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Commissioner, 54 T.C. 633, 636-637 (1970). This principle applies
specifically to the estate tax deductibility of items listed in
section 2053(a), including administrative expenses and claims
against the estate. United States v. White, 853 F.2d 107, 113-115
(2d Cir. 1988); Estate of Lewis v. Commissioner, 49 T.C. 684, 688
(1968).
Section 20.2053-1(b)(2), Estate Tax Regs., describes how a
court decree affects estate tax deductions under section 2053(a):
The decision of a local court as to the amount and
allowability under local law of a claim or administration
expense will ordinarily be accepted if the court passes
upon the facts upon which deductibility depends. If the
court does not pass upon those facts, its decree will, of
course, not be followed. For example, if the question
before the court is whether a claim should be allowed,
the decree allowing it will ordinarily be accepted as
establishing the validity and amount of the claim.
However, the decree will not necessarily be accepted even
though it purports to decide the facts upon which
deductibility depends. It must appear that the court
actually passed upon the merits of the claim. This will
be presumed in all cases of an active and genuine
contest. If the result reached appears to be
unreasonable, this is some evidence that there was not
such a contest, but it may be rebutted by proof to the
contrary. If the decree was rendered by consent, it will
be accepted, provided the consent was a bona fide
recognition of the validity of the claim (and not a mere
cloak for a gift) and was accepted by the court as
satisfactory evidence upon the merits. It will be
presumed that the consent was of this character, and was
so accepted, if given by all parties having an interest
adverse to the claimant. The decree will not be accepted
if it is at variance with the law of the State; as, for
example, an allowance made to an executor in excess of
that prescribed by statute. On the other hand, a
deduction for the amount of a bona fide indebtedness of
the decedent, or of a reasonable expense of
administration, will not be denied because no court
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