Cary v. Vcommissioner of Internal Revenue/Opinion of the Court

Henry M. Flagler died on May 20, 1913. Petitioners are legatees under a testamentary trust created under his will. The trust continued for a period of ten years from his death and terminated on May 20, 1923. As of that time the trustees delivered to petitioners certain securities which were sold by them in 1934 and 1936. The question presented is whether the basis for computing gain or loss on such sales under § 113(a)(5) of the Revenue Acts of 1934, 48 Stat. 680, and 1936, 49 Stat. 1648, is the value of the securities when delivered to the legatees or their value on the date of death of the decedent. Petitioners make substantially the same argument for application of the former criterion as did respondent in Helvering v. Reynolds, No. 684, 313 U.S. 428, 61 S.Ct. 971, decided this day. And they contend that under Florida law they had at the date of death only contingent interests. But assuming they are correct in the latter contention, it is of no avail. For the reasons stated in Helvering v. Reynolds, supra, the proper basis was the value of the securities at the death of the decedent. Accordingly, the judgments of the court below (2 Cir., 116 F.2d 800) must be affirmed.

The CHIEF JUSTICE and Mr. Justice ROBERTS dissent for the reasons stated in their dissent in Helvering v. Reynolds, No. 684, 311 U.S. --, 61 S.Ct. 971, decided this day.