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months later, the Association's bylaws were amended to permit the
settlement of outstanding claims for less than the full amount
owed. The estate ultimately settled the claim for less than the
amount originally sought (and reported by the estate on its
return). Id. at 1250.
The Court of Appeals for the Ninth Circuit found that the
Association's lien claims were certain and enforceable when the
decedent died. The Court of Appeals noted that at the time of
the decedent's death, the Association lacked the authority to
settle claims for less than their full amount. In addition, the
estate lacked even a colorable defense against the Association's
claims. The Court of Appeals ruled that "when claims are for
sums certain and are legally enforceable as of the date of death,
post-death events are not relevant in computing the permissible
deduction." Id. at 1254. The estate was entitled, therefore, to
a deduction for the claim in the amount reported on its estate
tax return.
Petitioner's reliance on Propstra is misplaced. In
Propstra, the Court of Appeals explained that the threshold
determination to be made under section 2053(a)(3) is whether the
claim in question was certain and enforceable at the time of the
decedent's death. See id. at 1253. The Court of Appeals
precluded consideration of postdeath events only where a claim
was found to be certain and enforceable on the date of death.
Id. at 1254; see also Estate of Van Horne v. Commissioner, 720
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