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On June 19, 1997, respondent issued a notice of deficiency.
In the notice, respondent determined that the above improvements
were part of the real property owned by decedent, and, therefore,
includable in decedent’s gross estate.
Prior Court Proceedings
The main issue for decision was whether these improvements
were includable in decedent’s gross estate. Estate of Frazier v.
Commissioner, T.C. Memo. 1999-201. We held that, at the time of
decedent’s death, the improvements belonged to decedent and were
includable in his gross estate under section 20334 because FNF
did not have a statutory right to remove its improvements after
the expiration of the original tenancy. Id.
The estate appealed our decision. Estate of Frazier v.
Commissioner, 12 Fed. Appx. at 502. The U.S. Court of Appeals
for the Ninth Circuit found that FNF’s lease included an implied
right to remove trade fixtures and an implied agreement that any
holdover tenancy would continue according to the terms of the
original lease (except as to duration). Id. at 503. The U.S.
Court of Appeals held that FNF retained the right to remove trade
fixtures even after decedent’s death. Id. On remand, we were
instructed to determine whether the improvements at issue were
4 Unless otherwise indicated, all Rule references are to
the Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code in effect at the date
of decedent’s death.
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Last modified: May 25, 2011