What is a person? To one conversant with the English language it is primarily a human being or individual. To the lawyer it also suggests a corporation. 1 The lexicographеr goes further, listing numerous gradations and differences of meaning, i.e., a role, a personage, or “the body in its external aspect”, New Century Dictionary p. 1288. The Congress, however, outdoes them all. As defined by it in the Revenue Act of 1932:
“Sec. 1111. (a) When used in this Act—
“(1) The term ‘person’ means an individual, a trust or estate, a partnership, or a corpоration.” 47 Stat. 289, cf. 26 U.S.C.A. § 1696(1).
This definition carries over into the statute governing the circumstance at bar. Embodied in the same Act, it taxes gifts and reads in part: “(b) Gifts less than $5,000. In the cаse of gifts (other than of future interests in property) made to any *968 person by the donor during the calendar year, the first $5,000 of such gifts to such person shall not, for the purposes of subsection (a), be included in the total amount of gifts made during such year.” 26 U.S.C. A. § 553(b).
We are asked to determine to what “person” a gift in trust is made. The Commissionеr, as respondent-appellee, thinks it is the trust person, so that one trust with ten beneficiaries should be given one exemption and, startlingly, vice versa. The taxрayer, having set up a trust for ten grandchildren, advocates, needless to say, the individual person theory with its far less drastic consequences from the standpоint of tax avoidance.
These opposing views are, of course, the direct result of an express statutory ambiguity. It is appropriate, therefore, to resolve that ambiguity by recourse to pertinent Congressional sources. They are explicit: “Such exemption, on the one hand, is to obviate the necessity of keeping an account of and reporting numerous small gifts, and, on the other, to fix the amount sufficiently large to cover in most cases wedding and Christmas gifts and occasional gifts of relatively small amounts. The exemption does not apply with respect to a gift to any donee to whom is given a future interest. The term ‘future interests in property’ refers to any interest or estate whether vested or contingent, limited to commerce in possession or enjoyment аt a future date. The exemption being available only in so far as the donees are ascertainable, the denial of the exemption in the casе of gifts of future interests is dictated by the apprehended difficulty in many instances of determining the number of eventual donees and the values of their respectivе gifts.” 72 Cong. 1st Sess. Sen. Rept. No. 665, p. 41; 72 Cong. 1st Sess. H. Rept. No. 708, p. 29.
To be sure, wedding and Christmas presents are not ordinarily given in trust, nor, on the. other hand, do trusts ever celebrate Christmаs or marry. However that may be, a conclusive indication of legislative intent exists, we think, in the reason for the denial of the exemption for gifts of future interests. Thе trust as an abstraction is immortal. If it is the donee, what becomes of the postulated difficulties of ascertainment and valuation? Other and further grounds for regarding “person” as meaning individual have been summed up in this wise: “ * * * It appears from the Committee Reports on the Revenue Act of 1932 discussing the tax generally that Congress believed that the beneficiary and not the trust whs the donee. Similarly Congress recognized that the beneficiary was the real donee when it exempted from the tаx that portion of the present value of a transfer in trust which inured to charity. Furthermore, it has been recognized that where a settlor has irrevocably transfеrred property to a trust, reserving only the power to change the beneficiary to persons other than himself, there is no taxable gift since the cestuis que trust are not finally determined, and a gift requires a definite donee. Therefore, while it is difficult to overlook the usual recognition of an irrevocable trust as а legal entity for tax purposes and to avoid the fact that the trustee and not the beneficiary is the only one having an immediate legal interest in the prоperty, it seems wiser to recognize that the gift tax should apply to the shifting of economic benefit rather than of bare legal title.” 86 University of Pennsylvania Law Rеview 907, 908.
The writers’ views are amply sustained by the authorities cited in their support. See, also, Sanford’s Estate v. Commissioner,
One case, not on the question, is the be all and end all of the Commissioner’s contrary attitude, Commissioner v. Wells, 7 Cir.,
In conclusion it is fitting to observe that the trust person theory has been viewed with Congressional alarm. The Senate Committee on Finance reported in 1938: “ * * * The Board of Tax Aрpeals and several of the Federal courts have held, with respect to gifts in trust, that the trust entities were the donees and on that ac *969 count the gifts were of present and not of future interests. The statute, as thus construed, affords ready means of tax avoidance, since a donor may create any number of trusts in the same year in favor of the same beneficiary with a $5,000 exclusion applying to each trust, whereas the gifts, if made otherwise than in trust, would in no case be subjeсt to more than a single exclusion of $5,000.” 75th Cong. 3d Sess. S. Rep. No. 1567, p. 41.
Accordingly, the statute under construction has been amended to withhold the exemption from gifts in trusts as well as those of “future interests”, Act May 28, 1938, § 505(a), 52 Stat. 565, 26 U.S.C.A. § 553(b). A re-definition of the latter term would, of course, have been the more exact solution, and that being so, the plug еxceeds the loophole. But this excess does not, we think, indicate any implied legislative disapproval of the interpretation we have adoрted. It is only because the apprehended avoidance extended to present as well as future interests in trust that the exemption has been denied tо both. Our interpretation excludes that apprehension.
The decision of the Board of Tax Appeals is reversed.
Notes
Mr. Justice Frankfurter in the recent ease of Neirbo Company and A. P. Smith Manufacturing Company et al. v. Bеthlehem Shipbuilding Corporation, Ltd.,