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4. Mr. Stern’s Promise To Pay Petitioners’ Expenses on His
Behalf
On April 2, 1990, Mr. Stern promised to compensate
petitioner for her care for him and to repay petitioners for
their expenses on his behalf. Mr. Stern had substantial
financial means when he promised to pay petitioner. Petitioners
expected Mr. Stern to pay for the care that petitioner provided
him.
B. Mr. Stern’s Death and Estate
Mr. Stern died testate in 1992. His estate was worth about
$1 million. He left $1,000 to charity, and the rest to
petitioner.
Petitioner filed a claim against Mr. Stern’s estate for
$182,500. The amount of her claim was based on estimates of her
per-day expenses and the value of the services that petitioner
provided to Mr. Stern, multiplied by the number of days that Mr.
Stern lived with petitioners. On January 20, 1993, Judge Charles
J. Deiter (Judge Deiter), Marion Superior Court, Probate
Division, approved the claim, and ordered that the estate pay her
$182,500, “of which one-half * * * [was] reimbursement for living
expenses and the other half for personal care.”
On its Federal estate tax return, the Stern estate deducted
the $182,500 it paid to satisfy petitioner’s claim. The
Commissioner determined that the claim was not deductible under
section 2053, and that petitioner’s claim against the estate was
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