. § 2040(b)(2) (1994)). This is the current language of the stat-
ute. The 1981 Amendment did not change § 2040(b)(1), the operative

                     6
section, but it did eliminate subsections (c), (d), and (e). The effective
date of the 1981 Amendment stated that it was "applicable to estates
of decedents dying after December 31, 1981."

Thus the problem: The Blaneys' estate was created prior to Decem-
ber 31, 1976, but Mr. Blaney died after December 31, 1981. By its
terms, therefore, § 2040(b)(1) (the operative provision) does not
apply, whereas by its terms § 2040(b)(2) (the definitional provision)
does. The question, then, is whether the 1981 Amendment repealed,
either expressly or by implication, the effective date of the 1976
Amendment.2 The only other circuit to consider the issue ruled that
it did not, and refused to apply § 2040(b)(1) to an estate created prior
to December 31, 1976. See 

. Here, the
district court agreed with the result in Gallenstein and ruled that
§ 2040(b)(1) did not apply.

Again, the question is whether the effective date of the 1981
Amendment expressly or impliedly repealed the 1976 Amendment
effective date.3 Although the Fourth Circuit has yet to consider
§ 2040, "[a]n express repeal requires that Congress overtly state with
specificity that the subsequent statute repeals a portion of the earlier
statute." 

(citing In re Buren, 

(6th Cir. 1984)). Because the text of the 1981 Amendment does
_________________________________________________________________
2 Contrary to our dissenting colleague's claim, Patten's argument does
not rest on any "conceptual portion" of the 1976 Amendment. Dissenting
Op. at 18. Rather, Patten's argument rests on the text of § 2040(b)(1), the
operative provision of the statute, which was enacted in 1976 and has not
been amended, altered, or modified since that time. Even if Congress was
"clumsy," and even if Congress "fouled it up," we are not free to dismiss
the text of an enacted law as a mere "concept."
3 The Government argues that repeal is not the "proper" question.
Among the reasons offered to support this view is the argument that the
effective date of the 1976 Amendment was not codified. It is true that the
effective date does not appear in the United States Code. But it is also
true that the effective date was enacted as a section of the public law that
was later codified at § 2040. As noted by Patten, a piece of legislation
becomes law when it is passed by Congress and signed by the President.
Therefore, even though the effective date was not codified, it was
enacted, and it has the force of law. Accordingly, the effective date of
the 1976 Amendment controls unless it was repealed.

                     7
not mention the effective date of the 1976 Amendment, there has been
no express repeal.4

Similarly, the circumstances under which implied repeal will be
found are limited:

         (1) Where provisions in the two acts are in irreconcilable
         conflict, the later act to the extent of the conflict constitutes
         an implied repeal of the earlier one; and (2) [i]f the later act
         covers the whole subject of the earlier one and is clearly
         intended as a substitute, it will operate similarly as a repeal
         of the earlier act. But, in either case, the intention of the
         Legislature to repeal must be clear and manifest.

Radzanower v. Touche Ross & Co., 

, 154 (1976). We
have recently revisited the circumstances under which an implied
repeal will be found:

         [A] repeal by implication will only be found when there is
         clear legislative intent to support it. Or, stated differently, a
         later act will not repeal an earlier one in the absence of a
         clear and manifest intention of Congress. A court may find
         the requisite degree of intent when (1) "the two acts are in
         irreconcilable conflict," or (2) "the later act covers the whole
         subject of the earlier one and is clearly intended as a substi-
         tute."

United States v. Mitchell, 

, 472 (4th Cir. 1994) (citations
omitted) (quoting 

(internal quotation
marks omitted)), cert. denied, 

(1995). Moreover,
because an implied repeal is disfavored, there is a"strong presump-
tion" against finding such a repeal. See Blevins v. United States, 

, 181 (4th Cir. 1985); see also Farmer v. Employment Sec.
Comm'n, 

, 1283 (4th Cir. 1993) (explaining that "[i]t is
settled law that repeal of a statute by implication is not favored").
_________________________________________________________________
4 As explained by Patten, "If an express repeal must be inferred, the
`repeal' is not express. A repeal that must be inferred is, by definition,
an implied repeal." (Appellee's Br. at 13.)

