Estate of Algerine Allen Smith, Deceased, James Allen Smith, Executor - Page 13

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          postdeath events warrant consideration where the decedent's                 
          creditor has only a potential, unmatured, contingent, or                    
          contested claim which requires further action before it becomes a           
          fixed obligation of the estate.  Estate of Van Horne v.                     
          Commissioner, supra at 735.  Where a claim is disputed,                     
          contingent, or uncertain as of the date of the decedent's death,            
          the estate is not entitled to a deduction until the claim is                
          resolved and it is determined what amount, if any, will be paid.            
          It is this latter amount that is allowed as a deduction.  See,              
          e.g., Propstra v. United States, 680 F.2d 1248, 1253 (9th Cir.              
          1982); Estate of Taylor v. Commissioner, 39 T.C. 371, 375 (1962),           
          affd. sub nom. Gowetz v. Commissioner, 320 F.2d 874 (1st Cir.               
          1963); Estate of Cafaro v. Commissioner, T.C. Memo. 1989-348.               
               In Estate of Cafaro v. Commissioner, supra, for instance,              
          the taxpayer claimed several deductions pursuant to section                 
          2053(a)(3) which exceeded the amounts for which the estate                  
          ultimately settled the claims in issue, and the Commissioner                
          disallowed these deductions to the extent they exceeded the                 
          amounts of the settlements.9  This Court found that the                     
          settlement of the claims "indicates that, rather than being a               

               8(...continued)                                                        
          review all these prior cases in order to resolve the instant                
          case.                                                                       
               9One claim was settled before the taxpayer filed its Federal           
          estate tax return, while the other was settled after the return             
          had been filed.  Estate of Cafaro v. Commissioner, T.C. Memo.               
          1989-348.                                                                   




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