Helvering v. Reynolds, 313 U.S. 428 (1941)

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Helvering v. Reynolds

No. 684

Argued April 30, May 1, 1941
Decided May 26, 1941
313 U.S. 428

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Syllabus

1. Under § 113(a)(5) of the Revenue Act of 1934, which provides that, where property is "acquired by bequest, devise, or inheritance," the basis for computing gain or loss shall be its value "at the time of such acquisition," and under Treasury Regulations 86, construing that provision, the basis in the case of securities that were owned by the testator in specie and that were delivered to the taxpayer in pursuance of a testamentary trust, and sold by him, is their value at the time of the testator’s death, although the taxpayer’s interest at that time, under the will was a contingent remainder. P. 431.

The fact that the Regulation was not promulgated until some time after the transactions occurred which gave rise to the tax is immaterial.

2. The rule that reenactment implies a legislative adoption of administrative or judicial construction of the language reenacted is no more than an aid in statutory construction. It does not mean that the prior construction becomes so imbedded in the law that only Congress can change it; it gives way before changes in the prior rule or practice through exercise by the administrative agency of its continuing rulemaking power. P. 432.

3. Under the Revenue Act of 1934, where securities delivered by a testamentary trustee to a legatee who derived ownership through a bequest of a contingent remainder were securities purchased by the trustee, the basis for computing gain or lo was their cost to the trustee. P. 434.

114 F.2d 804 reversed.

Certiorari, 312 U.S. 672, to review a judgment overruling a decision of the Board of Tax Appeals, 41 B.T.A. 59, sustaining a tax assessment.