                    8
Nevertheless, the Government fashions several arguments supporting
its view that § 2040(b)(1) applies.

A. The "History" of § 2040

The Government first argues that the history of§ 2040 makes clear
that Congress "decided to jettison the overly complex spousal joint
interest rules and replace them with an easily applied rule." (Appel-
lant's Br. at 19.) The theory is that because Congress "clearly" meant
to do away with the "extremely complex statutory scheme," (Appel-
lant's Br. at 18), it follows that Congress meant to fashion a rule of
uniform applicability, that is, a rule that applied to all decedents dying
after December 31, 1981. To support this theory, the Government
cites the legislative history of the 1981 Amendment:

           The committee believes that present rules governing the
          taxation of jointly held property are unnecessarily complex.
          In particular, the tracing requirements are burdensome to
          estates and survivors because jointly held assets are fre-
          quently purchased with joint funds. Further, because few
          taxpayers understand the gift tax consequences of joint own-
          ership, there is widespread noncompliance.

H.R. Rep. No. 97-201, at 160 (1981). In other words, the Government
argues that Congress wanted to make the estate tax treatment of
jointly held property simple; because it is simple to apply
§ 2040(b)(1) to estates created before December 31, 1976, that is
what Congress meant to do. Therefore, runs the argument,
§ 2040(b)(1) applies to estates created before December 31, 1976,
even though it does not say that it does.

This argument is in effect an implied repeal argument, resting on
the theory that the history of § 2040 evidences congressional intent to
repeal the effective date of § 2040(b)(1). But the Government has not
demonstrated that § 2040(b)(1) is in "irreconcilable conflict" with
§ 2040(b)(2), or that § 2040(b)(2) "covers the whole subject" of
§ 2040(b)(1). Because of the strong presumption against implied
repeal, we will not find an implied repeal unless one of these condi-
tions is satisfied. Here, the Government makes only a slim showing
of congressional "intent" -- not rooted in statutory text or even legis-

                     9
lative history -- to support its argument for implied repeal. Accord-
ingly, we reject the Government's argument that the history of the
statute supports a finding of implied repeal.

B. Deletion of the "Created" Requirement

The Government next argues that because the 1981 Amendment
eliminated the requirement that the joint interest be "created by the
decedent, the decedent's spouse, or both," the requirements of
§ 2040(b)(1) have been substantively changed. That is, because the
1981 Amendment removed the requirement that the joint interest be
"created" by the decedent, it makes no sense to require that the joint
interest be created after December 31, 1976. The Government is
therefore again arguing for an implied repeal, attempting to demon-
strate that one action taken by Congress requires that we find Con-
gress meant to take another.

Again, the Government's argument proves neither an"irreconcil-
able conflict" between § 2040(b)(1) and§ 2040(b)(2) nor that
§ 2040(b)(2) "covers the whole subject matter" of § 2040(b)(1).
Instead, the Government makes only another general argument con-
cerning congressional intent, which is insufficient unless one of the
two conditions for implied repeal is satisfied. More fundamentally,
the Government does not prove a necessary connection between
removing the requirement that the joint interest be"created by the
decedent, the decedent's spouse, or both" and repealing the effective
date of the 1976 Amendment. As explained by Patten,"what became
irrelevant after the 1981 amendment was how the spousal joint inter-
est was created, not when it was created." (Appellee's Br. at 23.) We
agree. The 1981 Amendment can be squared with the effective date
of the 1976 Amendment simply by reading § 2040(b)(1) to apply only
to interests created by anyone -- not just the decedent, the decedent's
spouse, or both -- after December 31, 1976. We therefore reject the
Government's argument here as well.

C. Reliance on a "Functional" Analysis

The Government next argues that because § 2040(b)(1) is the oper-
ational paragraph and § 2040(b)(2) is the definitional paragraph, a
change in the effective date of § 2040(b)(2) necessarily changed the

                    10
effective date of § 2040(b)(1). That is, "[w]hen Congress amended
paragraph (b)(2) in 1981 to change the definition of a `qualified joint
interest,' it directly changed the application of paragraph (b)(1)."
(Appellant's Br. at 23.) Because of this direct change in the applica-
tion of § 2040(b)(1), argues the Government, it was unnecessary to
also change the effective date.

Putting aside the fact that the Government has yet to address the
predicate conditions -- either an irreconcilable conflict or that
§ 2040(b)(2) covers the whole subject -- this argument is logically
flawed. Changing the effective date of a definitional paragraph has no
direct effect on the operational paragraph. Instead, the operational
paragraph could easily be read to apply to a qualified joint interest
created after December 31, 1976. For decedents dying before January
1, 1982, the old definition of qualified joint interest applies, while for
decedents dying after December 31, 1981, the current definition
applies. Although the converse is perhaps true -- changing the effec-
tive date of an operational paragraph would arguably affect the effec-
tive date of the definitional paragraph -- the situation here is
reversed, and the Government has failed to prove its theory.

