1982 U.S. Tax Ct. LEXIS 42">*42
During 1976, the decedent made a gift in contemplation of death. Decedent died on Aug. 29, 1977.
79 T.C. 437">*437 OPINION
Respondent determined a deficiency in petitioner's Federal estate tax of $ 34,637.57. The sole issue presented for our decision is whether a transfer made in contemplation of death prior to the passage of the Tax Reform Act of 1976 may be taxed under
All of the facts have been stipulated. The stipulation of facts 79 T.C. 437">*438 and the attached exhibits are incorporated herein by this reference. A brief summary of the salient facts follows.
Margaret O. Gill died on August 29, 1977. Margaret was a resident of Houston, Tex., at the time of her death. Margaret's daughter, Robin G. Stanford, is the independent executrix of Margaret's estate. Robin was a resident of Houston, Tex., when the petition was filed in this case. Robin filed a Federal estate tax return1982 U.S. Tax Ct. LEXIS 42">*46 with the Internal Revenue Service Center at Austin, Tex.
On December 8, 1976, Margaret transferred her personal residence to her daughter, Robin. The transfer was without adequate and full consideration in money or money's worth.
Petitioner failed to report this transfer on the Federal estate tax return. Respondent determined that the value of the home should have been included in the gross estate under
Prior to the passage of the Tax Reform Act of 1976, and specifically on December 8, 1976,
(a) General Rule. -- The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide 1982 U.S. Tax Ct. LEXIS 42">*47 sale for an adequate and full consideration in money or money's worth), by trust or otherwise, in contemplation of his death.
(b) Application of General Rule. -- If the decedent within a period of 3 years ending with the date of his death (except in case of a bona fide sale for an adequate and full consideration in money or money's worth) transferred an interest in property, relinquished a power, or exercised or released a general power of appointment, such transfer, relinquishment, exercise, or release shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this section and sections 2038 and 2041 (relating to revocable transfers and powers of appointment); but no such transfer, relinquishment, exercise, or release made before such 3-year period shall be treated as having been made in contemplation of death.
(a) Inclusion1982 U.S. Tax Ct. LEXIS 42">*48 of Gifts Made by Decedent. -- Except as provided in subsection (b), the value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise, during the 3-year period ending on the date of the decedent's death.
(b) Exceptions. -- Subsection (a) shall not apply to: (1) any bona fide sale for an adequate and full consideration in money or money's worth, and (2) any gift excludable in computing taxable gifts by reason of section 2503(b) (relating to $ 3,000 annual exclusion for purposes of the gift tax) determined without regard to section 2513(a).
(c) Inclusion of Gift Tax on Certain Gifts Made During 3 Years Before Decedent's Death. -- The amount of the gross estate (determined without regard to this subsection) shall be increased by the amount of any tax paid under chapter 12 by the decedent or his estate on any gift made by the decedent or his spouse after December 31, 1976, and during the 3-year period ending on the date of the decedent's death. 1
1982 U.S. Tax Ct. LEXIS 42">*49 As we understand their positions, the parties agree that new
Congress provided that new
Broadly speaking, it is petitioner's position that
We disagree. We do not believe that Congress intended by the amendment of
1982 U.S. Tax Ct. LEXIS 42">*51 In her quest for a technical loophole, petitioner has overlooked 79 T.C. 437">*441 the obvious. New legislation can only amend or replace old legislation to the extent that the legislators authorize the new bill to take effect. Since the new legislation by its own terms specifically never became effective as to transfers prior to January 1, 1977, the old
1982 U.S. Tax Ct. LEXIS 42">*52
1. Sec. 424 of the Economic Recovery Tax Act of 1981, 95 Stat. 172, added (1) In General. -- Except as otherwise provided in this subsection, subsection (a) shall not apply to the estate of a decedent dying after December 31, 1981. (2) Exceptions for certain transfers. -- Paragraph (1) shall not apply to a transfer of an interest in property which is included in the value of the gross estate under section 2036, 2037, 2038, 2041, or 2042 or would have been included under any of such sections if such interest had been retained by the decedent. (3) 3-year rule retained for certain purposes. -- Paragraph (1) shall not apply for purposes of -- (A) section 303(b) (relating to distributions in redemption of stock to pay death taxes), (B) section 2032A (relating to special valuation of certain farm, etc., real property), (C) section 6166 (relating to extension of time for payment of estate tax where estate consists largely of interest in closely held business), and (D) subchapter C of chapter 64 (relating to lien for taxes).↩
2. In this connection, we note the following explanation of the effective date provisions:
"In general, the amendments apply to the estates of decedents dying after December 31, 1976, and to gifts made after December 31, 1976. However, the amendments relating to the estate tax treatment of transfers made within three years of a decedent's death do not apply to transfers made before January 1, 1977.
3. Petitioner also points out in her reply brief that the legislative history of the new
