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bears the burden of proving its entitlement to the deduction.
Rule 142(a); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440
(1934).
I. Local Law
Petitioner contends that the attorney's fees are allowable
under local law because the Monroe County Surrogate's Court
issued a decree allowing the fees. Section 20.2053-1(b)(2),
Estate Tax Regs., addresses the effect of a local court decree:
The decision of a local court as to the amount and
allowability under local law of a claim or
administration expense will ordinarily be accepted if
the court passes upon the facts upon which
deductibility depends. * * * It must appear that the
court actually passed upon the merits of the claim.
This will be presumed in all cases of an active and
genuine contest. * * * The decree will not be accepted
if it is at variance with the law of the State. * * *
While it appears that the court passed upon the merits of
the claim, the relevant portion of the Surrogate's Court's
opinion contains no analysis supporting its conclusion.
Therefore, it is unclear whether the opinion is consistent with
New York law. Accordingly, we must conduct our own examination
of whether these expenses are deductible under New York law as
determined by the New York Court of Appeals. In doing so, we
give "proper regard" to the relevant rulings of New York's lower
courts. Commissioner v. Estate of Bosch, 387 U.S. 456, 465
(1967); United States v. White, 853 F.2d 107, 113-115 (2d Cir.
1988).
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