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not shown that any change in California law endowed the divorce
court with power to alter the 1984 PSA prior to accepting it and
incorporating it into the final judgment. According to a leading
treatise, the law in California regarding a divorce court's power
to modify a property settlement agreement before entering a
decree has not substantially changed from the time Gray v. United
States, supra, was decided. See 11 Witkin, Summary of Cal. Law,
ch. XVI, sec. 296 (9th ed. 1990) (citing Adams v. Adams, 177 P.2d
265 (Cal. 1947)). We conclude that the California divorce court
lacked sufficient power to modify the 1970 PSA and the 1984 PSA,
and therefore the Edwards children's claim is founded on those
agreements.
Petitioner has not demonstrated that it is entitled to
judgment as a matter of law. Courts have often expressed
reservations about extending the rationale of Harris v.
Commissioner, 340 U.S. 106 (1950), to encompass transfers to the
children of a decedent. See Rosenthal v. Commissioner, 205 F.2d
505 (2d Cir. 1953), revg. 17 T.C. 1047 (1951); Spruance v.
Commissioner, 60 T.C. 141 (1973), affd. without published opinion
505 F.2d 731 (3d Cir. 1974); Estate of Hartshorne v.
Commissioner, 48 T.C. 882 (1967), affd. 402 F.2d 592 (2d Cir.
1968); Estate of Keller v. Commissioner, 44 T.C. 851 (1965). In
Rosenthal v. Commissioner, supra at 508, the Court of Appeals for
the Second Circuit opined:
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