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NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports.  Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
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SUPREME COURT OF THE UNITED STATES
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No. 92-1546
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UNITED STATES, PETITIONER v. JOHN O.
IRVINE and FIRST TRUST NATIONAL
ASSOCIATION
on writ of certiorari to the united states court
of appeals for the eighth circuit
[April 20, 1994]

  Justice Souter delivered the opinion of the Court.
  In Jewett v. Commissioner, 455 U. S. 305 (1982), we
construed the 1958 version of Treasury Regulation
25.2511-1(c) to provide that the disclaimer of a remain-
der interest in a trust effects a taxable gift unless the
disclaimant acts within a reasonable time after learning
of the transfer that created the interest.  This case
presents the question whether the rule is the same,
under current Treasury Regulation 25.2511-1(c)(2)
(Regulation), when the creation of the interest (but not
the disclaimer) occurred before enactment of the federal
gift tax provisions of the Revenue Act of 1932.  We hold
that it is.

                      I
  In 1917, Lucius P. Ordway established an irrevocable
inter vivos family trust, with his wife and their children
as primary concurrent life income beneficiaries, to be
succeeded by unmarried surviving spouses of the
children and by grandchildren.  The trust was to
terminate upon the death of the last surviving primary
income beneficiary, at which time the corpus would be
distributed to Mr. Ordway's surviving grandchildren and
the issue of any grandchildren who had died before
termination.  When the trust terminated on June 27,
1979, the corpus was subject to division into 13 equal
shares among 12 grandchildren living and the issue of
one who had died.  Prior to distribution, on August 23,
1979, one of the grandchildren, Sally Ordway Irvine,
filed a disclaimer of five-sixteenths of her interest in the
trust principal.  Mrs. Irvine had learned of her contin-
gent interest in the trust at least as early as 1931 when
she reached the age of 21, and she had begun receiving
a share of the annual trust income after her father's
death in 1966.  Her disclaimer was nonetheless effective
under a Minnesota statute on the books at the time,
which permitted the disclaimer of a future interest at
any time within six months of the event finally identify-
ing the disclaimant and causing her interest to become
indefeasibly fixed.  As a result of her disclaimer, each
of Mrs. Irvine's five children received one-sixteenth of
her share of the distributed trust principal.
  Mrs. Irvine reported the disclaimer in a federal gift
tax return, but did not treat it as resulting in a taxable
gift.  The Commissioner of Internal Revenue determined
on audit that the disclaimer indirectly transferred
property by gift within the meaning of Internal Revenue
Code of 1986 2501(a)(1) and 2511(a), and was not
excepted from gift tax under Treas. Reg. 25.2511-1(c)
because it was not made -within a reasonable time after
[Mrs. Irvine's] knowledge- of her grandfather's transfer
creating her interest in the trust estate.  Mrs. Irvine
responded with an amended return treating the dis-
claimer as a taxable gift, on which she paid the result-
ing tax of $7,468,671.00, plus $2,086,627.51 in accrued
interest on the deficiency.  She then claimed a refund
of the tax and interest, which the Internal Revenue
Service denied.
  After Mrs. Irvine's death in 1987, respondents, repre-
senting her estate, filed this action for refund of the tax
and interest in the United States District Court for the
District of Minnesota.  The Government continued to
maintain that the partial disclaimer brought about a
transfer subject to federal gift tax because Mrs. Irvine
had not made it, as the Regulation requires, -within a
reasonable time after knowledge of the [earlier] transfer-
that created her interest in the trust estate.  The
Government relied on Jewett v. Commissioner, 455 U. S.
305 (1982), in which this Court held that the -transfer-
referred to in Treas. Reg. 25.2511-1(c), 26 CFR
25.2511-1(c) (1959) (promulgated in 1958), knowledge
of which starts the clock ticking, occurs at the creation
of the interest being disclaimed, not when its extent is
finally ascertained or it becomes possessory.  Jewett,
supra, at 311-312.
  Respondents tried to distinguish Jewett as having
dealt with a trust established in 1939, after the creation
of the gift tax by the Revenue Act of 1932 (Act), where-
as the Ordway trust had been created before the Act, in
1917.  Respondents also argued that the -reasonable
time- limitation did not apply because the pre-Act, 1917
transfer creating the trust was not a -taxable transfer-
of an interest, absent which the Regulation was inappli-
