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property. Approximately 7 months later, she then sold the
property, which had appreciated substantially since its purchase
in 1955. Eventually, on a second amended Federal income tax
return for 1988, Mrs. Gallenstein reported 100 percent of the
date of death value of the property as her basis, resulting in no
capital gain upon its sale.
In opposing her refund suit, the Government argued, as here,
that, pursuant to section 2040(b)(1), Mrs. Gallenstein could
receive a stepped-up basis for only 50 percent of the property.
The Government asserted that the 1981 amendment of the definition
of "qualified joint interests" in section 2040(b)(2) operated to
repeal the effective date of section 2040(b)(1), and therefore
the 50-percent inclusion rule was applicable to Mr. Gallenstein's
estate because he died after December 31, 1981. The Government
pursued this claim along both an express and an implied repeal
theory.
The Court of Appeals for the Sixth Circuit concluded that
the 1981 amendment to paragraph (2) of section 2040(b) did not
act to repeal the effective date of the 1976 amendment creating
"qualified joint interests", and therefore affirmed summary
judgment in favor of Mrs. Gallenstein. The court rejected the
Government's claim that section 2040(b)(2) expressly repealed the
effective date of section 2040(b)(1) by changing the definition
of "qualified joint interests." The court reasoned that an
express repeal can only be found where a subsequent statute
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