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In determining the binding or persuasive effect of State
court decrees on Federal courts, interpreting the application of
State law, the Supreme Court has acknowledged that where State
law governs the ownership of property (as here), the State's
highest court is the best authority on its own law. Commissioner
v. Estate of Bosch, 387 U.S. 456, 465 (1967) (citing Erie R. Co.
v. Tompkins, 304 U.S. 64 (1938)). A Federal court in a Federal
estate tax controversy is not conclusively bound by a State trial
court's adjudication. Id. The ruling of an intermediate
appellate State court is not to be disregarded by a Federal court
unless it is considered that the State's highest court would
decide otherwise. Id. If there is no decision by the State's
highest court, the Federal court must do the best it can to
discern what such State's highest court would decide. Id.;
Estate of Rowan v. Commissioner, 54 T.C. 633, 636-639 (1970).
While a hearing occurred in regard to the petition, only the
final order was submitted into evidence in regard to the
California Superior Court's basis for its determination. Without
other evidence, we cannot rule out that respondent, if present at
the California Court, would have prevailed in opposing
petitioner's petition that the property was community property.
See Estate of Rowan v. Commissioner, supra at 638. The evidence
before us does not show that the proceeding in the Superior Court
was a bona fide, adversarial litigation. Therefore, we conclude
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