INGRAHAM, Circuit Judge:
The executor of the estate of Para Pierce Aldrich appeals the decision of the Tax Court that the Commissioner correctly determined a deficiency in the decedent’s estate tax in the amount of $227,231.69. The case was submitted to the Tax Court on stipulations and briefs at the request of the parties. In view of the fact that counsel did not wish to orally argue the case in that court, we carefully examined the record and briefs to determine whether oral argument would be helpful to us in resolving the issues presented on this appeal. Concluding that it would not, we directed the clerk to place the case on the Summary Calendar.
The appellant received the usual notice to counsel of that action, and has now moved to have the appeal placed on the regular calendar for oral argument. After reviewing our determination in light of the appellant’s motion and supporting brief, we nevertheless remain convinced that oral argument would not be helpful. “Our Circuit’s screening procedure demands extreme care and delicate (and unanimous) judicial action. Those requisites were met in this ease.” Allen v. Mississippi Commission of Law Enforcement, 424 F.2d 285, 287 (5th Cir., 1970.
The motion to remove the appeal from the Summary Calendar is accordingly denied.
I.
Mrs. Aldrich, a resident of Louisiana, died on August 9, 1965, leaving a will which was probated in Louisiana, and one section of which forms the basis of this appeal:
“6. I bequeath to the First Methodist Church, Baton Rouge, Louisiana, for use in connection with its Youth Educational Center, two thirds of the
remainder of my estate and to the Cumberland Presbyterian Church, Dyersburg, Tennessee, the remaining one third thereof, but under these conditions:
(A) My executor shall reduce such remainder to cash and purchase bonds of the United States Government therewith the bonds to be delivered by him to said legatees in the proportion mentioned.
(B) The bequeaths (sic) contained in this paragraph shall be subject to a lifetime usufruct, which I now bequeath to my beloved sister, Elberta Pierce Forsythe, by which I mean that the income from any bonds which may later be purchased to replace them shall be paid over to my sister so long as she may live as such interest becomes due and is received.”
The appellant (taxpayer) contends, as it did in the Tax Court, that it was entitled to deduct from the gross estate the full amount of the bequests to the Churches, without reduction for the actuarial value of the usufructuary interest in favor of the decedent’s sister. The taxpayer maintains that the only item by which the charitable deduction, provided under section 2055 of the Internal Revenue Code of 1954, may be reduced is death taxes under section 2055(c).
It is further contended that section 20.2055-2 (a) of the Estate Tax Regulations, providing for the reduction from a charitable deduction the present value of a noncharitable remainder “or similar interest”, is inapplicable.
The
taxpayer argues that since the bonds were delivered to the charities, the usufructuary interest reserved to the decedent’s sister is not comparable to the common-law life estate, an interest in which Mrs. Aldrich’s sister would have had possession of the bonds for life. In this respect, the taxpayer places emphasis on the language in § 2055(a) that “the taxable estate shall be determined by deducting from the value of the gross estate the
amount
of all bequests * * It is argued that “amount” means the sum of the bonds purchased and delivered to the charities. No “amount” was reserved to the decedent’s sister; her interest was thus not includible in the interests intended to be covered by § 2055 — trusts, remainders, and deferred payments.
The Tax Court declined “to walk the semantic tightrope” which the taxpayer sought to construct, and found it unnecessary “to delve into Louisiana law in order to determine the precise nature of the usufructuary interest of decedent’s sister.” Estate of Para Pierce Aldrich, CCH Tax Ct. Rep. (Memo.) Dec. No. 29,596(M) (1969) at 579; Estate of Para Pierce Aldrich, PH. Tax Ct. Mem. Dec.
¶
69,109 (1969) at 69-618. We, too, decline the invitation, because for federal tax purposes the label attached to an interest by state statute is irrelevant to the critical inquiry —the
nature
of the interest. It is settled that:
“State law creates legal interests and rights. The federal revenue acts designate what interests or rights, so created, shall be taxed. Our duty is to ascertain the meaning of the words used to specify the thing taxed. If it is found in a given case that an interest or right created by local law was the object intended to be taxed, the federal law must prevail no matter what name is given to the interest or right by state law.”
Morgan v. Commissioner, 309 U.S. 78, 80-81; 60 S.Ct. 424, 426, 84 L.Ed. 585 (1940); see also Burnet v. Harmel, 287 U.S. 103, 110, 53 S.Ct. 74, 77 L.Ed. 199 (1932); Stewart v. Usry, 399 F.2d 50 (5th Cir. 1968).
In this case, the label given the interest is usufruct, defined in the Louisiana Code as:
“the right of enjoying a thing, the property of which is vested in another, and to draw from the same all the profit, utility and advantages which it may produce, provided it be without altering the substance of the thing.
“The obligation of not altering the substance of the thing takes place only in the case of perfect usufruct.”
