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In effect, the amounts estimated as being due to the contractor
and due to the estate from the insurance company resulted in a
net reduction of approximately $120,000 in the gross estate.
Considering the $612,000 inclusion and reduction of approximately
$120,000, the gross estate was increased by a net amount of
approximately $490,000 in connection with decedent’s interest in
the partially completed residence.
With respect to the $612,000 amount, respondent determined
that the value of the residence, as completed, should be
includable in the gross estate. Based on the $1,032,000
completed value set forth in the appraisal attached to the estate
tax return, respondent determined that the gross estate should be
increased by $420,000 ($1,032,000 less the $612,000 already
included)3. Respondent argues that the $420,000 increase
reflects decedent’s right to receive reimbursement from the
insurance company for the completion of the residence.
Respondent also determined that the gross estate should be
increased by $122,400,4 representing the excess of the estimated
amounts that may be due to the contractor over the estimated
3 A more complete discussion of how the $612,000 value was
computed appears infra pp. 13-14.
4 We have referred to this difference as an “approximate”
amount because it is not clear in the record how the $122,400
amount was calculated. In any event, the parties only argue
about whether the $122,400 adjustment should be sustained and not
about the stated amount.
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