Estate of Algerine Allen Smith, Deceased, James Allen Smith, Executor - Page 15

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               We upheld the Commissioner's determination that the estate             
          was only entitled to a deduction of $12,500; i.e., the amount it            
          actually paid.  We stated that                                              

               because of the uncertainty as to whether the estate                    
               would ever pay any amount to Alice [the decedent's                     
               wife] on her disputed claim, the estate's liability was                
               contingent, and the outcome of such dispute must be                    
               looked to before the estate would be entitled to a                     
               deduction.                                                             
               Clearly the contesting of Alice's claim was not a                      
               frivolous or capricious act, but was based upon legal                  
               arguments which the estate deemed of sufficient                        
               importance to merit the attention of the highest court                 
               of Massachusetts.                                                      
               The value of the claim for deduction purposes was                      
               not reasonably ascertainable until the litigation ended                
               and the estate finally recognized its liability to                     
               Alice.  * * *  [Id. at 375; citations omitted.]                        

               On brief, petitioner argues that Exxon's claim was certain             
          and enforceable on the date of decedent's death, thereby                    
          entitling petitioner to deduct the entire amount of the claim in            
          determining the value of decedent's taxable estate.  Petitioner             
          posits several arguments in support of its position.  We shall              
          address each one in turn.                                                   
               First, petitioner contends that the HFU interest owners'               
          liability for the overcharges was the actual basis for the                  
          litigation in Exxon I, which was decided in 1983.  Petitioner               
          asserts that Exxon was required to make restitution only because            
          it was deemed necessary for the effective enforcement of the oil            
          pricing regulations.  Thus, petitioner maintains that Exxon's               




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