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law “‘is itself justified by a rational legislative purpose.’” Id.
(quoting Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S.
717, 730 (1984)); see also Estate of Kunze v. Commissioner, ___
F.3d ___ (7th Cir., Nov. 16, 2000), affg. T.C. Memo. 1999-344;
DeMartino v. Commissioner, 862 F.2d 400 (2d Cir. 1988), affg. 88
T.C. 583 (1987).
In determining whether the retroactive application of an income
tax statute violates the Due Process Clause, we examine whether “the
nature of the tax and the circumstances in which it is laid * * * is
so harsh and oppressive as to transgress the constitutional
limitation.” Welch v. Henry, supra at 147. This “harsh and
oppressive” standard “does not differ from the prohibition against
arbitrary and irrational legislation” that applies generally to
economic legislation. Pension Benefit Guaranty Corp. v. R.A. Gray
& Co., supra at 733.
Courts have held retroactive tax amendments unconstitutional
only in those cases where the amendment imposes “a wholly new tax,
which could not reasonably have been anticipated by the taxpayer at
the time of the transaction.” Wiggins v. Commissioner, 904 F.2d
311, 314 (5th Cir. 1990), affg. 92 T.C. 869 (1989); see also
Blodgett v. Holden, 275 U.S. 142 (1927); Nichols v. Coolidge, 274
U.S. 531 (1927); Untermyer v. Anderson, 276 U.S. 440 (1928). On the
other hand, courts have held that Congress acts rationally when it
cures “what it reasonably viewed as a mistake”. United States v.
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