On Appeal from the Decision of the United States Tax Court No. 4834-73 C. MOXLEY FEATHERSTON, Judge.
Fairchild, Chief Judge, Pell, Circuit Judge, and Noland, District Judge.*fn*
The issue in this appeal from a judgment of the Tax Court is the meaning of the term "surviving spouse" as used in section 2056(a) of the Internal Revenue Code of 1954.*fn1
The facts in this case are undisputed. In 1944 Priscilla Baker married Crockett W. Lane. At all relevant times they resided in Wisconsin. In 1966 she obtained a judgment of divorce in a Mexican court. Before obtaining this judgment, she entered a personal appearance and complied with the jurisdictional requirements prescribed by Mexican law. Crockett did not go to Mexico but appeared through counsel. The judgment was based on grounds not recognized under Wisconsin law, but it has never been set aside by the Mexican court which entered it. In January of 1967, the decedent, Wesley Steffke, executed a will which provided that the bulk of his estate would pass to his "friend, Priscilla Baker Lane." In July of that year Priscilla and decedent were married. The decedent died in November of 1968. Following his death, the Supreme Court of Wisconsin was presented with the question of whether the property passing to Priscilla should be taxed under the Wisconsin inheritance tax at rates applicable to widows or at rates applicable to strangers. In deciding this issue, the Wisconsin Supreme Court held that the Mexican divorce was of no effect in the state of Wisconsin and that Priscilla was not the wife of decedent under the laws of Wisconsin. In re Estate of Steffke, 65 Wis. 2d 199, 222 N.W.2d 628 (1974).
The decedent's estate claimed the marital deduction under section 2056 on the estate tax return. The Commissioner disallowed the deduction on the grounds that Priscilla was not decedent's surviving spouse. The estate petitioned the Tax Court to determine the issue, and in due course the court ruled in favor of the Commissioner.*fn2 This appeal followed.
Section 2056 allows the deduction from a decedent's gross estate of an amount equal to the value of any interest in property passing from a decedent to a surviving spouse to the extent the interest is not a terminable one and to the extent the value of the interest passing does not exceed fifty percent of the adjusted gross estate. The term "surviving spouse" is neither defined in the section nor elsewhere in the Internal Revenue Code.
The meaning of the words or the legal status of circumstances for federal tax purposes need not be identical to their meaning or their legal effect under state law. See Commissioner v. Tower, 327 U.S. 280, 90 L. Ed. 670, 66 S. Ct. 532 (1946); Lyeth v. Hoey, 305 U.S. 188, 83 L. Ed. 119, 59 S. Ct. 155 (1938). In Lyeth the Supreme Court indicated that it is the will of Congress that controls the meaning of the taxation statutes and that in the absence of language evidencing a different purpose, the statutes should be interpreted so as to produce a uniform result nationwide. According to the Court, state law can only control "when the federal taxing act by express language or necessary implication makes its operation dependent upon state law." 305 U.S. at 194.
The taxpayer's principal argument in this case is that uniformity can best be achieved by applying the holdings of Borax v. Commissioner, 349 F.2d 666 (2d Cir. 1965), cert. denied, 383 U.S. 935, 15 L. Ed. 2d 852, 86 S. Ct. 1064 (1966); Wondsel v. Commissioner, 350 F.2d 339 (2d Cir. 1965); and Feinberg v. Commissioner, 198 F.2d 260 (3d Cir. 1952). These cases were income tax cases, but the taxpayer argues that the same logic and principles apply in the estate tax context.
In Borax the Commissioner asserted deficiencies for the years 1952 through 1955 and 1957 against Herman and Hermine Borax, who had filed joint returns and had deducted payments made by Herman to his former wife, Ruth. Herman and Ruth had separated by mutual consent in 1946 and had entered a separation agreement. In August 1952, Herman obtained a divorce in Mexico. Ruth did not appear in the Mexican proceedings. Later that month Herman married Hermine. In 1953 a New York court entered a decree declaring that Ruth was the lawful wife of Herman, that Herman and Hermine were not husband and wife, and that the Mexican divorce decree was invalid and of no force or effect. The New York court had jurisdiction over Herman and Hermine. Each had been personally served and participated in the New York proceedings with counsel. In deciding the case, the Second Circuit established a rule that it characterized as a rule of validation. The rule provided:
The subsequent declaration of invalidity [of a divorce] by a jurisdiction other than the one that decreed the divorce is of no consequence under these provisions of the tax law.
349 F.2d at 670. The court first pronounced the rule when discussing the issue of the deductibility of payments made in discharge of a legal obligation incurred incident to a divorce, but it later applied the rule to allow Herman and Hermine to file joint returns. The court indicated that the rule tended to promote uniformity because all persons who obtained a divorce in a particular jurisdiction would be treated in the same way under it regardless of whether someone invoked the power of another jurisdiction to have the decree declared invalid.
In Wondsel the same court reached a similar result on similar facts. The divorce not recognized by New York in Wondsel was granted by Florida rather than a foreign country but was not entitled to full faith and credit because the New York court found that the Florida court lacked jurisdiction.
Feinberg also involved the deductibility of payments made incident to a divorce decree. Feinberg was decided by the Third Circuit before the Second Circuit annunciated its rule of validation, but the court reached the same result. It indicated that the mere fact that the marital domicile of the parties did not ...