Griswold v. Helvering

Background

A man died in 1923 who had owned real estate in Illinois jointly with his wife since 1909. The Revenue Act of 1921 included rules about valuing a decedent’s estate that could reach jointly held property. The tax commissioner valued the property at $890,000 and treated the whole parcel as part of the deceased man’s gross estate. The Board of Tax Appeals and a federal circuit court held that only the deceased person’s one-half interest could be included for the tax.

Reasoning

The Court considered whether applying the 1921 law this way was an improper retroactive tax. It explained that the tax looks to the event of death, not to when the joint tenancy was created. Because the decedent retained and controlled one-half of the property until his death, the tax could properly reach that half when his interest ceased. The Court distinguished an earlier case where the government tried to tax the surviving co-owner’s half and that was held retroactive; here only the decedent’s interest was taxed. The Court affirmed the lower courts’ rulings.

Real world impact

People who hold property as joint tenants and their heirs can expect that, under this statute, only the deceased person’s ownership share at death is subject to the inheritance tax. The surviving co-owner’s existing half remains outside the tax in this application. The Court emphasized that this decision was limited to applying the 1921 law in this case and did not broadly change other tax rules.