D. Reliance on Legislative History

The Government next argues that the legislative history of the 1981
Amendment demonstrates that Congress meant to repeal the effective
date of the 1976 Amendment. The Government does not explain why
we should resort to the legislative history, considering our view that
"if the statutory language is plain and admits of no more than one
meaning, the duty of interpretation does not arise, and . . . the sole
function of the courts is to enforce [the statute] according to its
terms." United States v. Murphy, 

, 145 (4th Cir. 1994)
(quotations omitted). We do not even look at legislative history unless
there is an ambiguity on the face of the statute. Moreover, because
implied repeal is at issue, the requisite ambiguity does not arise unless
the provisions are in irreconcilable conflict or one provision "covers
the whole subject matter" of the other. Accordingly, even if the legis-
lative history supported the Government's argument, we would
decline the Government's invitation to rely on the legislative history.5
_________________________________________________________________
5 In any event, the legislative history provides little guidance. The Gov-
ernment points only to general statements that Congress's intent was "to

                     11
E. "Elimination" of the Original Effective Date

The Government next argues that the 1981 Amendment"merely
completed the elimination of the 1976 effective date" that Congress
began with the 1978 amendment to § 2040. (Appellant's Br. at 26-
27.) In 1978, Congress amended § 2040 to allow spouses with joint
interests created prior to December 31, 1976, to elect to come within
§ 2040(b). The 1978 amendment, according to the Government, rep-
resents an "erosion" of the original effective date of the 1976 Amend-
ment. When Congress amended § 2040(b)(2) in 1981, it also
eliminated the election provided for in the 1978 amendment. The
Government points to the elimination of the election provision as evi-
dence that Congress meant to eliminate the effective date of the 1976
Amendment, thereby obviating the need for such elections.

The Government's reliance on the 1978 and 1981 amendments is
a reincarnation of the "history" argument raised above, and suffers the
same defects. To reiterate, evidence of congressional intent is relevant
only if the sections are in irreconcilable conflict or if § 2040(b)(2)
covers the whole subject matter of § 2040(b)(1). The Government has
yet to prove that either condition is satisfied, and therefore evidence
of Congressional intent is irrelevant. Congress may have "meant" to
eliminate the effective date of the 1976 Amendment. The question
here, however, is what Congress did -- not what it meant to do.
Accordingly, we reject the Government's argument that the effective
date of the 1976 Amendment has "eroded."

F. Avoidance of a "Windfall" to the Taxpayer

The Government next argues that leaving the effective date of the
1976 Amendment intact will result in an unintended"windfall" to the
_________________________________________________________________
simplify the statutory scheme by eliminating tracing for all qualified joint
interests, not simply those created after 1976." (Appellant's Br. at 24.)
This reincarnation of the Government's first argument fares no better
here. For example, the Government claims that the committee reports
demonstrate Congress's belief that it was "appropriate to adopt an easily
administered rule under which each spouse would be considered to own
one-half of jointly held property regardless of which spouse furnished the
consideration for the property." (Appellant's Br. at 24.) In no way does
the quoted language establish that Congress meant to eliminate the effec-
tive date of the 1976 Amendment.

                    12
taxpayer. Because of the elimination in 1981 of estate and gift taxa-
tion between spouses, argues the Government, the surviving spouse
will always want to include the full value of the property in the dece-
dent's estate tax return, thereby obtaining a full stepped-up basis. In
other words, "[n]ot only does the surviving spouse receive a full step-
up in basis, but there is no corresponding cost by way of an increase
in estate tax." (Appellant's Br. at 28.) According to the Government,
such a windfall "clearly was not intended by Congress." (Appellant's
Br. at 27.)

Even if the Government's premise is correct -- that leaving intact
the effective date of the 1976 Amendment gives the taxpayer a "wind-
fall" -- the conclusion surely does not follow. The Government is
apparently advocating a rule of construction that if something is good
for the taxpayer, it cannot be what Congress intended. While this
proposition may accurately describe IRS policy, no court should use
it as a legal rule. As explained by the Supreme Court, "where the ben-
efit claimed by the taxpayer is fairly within the statutory language and
the construction sought is in harmony with the statute as an organic
whole, the benefits will not be withheld from the taxpayer though
they represent an unexpected windfall." Lewyt Corp. v.
Commissioner, 

, 240 (1955).

In any event, even if we were to adopt a rule of construction disfa-
voring windfalls, which we have not, the fact remains that the Gov-
ernment has not proven an irreconcilable conflict or that § 2040(b)(2)
controls the whole subject matter of § 2040(b)(1). Because the condi-
tions for an implied repeal have not been satisfied, there is no need
to determine Congress's "intent," least of all by such an indeterminate
rule of construction.

