- 2 -
entered into a settlement agreement, which resolved
Exxon's claim for a total amount of $681,839. R
determined that P's sec. 2053(a)(3), I.R.C., deduction
was limited to $681,839.
As a result of paying Exxon an amount that
decedent had previously reported as income, P is
entitled to tax relief pursuant to the provisions of
sec. 1341(a), I.R.C. R determined that the income tax
benefit derived by P through application of sec.
1341(a), I.R.C., was an asset includable in the gross
estate.
Held: Exxon's claim against decedent was
uncertain and unenforceable as of the date of
decedent's death. P's deduction pursuant to sec.
2053(a)(3), I.R.C., is limited to the amount paid in
settlement of the claim.
Held, further: The income tax benefit derived by
P as a result of the application of sec. 1341(a),
I.R.C., is an asset includable in the gross estate.
P's deduction pursuant to sec. 2053(a)(3), I.R.C., of
its liability to Exxon and its sec. 1341(a), I.R.C.,
relief based on payment of that liability are so
inextricably linked that it would be inappropriate to
consider one in the determination of the taxable estate
while excluding the other.
Michael C. Riddle and Harold A. Chamberlain, for petitioner.
Carol Bingham McClure, for respondent.
OPINION
RUWE, Judge: In docket No. 19200-94, respondent determined
an estate tax deficiency of $663,785 and an accuracy-related
penalty under section 6662(a)1 in the amount of $132,785.2 In
1Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect as of the date of decedent's
death, and all Rule references are to the Tax Court Rules of
(continued...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011