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Here is the latest alert:
02/22/2012
Marshall Naify Revocable Trust v. U.S., No. 10-17358 D.C. No. 3:09-cv-01604-CRB
U.S. Court of Appeals for the Ninth Circuit, February 15, 2012
By David M. Eckstein, CFA *
Three contingent liability estate tax cases were decided between September 2010 and April 2011. One has now been affirmed on appeal. All three cases were governed by Treas. Reg. §20.2053 as it existed before its amendment in 2009[1], but appear to be consistent with the post-amendment regulation. All three original decisions and the appellate decision are favorable to the IRS in that they look to post-death settlements of the liabilities at amounts lower than the taxpayers expected as of the date of death. The recent appellate decision includes a detailed review of the Ninth Circuit’s position on looking to post-death events to determine value.
In the original Naify case[2], the Naify Trust argued that a contingent tax liability should be valued at $47 million based on the date-of-death probability of losing a $62 million income tax controversy, rather than at the subsequent $26 million settlement value, as argued by the Government. The District Court granted the Government’s Rule 12(c) motion for judgment on the pleading after determining that the Naify Trust’s complaint did not meet the test of showing that the tax claim was “ascertainable with reasonable certainty” as the date of death. Our prior Valuation Alert summarizes and analyzes the original District Court case. ... read more
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