**IGNORANCE OF THE LAW IS NO EXCUSE: PROPOSED SECTION 2053 REGULATIONS
ON POST DEATH EVENTS ARE DEAD WRONG**

On April 23, 2007, the IRS issued proposed regulations[^1] providing
that the amount of an estate tax deduction for a claim against the
estate equals the amount paid. This article will analyze these IRS
proposals and explain why they are fatally flawed because they are
contrary to the law, to the estate tax regime, and are unreasonable.

**I. BRIEF BACKGROUND**

Section 2053(a)(3) allows an estate tax deduction for "claims against
the estate . . . as are allowable by the laws of the jurisdiction."[^2]
In determining whether or not post-death events are relevant to this
deduction, "the cases in this field dealing with post-death evidence are
not readily reconciled with one another, and at times it is like picking
one's way through a minefield in seeking to find a completely consistent
course of decision."[^3] One line of cases, starting in 1929, has
determined that the amount deductible for a claim is only the amount
actually paid.[^4] Another line of cases, starting in 1935,[^5] states
that the amount deductible is based on the value of the claim at date of
death.[^6]

The courts' inconsistency has been reflected in the IRS litigating
position on this issue as well. Generally, the IRS litigating position
has been that "the law requires this Court to deny the deduction based
upon a rule of 'no payment, no deduction,'"[^7] and that "post-death
events are controlling in determining the amount that may be deducted as
a claim against the estate whether or not the claim is contested or
contingent."[^8] However, when the post-death events result in an
increase in the amount paid for a claim against the estate, the IRS has
argued successfully that post-death events do not affect the deduction
for a claim against the estate.[^9] In essence, the IRS position has
been that whatever generates the most revenue in a particular situation
is correct.

**II. OVERVIEW OF PROPOSED REGULATIONS**

On April 23, 2007, the IRS issued proposed regulations requiring actual
payment prior to any deduction for a claim against the estate.[^10]
These proposals amend existing regulations under Section 20.2053-4, last
amended in 1958, "to clarify that events occurring after a decedent's
death are to be considered when determining the amount deductible under
all provisions of Section 2053 and that deductions under Section 2053
are limited to amounts actually paid by the estate in satisfaction of
deductible expenses and claims."[^11] In essence, the proposed
regulations adopt the "no payment, no deduction" theory.[^12]

Under these proposed regulations, if the claim is "potential, unmatured,
or contested at the time the return is filed,"[^13] the executor is not
allowed to claim any deduction or even make a protective election.[^14]
Only when paid are the amounts deducted.[^15] If the claim remains
pending prior to the statute of limitations expiring, then prior to the
expiration of the statute of limitation the executor may "file a
protective claim for refund to preserve its rights to claim a deduction
under Section 2053(a)"[^16] explaining "the reasons and contingencies
delaying actual payment," with the IRS acting on the claim only after
the executor notifies the IRS that "the contingency has been
resolved."[^17] In addition, if subsequent to the filing of the estate
tax return, the estate receives a tax refund or other adjustment to a
paid claim, the estate must notify the IRS and pay additional taxes, or
file a refund claim for overpaid taxes.[^18] The IRS also believes that
claims by family members "may create the potential for collusion in
asserting invalid or exaggerated claims."[^19] Thus the proposed
regulations establish "a rebuttable presumption that claims by a family
member of the decedent, a related entity, or a beneficiary of the
decedent's estate or revocable trust are not legitimate and bona fide
and therefore are not deductible."[^20]

As support for amending nearly 50 year old regulations, the IRS notes a
split in authority between those cases adhering to the Supreme Court's
position that valuation is made at date of death[^21] and those
following the 8th Circuit's position that a deduction is allowed only
for amounts actually paid.[^22] The way the IRS presents this issue is
misleading, as only the 8th Circuit,[^23] and possibly the Court of
Claims,[^24] has adopted the rule that amounts deducted for claims
against the estate equal only the amounts paid[^25] while the majority,
the 5th, 7th, 9th, 10th, and 11th Circuits, applies the date of death
principle.[^26] Also, the IRS presents no cogent reason why the 8th
Circuit should be preferred to the Supreme Court. Instead, the IRS
rejects the Supreme Court and majority position upholding a date of
death valuation for a claim against the estate because in the IRS view
such valuation