cable.  On cross-motions for summary judgment, the
District Court held that imposing the gift tax on Mrs.
Irvine's disclaimer would amount to retroactive applica-
tion of the gift tax in violation of the Act's provision
that -[t]he tax shall not apply to a transfer made on or
before the date of the enactment of this Act [June 6,
1932].-  Revenue Act of 1932, ch. 209, 501(b), 47 Stat.
245.  The District Court cited Ordway v. United States,
89-1 USTC - 13,802 (1989), in which the United States
District Court for the Southern District of Florida had
reached the same conclusion, on virtually identical facts,
in a case involving a partial disclaimer by another
beneficiary of the Ordway trust.
  A divided panel of the Court of Appeals for the Eighth
Circuit reversed.  936 F. 2d 343 (1991).  It rejected the
view that the Regulation is inapplicable to a trust
created before enactment of the gift tax statute simply
because the Regulation reaches only -`taxable transfers
creating an interest in the person disclaiming made
before January 1, 1977.'-  Id., at 347 (emphasis in
original).  The Court of Appeals held that the transfer
creating the trust was -taxable,- relying on the provision
of Treas. Reg. 25.2518-2(c)(3) that -`a taxable transfer
occurs when there is a completed gift for Federal gift
tax purposes regardless of whether a gift tax is imposed
on the completed gift.'-  936 F. 2d, at 347-348.  The
court adopted the reasoning of its sister court for the
Eleventh Circuit in Ordway v. United States, 908 F. 2d
890 (1990), which held that a -taxable transfer- occurs
within the meaning of the Regulation whenever there is
-any transaction in which an interest in property is
gratuitously passed or conferred upon another, even if
that transaction was not subject to the gift tax.-  Id., at
895 (citation omitted).  Applying the Regulation, the
Court of Appeals for the Eighth Circuit held that Mrs.
Irvine's disclaimer was subject to gift tax because she
did not make it within a reasonable time after she
learned of her interest in the trust.  Finally, the divided
panel also upheld application of the Act against the
claim of retroactivity, holding it to be irrelevant that the
trust antedated the 1932 enactment of the Act, since the
tax was being imposed on the transfer brought about by
the 1979 disclaimer, not on the inter vivos transfer that
created the trust in 1917.  936 F. 2d, at 346.
  Respondents' suggestion for rehearing en banc was
granted, however, and the panel opinion was vacated.
Unlike the panel, the en banc court affirmed the District
Court, holding the Regulation inapplicable because its
terms expressly limit its scope to -taxable transfers . . .
made before January 1, 1977.-  981 F. 2d 991 (CA8
1992).  The creation of the Ordway trust in 1917 was
not a -taxable transfer,- the court reasoned, because the
federal gift tax provisions had yet to be enacted:  -It is
fundamental that for a transfer to be taxable there must
be an applicable tax in existence when the transfer is
made.  No such federal tax existed on January 16, 1917,
when . . .  Mrs. Irvine's interest was created.-  Id., at
994.  Given the inapplicability of the Regulation and its
-reasonable time- requirement for tax-free disclaimer,
the majority held that state law governed the effect of
a disclaimer for federal gift tax purposes. See id., at 996
(citing Hardenbergh v. Commissioner, 198 F. 2d 63
(CA8), cert. denied, 344 U. S. 836 (1952)); 981 F. 2d, at
998 (concurring opinion).  Because Mrs. Irvine's disclaim-
er was indisputably valid under Minnesota law, the
court held that the federal gift tax did not apply.
Finally, the majority rejected the panel's analysis of
retroactive application, indicating that taxation of the
transfer effected by the disclaimer would violate the
Act's prohibition of retroactive gift taxation.  Id., at 994.
  In a concurring opinion, id., at 996-998, Judge Loken
also concluded the Regulation was inapplicable, not
because of its limitation to -taxable transfers,- but
because it is limited to interests in -property transferred
from a decedent . . . by the decedent's will or by the law
of descent and distribution,- whereas the Ordway trust
came from an inter vivos transfer.  Judge Loken shared
the majority view, however, that because the Regulation
was inapplicable, federal gift tax consequences of the
disclaimer were a function of state law.  The dissent
took the position of the majority in the panel opinion,
and of the Eleventh Circuit in Ordway v. United States,
supra.  See 981 F. 2d, at 998-1002.
  The conflict prompted us to grant certiorari to deter-
mine whether a disclaimer made after enactment of the
gift tax statute, of an interest created before enactment,
is necessarily free of any consequent federal gift taxa-
tion.  508 U. S. ___ (1993).  We hold that it is not, and
reverse.

