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claim for a sum certain legally enforceable at the date of the
decedent's death, the claim was potential, unmatured, contested,
or contingent at the date of the decedent's death." Id. As a
result, we concluded that postdeath events--i.e., the future
settlements of the claims--had to be taken into account in
determining the proper amounts of the deductions to which the
estate was entitled.
In Estate of Taylor v. Commissioner, 39 T.C. at 372, a
husband and wife had entered into a separation agreement
requiring the husband to pay $500 a month to his wife for her
life or until she remarried. Upon the husband's death, the wife
made a demand upon the executors for continuation of the monthly
payments. The estate refused the wife's claim on the ground that
it was the intention of the parties to the separation agreement
that the payments would cease with the death of the husband.
While the matter was in litigation, the estate took a deduction
of $95,982 on its Federal estate tax return, which represented
the present value of the wife's right to receive $500 monthly
until she died or remarried. The following year the wife
remarried, and approximately 2 years thereafter, the Supreme
Judicial Court of Massachusetts ruled that the estate was liable
for payments for the period up to the wife's remarriage.
Pursuant to this decree, the estate paid to the wife $12,500 in
satisfaction of her claim.
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