> has required an inefficient use of resources for the taxpayers, the
> IRS, and the courts. Determining a date of death value requires the
> taxpayer and the IRS to retry the substantive issues underlying the
> claims . . . . Furthermore, this approach has proven to be expensive .
> . . In addition, this approach generally results in a deduction that
> is different from the amount actually paid on disputed claims.
> Finally, the date-of-death valuation approach often forces the
> taxpayer involved in actively defending against a claim to take
> contradictory positions on the estate tax return and in the
> substantive court pleadings, and may actually increase the taxpayer's
> potential liability. . . . After carefully considering the numerous
> judicial decisions and the analysis and conclusion in each, the
> legislative history of Section 2053 and its predecessors, . . . and in
> order to further the goal of effective and fair administration of the
> tax laws, the proposed regulations adopt rules based on the premise
> that an estate may deduct under Section 2053(a)(3) only amounts
> actually paid.[^27]

The IRS notably avoid discussing that it essentially litigated this
exact position and lost in the 1st,[^28] 2nd,[^29] 5th,[^30] 7th[^31],
8th,[^32] 9th,[^33] 10th,[^34] and 11th[^35] Circuits, the Court of
Claims,[^36] the Tax Court,[^37] and various district courts.[^38] The
IRS also suspiciously neglects to mention that these regulations attempt
to overturn three recent adverse appellate court rulings[^39] and
instead advance the IRS "failed litigating position."[^40] In addition,
in issuing these proposals the IRS does not even discuss the statutory
language and ignores the basic character of the estate tax, other estate
tax statutes, and are unreasonable. For these reasons, these sour grapes
regulations are not valid.

**III ANALYSIS OF PROPOSED REGULATIONS**

**A. Standard for Reviewing IRS Regulations**

Analyzing the validity of these proposed regulations is a two step
process. The first step is to analyze Section 2053 itself. "The task of
resolving the dispute over the meaning of \[a statute\] begins where all
such inquiries must begin: with the language of the statute
itself."[^41] "If the plain meaning of the statute only supports one
interpretation, the statute is not ambiguous."[^42] If this statute is
unambiguous, the IRS has no discretion to issue regulations contrary to
that unambiguous statute; instead, the plain meaning of the unambiguous
statute must be implemented.[^43]

"The plainness or ambiguity of statutory language is determined by
reference to the language itself, the specific context in which that
language is used, and the broader context of the statute as a
whole."[^44] "All acts of the legislature should be so construed, if
practicable, that one section will not defeat or destroy another, but
explain and support it."[^45] That is, "a reviewing court should not
confine itself to examining a particular statutory provision in
isolation. Rather, the meaning -- or ambiguity -- of certain words or
phrases may only become evident when placed in context."[^46]Also, if a
court has declared the statute clear and unambiguous[^47] or declared
what congressional intent is,[^48] the IRS has no discretion to issue
regulations contrary to that court ruling or court declaration of
congressional intent.[^49]

The second step occurs only if Section 2053 is ambiguous. "\[I\]f the
statute is silent or ambiguous with respect to the specific issue, the
question for the court is whether the agency's answer is based on a
permissible construction of the statute."[^50] A permissible
construction is one that is "reasonable"[^51] as "Congress has delegated
to the Commissioner the power to promulgate all needful rules and
regulations for the enforcement of the Internal Revenue Code, 26 U.S.C.
§7805(a), \[and courts\] must defer to his regulatory interpretations of
the Code so long as they are reasonable."[^52] The regulations will be
rejected if unreasonable or "arbitrary, capricious, or manifestly
contrary to the statute."[^53] The regulation may not amend[^54] the
statute or add "something which is not there."[^55] Also, the IRS "has
no more power to add to the Act what \[it\] thinks Congress may have
overlooked than \[it\] has to supply what Congress has deliberately
omitted."[^56] That is, the IRS "authority to issue regulations is not
the power to make law -- for no such power can be delegated by Congress
-- but the power to adopt regulations to carry into effect the will of
Congress as expressed by the statute."[^57] "In determining whether a
particular regulation carries out the congressional mandate in a proper
manner, we look to see whether the regulation harmonizes with the plain
language of the statute, its origin, and its purpose*.*"[^58]

**B. The Proposed Regulations Are Contrary To Section 2053.**

As noted above, the first step in determining the validity of the
proposed regulations is to read Section 2053 and determine if its
meaning is plain and the statute is unambiguous, and if so what it says.
If a court has already made that determination, then that is the clear
meaning of the statute.[^59] The IRS may only issue regulations
consistent with that unambiguous, clear meaning.[^60] In determining the
clarity of the statute, the plain language and context are
considered.[^61] For the reasons stated below, the author believes that
the proposed regulations are contrary to the clear meaning of Section
2053.