                     II
  The Internal Revenue Code of 1986 taxes -the transfer
of property by gift,- 26 U. S. C. 2501(a)(1), -whether
the transfer is in trust or otherwise, whether the gift is
direct or indirect, and whether the property is real or
personal, tangible or intangible. . . .,-  2511(a).  We
have repeatedly emphasized that this comprehensive
language was chosen to embrace all gratuitous transfers,
by whatever means, of property and property rights of
significant value.  See, e.g., Dickman v. Commissioner,
465 U. S. 330, 333-35 (1984); Jewett v. Commissioner,
455 U. S., at 309-310; Smith v. Shaughnessy, 318 U. S.
176, 180 (1943).  We held in Jewett, supra, at 310, that
-the statutory language . . . unquestionably encompasses
an indirect transfer, effected by means of a disclaimer,
of a contingent future interest in a trust,- the practical
effect of such a transfer being -to reduce the expected
size of [the taxpayer's] taxable estate and to confer a
gratuitous benefit upon the natural objects of [her]
bounty . . . .-
  Treas. Reg. 25.2511-1(c)(1) restates the gift tax's
broad scope by providing that the tax is payable on -any
transaction in which an interest in property is gratu-
itously passed or conferred upon another, regardless of
the means or device employed . . . .-  The Regulation
(subsection 1(c)(2)), on the other hand, affords an
exception to the general rule of taxability, by providing
that a disclaimer of property transferred by a decedent's
will or the law of descent and distribution does not
result in a gift if it is unequivocal and effective under
local law, and made -within a reasonable time after
knowledge of the existence of the transfer.-  As already
noted, the Jewett Court held that -the transfer- in the
1958 version of the Regulation refers to the creation of
the interest being disclaimed, with the -reasonable time-
therefore beginning to run upon knowledge of the
creation of the trust.  See supra, at 4.

                     III

                      A
  On one point there cannot be any serious dispute, for
it is clear that if the Regulation applies to Mrs. Irvine's
disclaimer, her act resulted in taxable gifts.  The
knowledge and capacity to act, which are presupposed by
the requirement that a tax-free disclaimer be made
within a reasonable time of the disclaimant's knowledge
of the transfer of the interest to her, were present in
this instance at least as early as Mrs. Irvine's 21st
birthday in 1931.  We need not decide whether a
disclaimer good for gift tax purposes could be required
to have been made before enactment of the gift tax, for
Mrs. Irvine did not disclaim shortly after enactment of
the Act, and the timeliness determination in this case
would be the same whether the reasonable time was
calculated from Mrs. Irvine's first knowledge of the
interest (1931) or from the enactment of the federal gift
tax statute (1932).  Moreover, we understand the
Government to have conceded that it would not have
contested the timeliness of a disclaimer made within a
reasonable time after the enactment of the Act.  See Tr.
of Oral Arg. 12.
  The determination of the amount of -reasonable time-
that remained after Mrs. Irvine learned of the interest
and reached majority status must be based upon the gift
tax's purpose to curb avoidance of the estate tax.  We
have already observed, supra, at 8, that -the practical
effect of [a disclaimer like this one is] to reduce the
expected size of [the disclaimant's] taxable estate and to
confer a gratuitous benefit upon the natural objects of
[her] bounty . . . .-  Jewett, 455 U. S., at 310.  Accord-
ingly, as the Court said in Jewett, -`[a]n important, if
not the main, purpose of the gift tax was to prevent or
compensate for avoidance of death taxes by taxing the
gifts of property inter vivos which, but for the gifts,
would be subject in its original or converted form to the
tax laid upon transfers at death.'-  Ibid. (quoting Estate
of Sanford v. Commissioner, 308 U. S. 39, 44 (1939)).
Hence the capacious language of Internal Revenue Code
2501(a)(1) and 2511(a), which encompasses all gratu-
itous transfers of property and property rights of
significant value.  See supra, at 9.
  -[T]he passage of time is crucial to the scheme of the
gift tax.-  Jewett, supra, at 316, n. 17 (internal quota-
tion marks and citation omitted).  The opportunity to
disclaim, and thereby to avoid gift as well as estate
taxation, should not be so long as to provide a virtually
unlimited opportunity to consider estate planning
consequences.  While a decision to disclaim even at the
earliest opportunity may be made with appreciation of
potential estate tax consequences, the passage of time
puts the prospective disclaimant in a correspondingly
superior position to determine whether her need to enjoy
the property (and incur a tax for a subsequent gift of it
or an increased estate tax if she retains it) outweighs
the favorable estate and gift tax consequences of a
disclaimer.  Although there is no bright line rule for
timeliness in the absence of a statute or regulation
providing one, Mrs. Irvine's delay for at least 47 years
after the clock began running, until she reached age 68,
could not possibly be thought reasonable.  By the date
of her disclaimer, Mrs. Irvine was in a position to make
a fairly precise determination of the advantage to be
gained by a transfer diminishing her estate 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 applica-
tion 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 pre-enactment
transfers taxable.  The language is, to say the least,
troublesome to the Government's position that the
Regulation applies.  The Government responds to the
trouble by citing Treas. Reg. 25.2518-2(c)(3) (adopted
in 1986, as was the Regulation), which deals with the
new regime (not applicable here) for disclaimers of
interests created after December 31, 1976, and defines
-taxable transfer- for its purposes as covering transfers
on which no tax is actually imposed (e.g., because a gift
is chargeable against the current lifetime exemption, 26
U. S. C. 2503(b)).  If this definition is thought to beg
the question, the Government falls back to the argument
that the predecessor regulation was not limited in
application to interests derived from taxable transfers,
and there was no intent in 1986 to narrow the scope
covered by the 1958 version of the Regulation in any
such way.
  The second argument rests on the Regulation's
provision that -the transfer- to which it applies is
subject to a timely, tax-free disclaimer -whether the
transfer is effected by the decedent's will or by the law
of descent and distribution,- but only -where the law
governing the administration of the decedent's estate-
gives the recipient of the transferred interest a right to
refuse it.  As against these descriptions of the
transfer's testamentary character, the text says nothing
indicating that a taxable transfer from anyone other
than a decedent may create an interest subject to a
disclaimer free of gift tax.  If the text is given its strict
reading, then, it has no application to the interest in
question here, which came into being not from a dece-
dent's transfer by will or from application of the law of
descent and distribution, but from Mr. Ordway's transfer
during his lifetime, creating an irrevocable inter vivos
trust.