LSA-C.C. art. 533 (West 1952). It was stipulated that the interest of the decedent’s sister constituted a perfect usufruct.
The Louisiana courts teach us that a usufruct is not a trust, see, e.g., Peyton v. Hammonds, 125 So.2d 491 (La.App. 3rd Cir., 1960), cert. denied; nor is the interest an exact counterpart to the classic common-law life estate. Succession of Ledbetter, 147 La. 771, 85 So. 908 (1920); Marshall v. Pearce, 34 La.Ann. 557 (1882). Nevertheless, it has been noted that for federal estate tax purposes,
“In Louisiana, the benefits of a life estate-remainder disposition can be obtained through utilizing the analogous usufruct-naked ownership disposition of the civil law. A testamentary disposition of the usufruct of property to the intermediate beneficiary avoids the ‘second tax’ which otherwise would be payable upon the death of the intermediate beneficiary.
******
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INGRAHAM, Circuit Judge:
The executor of the estate of Para Pierce Aldrich appeals the decision of the Tax Court that the Commissioner correctly determined a deficiency in the decedent’s estate tax in the amount of $227,231.69. The case was submitted to the Tax Court on stipulations and briefs at the request of the parties. In view of the fact that counsel did not wish to orally argue the case in that court, we carefully examined the record and briefs to determine whether oral argument would be helpful to us in resolving the issues presented on this appeal. Concluding that it would not, we directed the clerk to place the case on the Summary Calendar.
The appellant received the usual notice to counsel of that action, and has now moved to have the appeal placed on the regular calendar for oral argument. After reviewing our determination in light of the appellant’s motion and supporting brief, we nevertheless remain convinced that oral argument would not be helpful. “Our Circuit’s screening procedure demands extreme care and delicate (and unanimous) judicial action. Those requisites were met in this ease.” Allen v. Mississippi Commission of Law Enforcement, 424 F.2d 285, 287 (5th Cir., 1970.
The motion to remove the appeal from the Summary Calendar is accordingly denied.
I.
Mrs. Aldrich, a resident of Louisiana, died on August 9, 1965, leaving a will which was probated in Louisiana, and one section of which forms the basis of this appeal:
“6. I bequeath to the First Methodist Church, Baton Rouge, Louisiana, for use in connection with its Youth Educational Center, two thirds of the
remainder of my estate and to the Cumberland Presbyterian Church, Dyersburg, Tennessee, the remaining one third thereof, but under these conditions:
(A) My executor shall reduce such remainder to cash and purchase bonds of the United States Government therewith the bonds to be delivered by him to said legatees in the proportion mentioned.
(B) The bequeaths (sic) contained in this paragraph shall be subject to a lifetime usufruct, which I now bequeath to my beloved sister, Elberta Pierce Forsythe, by which I mean that the income from any bonds which may later be purchased to replace them shall be paid over to my sister so long as she may live as such interest becomes due and is received.”
The appellant (taxpayer) contends, as it did in the Tax Court, that it was entitled to deduct from the gross estate the full amount of the bequests to the Churches, without reduction for the actuarial value of the usufructuary interest in favor of the decedent’s sister. The taxpayer maintains that the only item by which the charitable deduction, provided under section 2055 of the Internal Revenue Code of 1954, may be reduced is death taxes under section 2055(c).
It is further contended that section 20.2055-2 (a) of the Estate Tax Regulations, providing for the reduction from a charitable deduction the present value of a noncharitable remainder “or similar interest”, is inapplicable.
The
taxpayer argues that since the bonds were delivered to the charities, the usufructuary interest reserved to the decedent’s sister is not comparable to the common-law life estate, an interest in which Mrs. Aldrich’s sister would have had possession of the bonds for life. In this respect, the taxpayer places emphasis on the language in § 2055(a) that “the taxable estate shall be determined by deducting from the value of the gross estate the
amount
of all bequests * * It is argued that “amount” means the sum of the bonds purchased and delivered to the charities. No “amount” was reserved to the decedent’s sister; her interest was thus not includible in the interests intended to be covered by § 2055 — trusts, remainders, and deferred payments.
The Tax Court declined “to walk the semantic tightrope” which the taxpayer sought to construct, and found it unnecessary “to delve into Louisiana law in order to determine the precise nature of the usufructuary interest of decedent’s sister.” Estate of Para Pierce Aldrich, CCH Tax Ct. Rep. (Memo.) Dec. No. 29,596(M) (1969) at 579; Estate of Para Pierce Aldrich, PH. Tax Ct. Mem. Dec.
¶
69,109 (1969) at 69-618. We, too, decline the invitation, because for federal tax purposes the label attached to an interest by state statute is irrelevant to the critical inquiry —the
nature
of the interest. It is settled that:
“State law creates legal interests and rights. The federal revenue acts designate what interests or rights, so created, shall be taxed. Our duty is to ascertain the meaning of the words used to specify the thing taxed. If it is found in a given case that an interest or right created by local law was the object intended to be taxed, the federal law must prevail no matter what name is given to the interest or right by state law.”
