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decedent’s interest in the malpractice claim against Eckell,
Sparks. Pursuant to the parties’ agreement, this $502,500 should
be reduced by $203,659 for legal costs in prosecuting the
malpractice, leaving a net value of $298,841. Pursuant to the
parties’ agreement, we next must multiply the $298,841 net amount
by .438233 (the present value factor), leaving $130,962 (rounded)
as the value of decedent’s interest in the malpractice claim as of
the date of death.
Issue 2. Whether That Portion of the Proceeds From the Settlement
of Claims Against the Law Firm of Eckell, Sparks Paid to
the Residuary Beneficiaries Is a Deductible Expense in
Determining Decedent’s Taxable Estate
Decedent’s estate argues that, if we determine that no portion
of the $750,000 settlement is allocable to the Glovers’ claim, then
the portion (60 percent) of the Eckell, Sparks settlement proceeds
payable to the Glovers pursuant to the plaintiffs’ agreement is
deductible (in determining decedent’s taxable estate) either as an
administration expense within the meaning of section 2053(a)(2) and
section 20.2053-3(c)(3), Estate Tax Regs., or as a claim against
the estate within the meaning of section 2053(a)(3) and section
20.2053-1(a)(1), Estate Tax Regs. We disagree.
An estate may deduct as claims against the estate only those
claims that are “enforceable against the decedent’s estate” and
only those amounts that “represent personal obligations of the
decedent existing at the time of his death”. Sec. 20.2053-4,
Estate Tax Regs. The plaintiffs’ agreement was not an obligation
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