1\. [They are Contrary to the Language of Section 2053]{.underline}

In 2001, after the 1999 court ruling rejecting the IRS position that
claims against the estate are valued based on amounts actually paid[^62]
and after the IRS announced it would not follow that decision,[^63]
Congress amended Section 2053 to require actual payment -- for foreign
estate taxes.[^64] However, Congress did not amend Section 2053 to
provide that a claim actually be paid before it could be deducted. If
Congress wanted actual payment prior to a deduction being allowable for
claims, it knew how to do so and could have done so. It did not. The IRS
may not add "something which is not there"[^65] or "supply what Congress
has deliberately omitted."[^66] As one Court has stated: "We cannot, if
we would, amend the statute to read ... 'Claims against the estate *so
far as paid*.'"[^67] Yet, the IRS in these proposed regulations is
trying to amend the statute to so read. For these reasons, requiring
actual payment for deduction of a claim is manifestly contrary to
Section 2053.

2\. [They Ignore a 50 year old Statutory Amendment]{.underline}

Second, the plain language of Section 2053(a) rejects the IRS
construction. In 1954, Congress amended Section 2053(a) from authorizing
a deduction for claims "allowed by the laws of the jurisdiction" to the
current "allowable by the laws of the jurisdiction." The proposed
regulations are an attempt to amend the statute back to "allowed" from
the current "allowable."

"Allowed" is a past-tense verb, stating that something has happened; in
particular, that some party has allowed the claim.[^68] Whether that
party is a court, an arbitrator, or the defendant-estate, some party has
acted on and determined the payment under that claim. At that point,
payment is generally only a formality; the disputes have ended. In
contrast, "allowable" is an adjective, meaning something that can be
allowed or is permissible.[^69] The latter word permits the possibility
that not only has nothing been allowed, but also that no one will
ultimately ever allow the claim.

By requiring actual payment, the proposed regulations require that some
party allowed the claim, whether formally or informally, with such
allowance occurring prior to the claim being deductible. "Allowed" is
prior, not current law.[^70] Currently, the statute expressly does not
require such mandatory allowance; in fact, it was amended in 1954 to
delete any such mandatory action. The IRS may not amend Section 2053;
only Congress may.[^71] Yet, the proposed regulations attempt to amend
the statute in all but name. Thus the proposed regulations are contrary
to the clear language of the statute, and thus invalid.

3\. [The Proposed Regulations Contrary to the Fundamental Nature of the
Estate Tax]{.underline}

These proposed regulations are contrary to the fundamental nature of the
estate tax. Section 2001 imposes an estate tax on a "transfer"[^72] by
the decedent.[^73] As a transfer tax, the "estate tax is not levied upon
the property of which an estate is composed. It is an excise imposed
upon the transfer of or shifting in relationships to property at
death."[^74] Although it is "tempting to revert to succession duty which
is a tax on receipt,"[^75] the estate tax is "not a tax upon succession
and receipt of benefits under the law or will;"[^76] the benefits, the
tangible fruit, of the estate;[^77] or "the interest to which some
person succeeds on a death."[^78] Instead, the estate tax is levied on
"the shifting of the economic benefits and burdens of property"[^79] and
thus on the net estate.[^80]

Because "\[i\]t is clear that the statute here involved is directed to
the privilege of transmission and not to the privilege of receiving the
estate,"[^81] "it is important to value the gross estate and the various
deductions as of the *same* date."[^82] Thus, "when the Supreme Court
announced the date-of-death valuation principle, it was making a
judgment about the nature of the federal estate tax -- specifically,
that it is a tax imposed on the act of transferring property by will or
intestacy and, because the act on which the tax is levied occurs at a
discrete time, i.e., the instant of death, the net value of the property
transferred should be ascertained, as nearly as possible, as of that
time."[^83] In other words, "the property to be valued for estate tax
purposes is that which the decedent actually transfers at his death
rather than the interest held by the decedent before death or that held
by the legatee after death."[^84] This transfer of both the benefits and
burdens, i.e., the assets and liabilities, or the net value of the
estate, is what is taxed for estate tax purposes as "Congress intended
to provide for a tax on net estates."[^85]

