United States v. Carlton

512 U.S. 26, 114 S. Ct. 2018 (1994)



The due process standard to be applied to tax statutes with retroactive effect is the same as that generally applicable to retroactive economic legislation. Provided that the retroactive application of a statute is supported by a legitimate legislative purpose furthered by rational means, judgments about the wisdom of such legislation remain within the exclusive province of the legislative and executive branches. To be sure, retroactive legislation does have to meet a burden not faced by legislation that has only future effects. The retroactive aspects of legislation, as well as the prospective aspects, must meet the test of due process, and the justifications for the latter may not suffice for the former. But that burden is met simply by showing that the retroactive application of the legislation is itself justified by a rational legislative purpose.


Respondent executor filed the estate tax return and claimed a deduction under 26 U.S.C.S. § 2057 for half the proceeds of the sale of employer securities that he sold on behalf of the estate to an employee stock ownership plan. The government disallowed the deduction, relying on the retroactive application of an amendment to § 2057 that allowed the deduction only if the decedent owned the stock in question immediately before dying. The appellate court allowed the deduction. The Supreme Court of the United States reversed the appellate court’s decision.


Could the amendment to 26 U.S.C.S. § 2057 be given retroactive effect to deny respondent executor’s claim for estate tax refund?




The statutory amendment retroactively applied to prohibit the executor from claiming the requested estate tax deduction. Therefore, respondent executor was not entitled to an estate tax refund.


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