                      2
  Even assuming the soundness of one or both of these
arguments that the Regulation is inapposite, however,
the disclaimer would not escape federal gift taxation by
reference to state law rules giving effect to the
disclaimer as causing a transfer to the beneficiary next
in line.  Any such reasoning would run counter to our
holding in Jewett.  In rejecting the argument that the
1958 version of the Regulation was being applied
retroactively to the taxpayer's disadvantage in that case,
the Jewett Court repudiated the -assumption that [the
taxpayer] had a `right' to renounce the interest without
tax consequences that was `taken away' by the 1958
Regulation.  [The taxpayer] never had such a right.-
Jewett, 455 U. S., at 317.  Only then did the Jewett
Court go on to determine that the disclaimer at issue
did not fall within the exemption from the gift tax
provided by the Regulation, and was consequently
taxable.  Id., at 312-316.  The Court followed the
general and longstanding rule in federal tax cases that
although state law creates legal interests and rights in
property, federal law determines whether and to what
extent those interests will be taxed.  See, e.g., Burnet v.
Harmel, 287 U. S. 103, 110 (1932); Morgan v. Commis-
sioner, 309 U. S. 78, 80-81 (1940); United States v.
Mitchell, 403 U. S. 190, 197 (1971).  The Court put it
this way in United States v. Pelzer, 312 U. S. 399,
402-403 (1941):
-[T]he revenue laws are to be construed in the light
of their general purpose to establish a nationwide
scheme of taxation uniform in its application.
Hence their provisions are not to be taken as subject
to state control or limitation unless the language or
necessary implication of the section involved makes
its application dependent on state law.-