G. Implied Repeal of the Old Effective Date

In its final argument, the Government turns to a direct consider-
ation of implied repeal. According to the Government, each of the
previous six arguments was in fact an argument for express repeal,
while this final argument is an argument for implied repeal. In none
of the previous six arguments, however, did the Government point to
any language in the 1981 Amendment by which Congress repealed
the effective date of the 1976 Amendment. Thus, there is no express

                    13
repeal, and the arguments regarding Congress's intentions are best
read as arguments for implied repeal. In any event, in this final argu-
ment, the Government couches its argument in terms of the test out-
lined above for implied repeal.

Because the district court relied heavily on Gallenstein v. United
States, 

(6th Cir. 1992), the Government argues primar-
ily against the reasoning in Gallenstein. First, the Government argues
that there is an irreconcilable conflict between the two effective dates
because "[l]imiting the application of the 1981 definition of `qualified
joint interests' to spousal joint interests created after 1976 completely
frustrates Congress' clear intent to replace the patchwork statutory
scheme with a bright-line test for inclusion in the deceased spouse's
gross estate." (Appellant's Br. at 33.) This argument is simply another
appeal to inferential congressional intent, and it does not show an
irreconcilable conflict between the operation of the two sections.
"Statutory provisions will not be considered to be in irreconcilable
conflict unless there is a `positive repugnancy' between them such
that they `cannot mutually coexist.'" 

(quoting

). Here, the sections are not so irrecon-
cilable:

           The statutory provisions at issue here cannot be character-
          ized as being irreconcilably in conflict in the sense that there
          is a positive repugnancy between them or that they cannot
          mutually coexist. It is not enough to show that the two stat-
          utes produce different results when applied to the same fac-
          tual situation, for that no more than states the problem.
          [Section] 2040(b)(1) applies to a qualified joint interest cre-
          ated after 1976, and . . . § 2040(b)(2) redefines a qualified
          joint interest for estates of decedents dying after 1981.

(citations omitted). We agree with this
reasoning. There is no inherent tension between the operation of the
two provisions.

Second, the Government tries to prove that § 2040(b)(2) covers the
whole subject matter of § 2040(b)(1), primarily by referring to the
history of the section as described above. Again, evidence of Con-
gress's intent is relevant only if § 2040(b)(2) covers the whole subject

                     14
matter of § 2040(b)(1), and the Government is not permitted to
bootstrap its way out of the requirement that the subsequent enact-
ment cover the entire subject matter of the first. As described in
Gallenstein:

          The statutes at issue here are far from mutually exclusive in
          the manner necessary for such an assumption. Congress
          expressly made one subsection applicable to all decedents
          dying after 1981. Another subsection, applicable to interests
          created before 1977, allowed a different computation for
          purposes of calculating the estate's taxable income.. . .
          Despite the government's extensive discussion of legislative
          history, we find the fact that Congress chose not to change
          § 2040(b)(1)'s operative effective date dispositive of this
          

. Again, we are persuaded by this reasoning. The Gov-
ernment simply has not proven that § 2040(b)(2) covers the whole
subject matter of § 2040(b)(1). Therefore, evidence of congressional
intent should be ignored.

III.

We agree with our dissenting colleague that "[t]his case does not
involve difficult questions of express or implied repeal." Dissenting
Op. at 16. On the contrary, this case involves easy questions of
express or implied repeal -- there has been neither, and § 2040(b)(1)
continues to apply only to estates created after December 31, 1976.
Congress may have intended to repeal the effective date of the 1976
Amendment, and a single effective date might be simpler and easier
to administer. Nevertheless, "even the will of the majority [of Con-
gress] does not become law unless it follows the path charted in Arti-
cle I, § 7, cl. 2 of the Constitution." Landgraf v. USI Film Prods., 

, 263 (1994) (citing INS v. Chadha, 

, 946-51
(1983)). The question is what Congress did, not what it meant to do,
and we find no evidence that Congress eliminated the effective date
of the 1976 Amendment. We therefore affirm the decision of the dis-
trict court.

AFFIRMED

                    15
HALL, Circuit Judge, dissenting:

In my view, the majority opinion is not so much wrong as it is
beside the point. This case does not involve difficult questions of
express or implied repeal. On the contrary, we are asked simply
whether an act of Congress applicable to the estates of decedents
dying after December 31, 1981, applies to the estate of a decedent
dying after December 31, 1981. The answer is manifest, so I am con-
strained to dissent.

I.

As the majority notes, before 1976, all joint interests in property
were treated the same for estate tax purposes. The decedent's estate
included the full market value of the property, except to the extent
that the survivor could show that he or she contributed money toward
the property's purchase or improvement. The survivor's basis in the
property was -- and still is -- the amount included in the decedent's
estate.

