The Court of Appeals affirmed, one judge dissenting. The decision of the Court of Appeals for the Third Circuit in the present case is also in apparent conflict with a decision of the Court of Appeals for the Second Circuit in Gelb v. Commissioner, 298 F.2d 544 (1962) (Friendly, J.). The surviving widow in Gelb was entitled to all the income from the trust.

Thus her payments might come from corpus. These theories, with the exception of the latter argument, as well as the Government's arguments urged here on the legislative history of § 2056 and the provisions of regulation § 20.2056(b)5(c), were rejected by the Second Circuit in Gelb v. C.I.R., 298 F.2d 544, 549-552 (2nd Cir. 1962). There the wife was given a life interest in the "net income" and a general power of appointment by will over the remainder at her death, and the issue was whether a power, given to the trustees to invade corpus for a maximum of $5,000.

As stated in James v. United States, 366 U.S. 213, 220 (1961): “There may have been any number of reasons why Congress acted as it did.” In Gelb v. Commissioner, 298 F.2d 544 (2nd Cir.1962), a testamentary trust gave decedent's wife the entire income of the trust for her life and a power of appointment by will over the corpus as it existed at the time of her death. The will also provided that the individual trustees of the trust could call upon the executors and trustees to pay to the wife up to $5,000 annually from the trust for the support and education of decedent's younger daughter.

As stated in James v. United States, 366 U.S. 213, 220 (1961): "There may have been any number of reasons why Congress acted as it did." In Gelb v. Commissioner, 298 F.2d 544 (2d Cir. 1962), a testamentary trust gave decedent's wife the entire income of the trust for her life and a power of appointment by will over the corpus as it existed at the time of her death. The will also provided that the individual trustees of the trust could call upon the executors and trustees to pay to the wife up to $5,000 annually from the trust for the support and education of decedent's younger daughter.

Such discrepancies as may exist will no doubt average out in the long run; and while this may sometimes prove to be unfortunate for individual taxpayers, the discrepancies may have to be suffered in the interest of a simplified over-all administration of the tax laws. [Footnote omitted] And in Gelb v. Commissioner, 298 F.2d 544 (2d Cir. 1962), the Court at pages 551-52 indicated approval of the use of actuarial tables: Yet the use of actuarial tables for dealing with estate tax problems has been so widespread and of such long standing that we cannot assume Congress would have balked at it here; the United States is in business with enough different taxpayers so that the law of averages has ample opportunity to work.

income interests in this case did have determinable values, and that those values should have been ascertained by reference to the actuarial tables prescribed by Treasury Regulation § 25.2512-5. That section provides for the valuation of, inter alia, the right to receive income from property for a term of years or for the life of a person or, as here, on a more complicated basis, by applying an assumed annual yield of 3 1/2 percent to the principal. Appellants concede that, since no dividends have in fact been paid out since their gifts were made, the use of this method in the present case would produce a valuation of the income interests which is inaccurate ex post, but they note that determining the value of an income interest is necessarily "fraught with speculation and uncertainty," McMurtry v. Commissioner, 203 F.2d 659, 666 (1 Cir. 1953), and that the tables in question are not intended to operate with total accuracy in particular cases but rather work on "the law of averages," Gelb v. Commissioner, 298 F.2d 544, 552 (2 Cir. 1962). This rate applies only to gifts made prior to 1971.

"[T]he United States is in business with enough different taxpayers so that the law of averages has ample opportunity to work." Gelb v. Commissioner, 298 F.2d 544, 552 (2d Cir. 1962). Moreover, although the taxpayer has the burden of showing the error in the Commissioner's determination, where the taxpayer proves that normally the actuarial tables provided in the Regulations would be applicable to his case, the burden is on the Government to show that the case is "exceptional," justifying a modification of or departure from the prescribed method.

As we have observed before, "this is most unlike a sale," Levin v. C.I.R., supra, 385 F.2d at 527-528, and dividend treatment is appropriate. As to (3), the men's expectancies with respect to the period of redemption were equal from an actuarial standpoint, cf. Gelb v. C.I.R., 298 F.2d 544, 551 n. 7 (2 Cir. 1962), although, of course, matters might not work out that way. While the record gives no information concerning the ages and consequent expectancies of the wives, it is not unreasonable to assume that they would be approximately the same age when their husbands retired. If the facts were significantly different, the taxpayers had the burden of showing this. Tax Ct.Rule 32. We accordingly need not decide whether a large difference in the expectancy would make the planned series of redemptions so disproportionate as to justify capital gains treatment.

"The United States is in business with enough different taxpayers so that the law of averages has ample opportunity to work." Gelb v. C. I. R., 298 F.2d 544, 552 (2d Cir. 1962). Reversed.

A Treasury regulation requires the "specific portion," referred to in section 2056(b)(5), to "constitute a fractional or percentile share of a property interest." In Gelb v. Commissioner of Internal Revenue, 298 F.2d 544, 549 (2d Cir. 1962), we pointed out that prior to the 1954 Code, unless all of a trust qualified for a marital deduction, no part of it would, and that the 1954 Code introduced a new concept — the qualifying "specific portion." Construing the provision as a liberalization of prior law, we disapproved the regulation and held that the "specific portion" may be a dollar amount and even one determined by actuarial calculation of life expectancy.