 Although the tax code indicated that Congress specifically intended that donees pay tax on all appreciation since the purchase of the property, Ms. Taft argued that the Sixteenth Amendment did not grant Congress the authority to authorize this type of tax.The Supreme Court held that the IRS could tax the appreciation which occurred while the gift was in the hands of the donor, finding that nothing in the Constitution requiring Congress to tax increased capital only so far as the increase occurred while in the hands of the current owner.As Ms. Taft accepted the gift with knowledge of the statute, she voluntarily assumed the position of the donor with respect to the appreciation of the stock.