- 13 -
Appeals did not perceive a meaningful distinction between the
valuation of claims that are enforceable but questionable as to
amount and claims where the amount is known but enforceability is
in doubt. Id. at 525.10 The Court of Appeals stated:
The actual value of Exxon’s claim prior to either
settlement or entry of a judgment is inherently
imprecise, yet “even a disputed claim may have a value,
to which lawyers who settle cases every day may well
testify, fully as measurable as the possible future
amounts that may eventually accrue on an uncontested
claim.” [Id. at 525 (quoting Gowetz v. Commissioner,
320 F.2d 874, 876 (1st Cir. 1963)).]
On remand, we were instructed to admit and consider evidence
of predeath facts and occurrences that are relevant to the date-
of-death value of Exxon’s claim, without admitting or considering
postdeath facts and occurrences such as the estate’s settlement
with Exxon. Id. at 517-518. The Court of Appeals, quoting Rev.
Rul. 59-60, 1959-1 C.B. 237, found the following words
instructive to this case:
A determination of fair market value, being a question
of fact, will depend upon the circumstances in each
case. No formula can be devised that will be generally
applicable to the multitude of different valuation
issues arising in estate and gift tax cases.... A
10The Court of Appeals provided the following example:
For example, if given the choice between being the
obligor of (1) a claim known to be worth $1 million
with a 50 percent chance of being adjudged
unenforceable, or (2) a claim known to be enforceable
with a value equally likely to be $1 million or zero, a
rational person would discern no difference in choosing
between the claims, as both have an expected value
$500,000. * * * [Id. at 525.]
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011