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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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