- 12 -
decontamination of real property. The estate contends that each
line of cases is analogous to the estate’s circumstances and
therefore provides authority to resolve the matter in favor of
the estate.
A. Cases Allowing Consideration of Future Tax Detriments
or Benefits
Built-in Capital Gains Cases
The estate relies on Estate of Davis v. Commissioner, 110
T.C. 530 (1998), and its progeny5 to support the proposition that
the value of the IRAs should be reduced by the income tax
liability resulting from their distribution. In Estate of Davis,
the donor held shares of a closely held corporation. The
corporation held assets which had appreciated and could not
readily be sold without payment of Federal income tax. The
Internal Revenue Service argued that the gift tax value of the
donor’s interest in the corporation should not be adjusted or
5See, e.g., Estate of Dunn v. Commissioner, 301 F.3d 339
(5th Cir. 2002), revg. T.C. Memo. 2000-12; Estate of Jameson v.
Commissioner, 267 F.3d 366 (5th Cir. 2001), revg. T.C. Memo.
1999-43; Eisenberg v. Commissioner, 155 F.3d 50 (2d Cir. 1998),
revg. T.C. Memo. 1997-483. Prior to 1986, courts generally held
that an estate could not reduce the value of closely held stock
by the capital gains tax potential. The repeal of the General
Utilities doctrine, by the Tax Reform Act of 1986, Pub. L. 99-
514, 100 Stat. 2085, dealing with corporate liquidations,
prompted courts to reconsider the settled law and allow estates
to take capital gains tax attributable to closely held corporate
stock into account. Gen. Utils. & Operating Co. v. Helvering,
296 U.S. 200 (1935); see Dunn v. Commissioner, supra; Estate of
Jameson v. Commissioner, supra; Eisenberg v. Commissioner, supra;
Estate of Davis v. Commissioner, 110 T.C. 530 (1998).
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011