236
Opinion of the Court
and its eventual taxation. If her decision were treated as timely, the requirement for a timely election would have no bite at all.
B
Respondents would avoid this result on two alternative grounds. They argue first that by its own terms, the Regulation does not apply on the facts of this case, with the consequence that taxability under the Internal Revenue Code turns on the efficacy of the disclaimer under state law. Second, respondents argue that even if the disclaimer would result in an otherwise taxable transfer in the absence of the governing Regulation, the tax on transfer of an interest created by an instrument antedating the enactment of the gift tax statute would be barred by the statutory prohibition of retroactive application.
1
The question of the Regulation's applicability under its own terms need not be resolved here, for the result of its inapplicability would not be freedom from gift taxation on a theory of borrowed state law or on any other rationale. The arguments for inapplicability may therefore be shortly stated, each having been raised at one point or another in the prior litigation of this case.
The first argument turns on the Regulation's application to disclaimers of interests created by what it terms "taxable transfers," a phrase that on its face presupposes some source of taxability for the transfer. There was, however, no gift tax when the trust, including its remainder interests, was created in 1917, and the gift tax provisions of the Act did not render preenactment transfers taxable.11 The language is, to say the least, troublesome to the Government's position that the Regulation applies. The Government responds to
11 See Revenue Act of 1932, ch. 209, § 501(b), 47 Stat. 245 (nonretroactivity provision).
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