United States Supreme Court Cases & Opinions

U.S. Supreme Court

Lang v. Commissioner, 289 U.S. 109 (1933)

Lang v. Commissioner of Internal Revenue

No. 595

Argued March 22, 1933

Decided April 10, 1933

289 U.S. 109

Syllabus

1. Section 204(a) of the Revenue Act of 1926 provides:

"The basis for determining the gain or loss from the sale or other disposition of property acquired after February 28, 1913, shall be the cost of such property; except that --"

"* * * *"

"(5) If the property was acquired by bequest, devise, or inheritance, the basis shall be the fair market value of such property at the time of such acquisition."

Held:

(1) That, upon the termination of an estate by the entirety through the death of one spouse, the survivor does not succeed to anything by "inheritance" within the meaning of this exception, but holds the estate under the original limitation, it being merely freed from participation by the other tenant. Tyler v. United States, 281 U. S. 497, distinguished. P. 289 U. S. 110.

(2) Therefore, upon a sale of the property by the survivor, the gain was properly determined on the basis of what the two tenants paid for the property when acquired, and not upon the basis of the part of that payment that was contributed by the survivor added to a part of the value of the property at the time of the other spouse's death proportionate to his contribution to the purchase. Id.

2. This construction is confirmed by the fact that the statute expressly declares the exception applicable to certain of the interests that are listed in § 302 as embraced in decedents estates, but significantly omits from the declaration the interest of a tenant by the entirety, although it also is listed in that section. P. 289 U. S. 111.

3. Unless there is a violation of the Constitution, Congress may select the subjects of taxation and tax them differently as it sees fit, and, if it does so in plain words, the courts are not at liberty to modify the Act by construction in order to avoid special hardship. P. 289 U. S. 113.

61 F.2d 280 affirmed.

Certiorari, 288 U.S. 596, to review the affirmance of a decision of the Board of Tax Appeals, 23 B.T.A. 854, sustaining a deficiency assessment of income taxes.

Page 289 U. S. 110