  Cases like Jewett and this one illustrate as well as
any why it is that state property transfer rules do not
translate into federal taxation rules.  Under state
property rules, an effective disclaimer of a testamentary
gift is generally treated as relating back to the mo-
ment of the original transfer of the interest being
disclaimed, having the effect of canceling the transfer to
the disclaimant ab initio and substituting a single
transfer from the original donor to the beneficiary of the
disclaimer.  See, e.g., Schoonover v. Osborne, 193 Iowa
474, 478, 187 N. W. 20, 22 (1922); Seifner v. Weller, 171
S. W. 2d 617, 624 (Mo. 1943); Albany Hosp. v. Hanson,
214 N. Y. 435, 445, 108 N. E. 812, 815 (1915); Burritt
v. Silliman, 13 N. Y. 93, 97-98 (1855); Perkins v. Isley,
224 N. C. 793, 798, 32 S. E. 2d 588, 591 (1945); see also
3 American Law of Property 14.15 (A. Casner ed. 1952).
Although a state-law right to disclaim with such conse-
quences might be thought to follow from the
common-law principle that a gift is a bilateral transac-
tion, requiring not only a donor's intent to give, but also
a donee's acceptance, see, e.g., Wallace v. Moore, 219 Ga.
137, 139, 132 S. E. 2d 37, 39 (1963); Gottstein v. Hedges,
210 Iowa 272, 275, 228 N. W. 93, 94 (1929); Pirie v.
Le Saulnier, 161 Wis. 503, 507, 154 N. W. 993, 994
(1915); Blanchard v. Sheldon, 43 Vt. 512, 514 (1871),
state-law tolerance for delay in disclaiming reflects a
less theoretical concern.  An important consequence of
treating a disclaimer as an ab initio defeasance is that
the disclaimant's creditors are barred from reaching the
disclaimed property.  See, e.g., Gottstein v. Hedges,
supra.  The ab initio disclaimer thus operates as a legal
fiction obviating a more straightforward rule defeating
the claims of a disclaimant's creditors in the property
disclaimed.
  The principles underlying the federal gift tax treat-
ment of disclaimers look to different objects, however.
As we have already stated, Congress enacted the gift tax
as a supplement to the estate tax and a means of
curbing estate tax avoidance.  See supra, at 10-11.
Since the reasons for defeating a disclaimant's creditors
would furnish no reasons for defeating the gift tax as
well, the Jewett Court was undoubtedly correct to hold
that Congress had not meant to incorporate state law
fictions as touchstones of taxability when it enacted the
Act.  Absent such a legal fiction, the federal gift tax is
not struck blind by a disclaimer.  And as we have
already stated, supra, at 8-9, without the exception
afforded in the Regulation, the gift tax statute pro-
vides a general rule of taxability for disclaimers such as
respondent's.

                     IV
  Presumably to ward off any attack on the federal gift
tax resting on the possibility that its retroactive applica-
tion would violate due process, see Untermeyer v.
Anderson, 276 U. S. 440 (1928), 501(b) of the Act
provided that it would -not apply to a transfer made on
or before the date of the enactment of this Act [June 6,
1932].-  Revenue Act of 1932, ch. 209, 501(b), 47 Stat.
245.  The same provision has in substance been carried
forward to this day.  Respondents argue that even if
the Regulation applies, or taxation would otherwise be
authorized, taxation of the transfer following Mrs.
Irvine's disclaimer would violate this limitation.  The
language that respondents use to frame this claim
reveals the flaw in their position.  Respondents argue
that -[t]he government's interpretation of the 1986
Regulation to apply to interests created before enactment
of the Act [i.e., to result in taxability] would be a
retroactive application of the Act clearly contrary to
Congressional intent.-  Brief for Respondents 26.  But
501 merely prohibited application of the gift tax statute
to transfers antedating the enactment of the Act; it did
not prohibit taxation when interests created before the
Act were transferred after enactment.  Such post-
enactment transfers are all that happened on the
occasion of Mrs. Irvine's disclaimer.  The critical events,
the transfers of fractional portions of Mrs. Irvine's
remainder to her children, occurred after enactment of
the gift tax, though the interests transferred were
created before that date.  To argue otherwise, that the
transfer to be taxed antedated the Act, would be to cling
to the legal fiction that the disclaimer related back to
the moment in 1917 when Lucius P. Ordway established
the trust.  This fiction may be indulged under state law
as a device to regulate creditors' rights, but the Jewett
Court clearly held that Congress enacted no such
fantasy.  In sum, the retroactivity argument is suffi-
ciently answered by our statement in United States v.
Jacobs, 306 U. S. 363, 367 (1939), that a tax -does not
operate retroactively merely because some of the facts or
conditions upon which its application depends came into
being prior to the enactment of the tax.-

                      V
  The Commissioner's assessment of federal gift tax on
Mrs. Irvine's 1979 disclaimer was authorized by the
statute.  The judgment of the Court of Appeals is
reversed.
It is so ordered.

  Justice Blackmun took no part in the decision of this
case.