Morgan v. Commissioner, 309 U.S. 78, 80-81; 60 S.Ct. 424, 426, 84 L.Ed. 585 (1940); see also Burnet v. Harmel, 287 U.S. 103, 110, 53 S.Ct. 74, 77 L.Ed. 199 (1932); Stewart v. Usry, 399 F.2d 50 (5th Cir. 1968).
In this case, the label given the interest is usufruct, defined in the Louisiana Code as:
“the right of enjoying a thing, the property of which is vested in another, and to draw from the same all the profit, utility and advantages which it may produce, provided it be without altering the substance of the thing.
“The obligation of not altering the substance of the thing takes place only in the case of perfect usufruct.”
LSA-C.C. art. 533 (West 1952). It was stipulated that the interest of the decedent’s sister constituted a perfect usufruct.
The Louisiana courts teach us that a usufruct is not a trust, see, e.g., Peyton v. Hammonds, 125 So.2d 491 (La.App. 3rd Cir., 1960), cert. denied; nor is the interest an exact counterpart to the classic common-law life estate. Succession of Ledbetter, 147 La. 771, 85 So. 908 (1920); Marshall v. Pearce, 34 La.Ann. 557 (1882). Nevertheless, it has been noted that for federal estate tax purposes,
“In Louisiana, the benefits of a life estate-remainder disposition can be obtained through utilizing the analogous usufruct-naked ownership disposition of the civil law. A testamentary disposition of the usufruct of property to the intermediate beneficiary avoids the ‘second tax’ which otherwise would be payable upon the death of the intermediate beneficiary.
******
“[T]he usufruct is a device which permits substantial utlimate tax-saving by avoiding a double tax incidence in the passage of property successively to two people.
“The usufruct-naked ownership disposition is [one of the three devices] * * * permitted by Louisiana law which eliminates the taxation and succession costs of one succession during two deaths.”
J. M. Wisdom & P.O.H. Pigman, Testamentary Dispositions in Louisiana Estate Planning, 26 Tulane L.Rev. 119, 128-30, 137-38 (1952); see generally M. W. Hickey, the Usufruct and Taxation, 8 La. B.J. 223 (1961); A. N. Yiannopoulos, Legal Usufructs, Louisiana and Comparative Law, 14 Loyola L. Rev. 1 (1967-68).
But the extent to which a usufruct approximates a life estate is not the point. The point, is as the Tax Court held, that the churches “held the bonds subject to a legally enforceable right in decedent’s sister to receive the life income in the manner provided in the will itself. Under these circumstances, the value of what passed to the charities was correspondingly reduced.” CCH Rep. at 579-80; P-H Rep. at 69-619. We therefore agree that in computing the § 2055 deduction, the value of the charitable bequests should be reduced to reflect the actuarial value of the usufructuary interest.
II.
The only other issue before us is whether the Commissioner utilized the correct method in computing the charitable deduction. The Tax Court approached and resolved the question in this manner:
“The second prong of the controversy herein relates to the method of calculating the charitable deduction because of the estate taxes payable from the residue by reason of paragraph 3
of the decedent’s will. Respondent repeatedly reduced the value of the charitable deduction by subtracting therefrom the estate and inheritance tax liability of the estate. This in turn reduced the amount passing to charity, thereby increasing the taxable estate, and the estate tax liability, and further reducing the amount passing to charity. Petitioner concedes that a reduction for estate taxes based upon a single calculation is proper but contends that respondent’s use of a cumulative method of computation, although consistent with section 20.-
2055-3, Estate Tax Regs.,
vitiates the Congressional purpose of encouraging charitable testamentary transfers by causing an unwarranted reduction in the amount available to charity. We are aware of the significant impact of respondent’s method. Nevertheless, that impact has been considered by the Congress, which reacted in a limited fashion in enacting section 2053(d) (70 Stat. 23; S. Rept. No. 1401, 84th Cong., 2d Sess. (1956), p. 3). And the use of such method has received judicial approval. Dulles v. Johnson, 273 F.2d 362 (C.A. 2, 1959); compare Edwards v. Slocum, 264 U.S. 61; [44 S.Ct. 293, 68 L.Ed. 564] (1924), with Harrison v. Northern Trust Co., 317 U.S. 476, [63 S.Ct. 361, 87 L.Ed. 407] (1943). See also Luehrmann’s Estate v. Commissioner [of Internal Revenue] [287 F.2d 10 (8th Cir. 1961)]. We therefore hold that section 20.2055-3 of respondent’s regulations and his determination thereunder are fully in accord with the statutory mandate of section 2055 (c).”
CCH Rep. at 580; P-H Rep. at 69-619. (Footnotes omitted).
We agree. The decision of the Tax Court is, in all respects, accordingly
Affirmed.