The pre-1976 rule was a great injustice to housewives. Their hus-
bands generally had been the bread (and thus the property) winners.
If the husband died first, the wife was stuck with an estate tax bill (at
the time, the marital deduction was only 50% of the estate passing to
the survivor). On the other hand, if the wife died first, the husband
could take the property free of charge.

Congress began a series of clumsy reforms in 1976. It added 20
U.S.C. § 2040(b),1 which provided that, for a "qualified joint interest"
of a husband and wife, the decedent's gross estate included only one-
half of the value of the property, notwithstanding which spouse con-
tributed the funds for its purchase. This was a great idea, except that
Congress fouled it up right away by defining "qualified joint inter-
ests" as those (i) created by the decedent, the survivor, or both (ii)
after December 31, 1976. Thus, the reform applied to nothing when
enacted, and preexisting joint interests could be made "qualified joint
interests" only if the couple took formal steps to record a new deed,
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1 The old rule survives for non-spousal joint interests and is codified at
20 U.S.C. § 2040(a).

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etc. Naturally, many of the persons the new statute was designed to
benefit failed to take those steps.

Congress tried to fix § 2040 in 1978, but succeeded only in making
things worse. Section 2040c was added to permit a reduction in the
decedent's gross estate where the survivor, though not contributing
capital, had participated in a farm or business. Section 2040(d) took
the logical step of eliminating the need for a re-creation of the pre-
1976 joint interest, but only if the couple filed a gift tax return -- and
paid any applicable tax -- reporting the parties' contributions to the
property's purchase and appreciation. Naturally, couples were just as
unlikely to pay taxes on their own initiative as to draw up a new deed.
Finally, new § 2040(e) delivered the regime of complexity's coup de
grace: even if a couple re-created their pre-1976 joint interest by deed,
there would be no "qualified joint interest" unless they also filed the
gift tax return under § 2040(d).

II.

In 1981, Congress undertook a grand revision of the tax code. It
finally did the right thing with § 2040:

          (i) the 1978 amendments (subsections (c), (d), and (e))
          were repealed, and

           (ii) subsection (b) was revised to make any property held
          by the decedent as a spousal joint tenant a "qualified joint
          interest,"

          (iii) with the new (b) "applicable to estates of decedents
          dying after December 31, 1981."

Simultaneously with this amendment, the marital deduction for the
surviving spouse was increased to 100%. This change allowed the tax
burden of spousal joint property to be deferred until either both died
or the survivor sold the property and realized a gain.

III.

When David Blaney died, the 1981 amendment was, by its own
terms, applicable to his estate, so only half of the value of the prop-

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erty was included. When Marjory Blaney sold the property the next
year, she used as her basis the amount included in her husband's
estate, which was also in compliance with clear law. See 26 U.S.C.
§ 1014(b)(9). Her administratrix has now convinced the majority that
this adherence to the letter of the law was wrong.

The administratrix's argument is that Congress created the concept
of "qualified joint interest" in 1976 and made it effective only pro-
spectively. The 1981 amendment did not "repeal" this conceptual por-
tion of the 1976 law, and, therefore, § 2040(b) really applies only to
"estates of decedents dying after December 31, 1981" where any pre-
1976 joint interest would have been a "qualified joint interest" under
prior law.

Of course, the statute says no such thing, and, inasmuch as the stat-
ute is clear on its face, we have no license to construe it to include
this far-reaching proviso. It just does not matter what sort of concept
Congress created in 1976, because, in 1981, it created an entirely dif-
ferent one. Since December 31, 1981, "qualified joint interest" has
been defined solely by the date of the first spouse's death. There was
no reason or need for Congress to repeal the effective date of a
repealed definition. Everyone who died on or before December 31,
1981, has died; all who were destined to survive survived. It takes no
act of Congress to ratify the effect of the sands of time.

In sum, "qualified joint interest" was once defined by the time and
manner of the creation of the interest; now it is defined by the date
of death. David Blaney's death fit the definition. 2

I would reverse.
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2 It bears noting that the administratrix's argument provides for a wind-
fall that Congress surely did not intend. The 100% marital deduction was
enacted simultaneously with the new § 2040(b). By providing that the
survivor's basis was only half of the property's value, Congress ensured
that the survivor or her estate would ultimately pay some tax. To include
100% of the value in the decedent's estate (under the old rules) and per-
mit the survivor a 100% deduction (under the new rules) is illogical and
supports my view that the statute was intended to mean what it clearly
says -- it applies to estates of decedents dying after December 31, 1981.
It applies here.

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