The proposed regulations change the estate tax from an excise tax on the
privilege of transferring the net estate to a succession tax on property
the legatees receive. In fact, the IRS boldly asserts that is why it
issued these regulations -- to tax the property received by the
legatees.[^86] The IRS has fallen victim to that temptation to change
the fundamental nature of the estate tax by transforming the estate tax
from an excise tax to a succession tax.[^87] In addition, taxing what is
actually received ignores the burdens of the property shifted, and
instead taxes only the benefits of the property, i.e., the gross value
of the assets. It also changes the estate tax from a tax on the transfer
by the *decedent* to a tax on the transfer by the *estate*. The proposed
regulations thereby improperly change the fundamental nature of the
estate tax and are thus invalid.[^88]

4\. [The Proposed Regulations are Contrary to Court
Pronouncements]{.underline}.

The proposed regulations also are contrary to court pronouncements as to
the clear and plain meaning of Section 2053. In construing Section 2053,
if a court has declared the statute clear and unambiguous,[^89] the IRS
has no discretion to issue regulations contrary to that court ruling or
court declaration of congressional intent. In 1938, the 2nd Circuit, in
interpreting the predecessor to Section 2053, noted that the IRS argued
"that the deduction of claims should be limited to only those allowed
and paid. The act, however, does not so read, and we cannot assume that
Congress so intended. . . . In construing this statute, we cannot go
beyond the clear and unambiguous phrase of the act."[^90] The 5th
Circuit interpreted the same statute in 1937 and stated that: "If \[the
Regulation\] means that definitely ascertained debts of the decedent are
to be recognized only insofar as they are paid, it is plainly contrary
to the statute."[^91] Only one court, *Propstra v. United States*,[^92]
has analyzed in any detail the 1954 amendment to Section 2053(a)
authorizing a deduction for claims "allowed by the laws of the
jurisdiction" to the current "allowable by the laws of the
jurisdiction."[^93] In analyzing this 1954 amendment, the *Propstra*
court concluded "that enforceability was to be determined at date of
death . . . \[and\] claims based on legally recognized and enforceable
rights were deductible; claims that were unenforceable because they
lacked legal foundation were not deductible, even if actually paid.
Congress lent support to this . . . construction when . . . it replaced
'allowed' with 'allowable'."[^94] *Propstra* also stated: "we think that
various indicia show that Congress intended that post-death events be
disregarded when valuing the claims against the estate."[^95] Thus, this
court ruled on what congressional intent was when it amended the
statute,[^96] and the IRS cannot overturn a court's interpretation of
congressional intent by a regulation.[^97]

Under each of these cases, this clear and unambiguous statute mandates
the deduction for the claim be based on date of death value and not
actual payment, rejecting the IRS attempt to construe the law
differently.[^98] As the 5th Circuit recently said in response to the
IRS plea for a no pay, no deduction approach, "We decline the
Commissioner's invitation to rewrite the law ourselves."[^99] As these
courts have declared Section 2053 to be clear and unambiguous, the IRS
must give effect to that construction.[^100] Thus, the IRS must construe
the deduction for claims against the estate as being valued at date of
death. The proposed regulations are contrary to these expressions and
statements, and are thus void.

5\. [The Proposed Regulations Create Disharmony in the Estate Tax
Regime, are Amendments in Disguise, and Defeat Other Estate Tax
Statutes.]{.underline}

Additionally, the proposed regulations do not operate in harmony with
related estate tax statutes,[^101] but instead impermissibly attempt to
amend estate tax law.[^102] The IRS proposed regulations further take
Section 2053 out of context, as if it were an island all unto itself,
and defeat and destroy[^103] other provisions of the estate tax law.

Under these proposed regulations, the IRS imposes an additional
requirement on the executor to file a protective claim prior to the
expiration of the statute of limitations and not as part of the estate
tax return and a new duty to notify the IRS when the contingency
affecting a claim has been removed.[^104] Yet, when Congress wanted to
impose a duty on an executor with respect to post-death events and their
impact on the estate tax, it specifically enacted statutes to do
so.[^105] Section 2053(a) imposes no explicit post-death duty. Also, if
the decedent and the party suing the estate were related, the proposals
apply a rebuttable presumption denying claims between related
parties.[^106] When Congress wanted to have family relations be
considered in terms of transfer tax valuation, Congress enacted Chapter
14 of the Internal Revenue Code.[^107] Nonetheless, in these proposals,
the IRS is seeking to add that which Congress did not -- another
post-death duty and another family attribution provision. Thus, these
proposals are a disguised statutory amendment, something the IRS cannot
do.

Moreover, in 2001, Congress added Section 2058, which authorizes a
deduction for state death taxes "actually paid," provided that any
deduction is claimed within certain time periods, such as before four
years after the filing of the estate tax return.[^108] Congress thus
provided for an estate tax deduction that could not be claimed on the
estate tax return if not actually paid by then, and provided an implied
exception to the three year statute of limitation by authorizing a
refund claim (or a claim for a deduction) within certain time periods
after filing the return. The proposed regulations under Section 2053
attempt to export the concept and structure of Section 2058, excluding
any time limitation, to Section 2053(a). That effectively rewrites the
law, again something that the IRS cannot do.

Section 2057 also belies the IRS position that the deduction for claims
against the estate should be treated similarly to the deduction for
funeral expenses and administration expenses because they are in the
same statute.[^109] In Section 2057, Congress has concluded that claims
are more analogous to mortgages,[^110] which exist at the date of death
and are not dependent on post-death events.[^111] Also, funeral expenses
and administration expenses do not exist as of, and by their very nature
cannot exist prior to, death,[^112] but claims against the estate are
claims against the decedent,[^113] and as such the facts underlying the
claim, and the claim itself, exist as of date of death. In addition,
funeral expenses and administration expenses often have priority in
payment over taxes, while claims against the estate have no such
priority.[^114] The IRS, in issuing the proposed regulations, aligns
itself with cases that have analogized claims against the estate to the
deductions for funeral expenses and administration expenses, which is a
false analogy.[^115] By doing so, the IRS is attempting to ignore the
provision of Section 2057 that differentiates funeral expenses and
administration expenses from claims against the estate. The IRS
regulations must implement Section 2053(a) in accordance with its
context, not rewrite the law.[^116]

In addition to disguised statutory amendments, the IRS in these proposed
regulations treat Section 2053 in isolation, and thereby defeats and
destroys other estate tax statutes. For example, Section 6166 provides
that in determining whether an estate qualifies for payment of estate
taxes in installments, the deductions allowable under Section 2053 are
considered.[^117] Section 2057 has a similar requirement as Section
6166, except qualification for its benefits expressly considered only
deductions for claims against the estate and mortgages.[^118] For
Section 6166 and Section 2057 to be effective, the estate and the IRS
need to know *prior* to any tax payments if the estate qualifies for the
benefits authorized therein. Otherwise, the estate could have had to pay
the estate taxes without being able to claim the benefits of Section
6166 and Section 2057 even though the estate should have been able to
utilize these statutory benefits. Thus, under the proposed regulations,
in order to obtain benefits expressly authorized by Section 2053, the
executor must not file a timely and complete estate tax return,[^119]
and instead must undertake additional, new non-statutory duties, and
potentially lose the ability to claim the benefits of Section 6166 and
Section 2057.

Another statute defeated by these proposals is the statute of
limitations.[^120] In specific, the IRS proposals result in an
indeterminate statute of limitations, depending solely on when claims
are actually paid. Yet, the statute of limitations is based solely on
the due date and the filing of the return, not on when a non-tax related
claim is resolved.[^121] This proposal exacerbates rather than
"alleviates the uncertainty and delay in estate administration which may
result if events occurring months or even years after a decedent's death
could be considered in valuing a claim against the estate."[^122] Thus,
these IRS proposals destroy the effects and purposes of other provisions
of the estate tax regime.

Given the disharmony and destruction created by using other than date of
death valuation for purposes of calculating the deduction for claims, a
reasonable inquiry is how the IRS or any court that has applied a
different valuation date has addressed these issues or questions. The
answer is that none of them have even raised the issues, much less
answered them. In fact, the IRS and these courts have glaringly ignored:
(1) general principles of statutory construction;[^123] (2) the 1954
amendment to the Section 2053(a), changing "allowed" to
"allowable";[^124] (3) that the estate tax is on the act of transfer; by
the decedent of his or her net estate[^125] (4) other estate tax
statutes; (5) that Section 2053 also provides a deduction for mortgages
or (6) that requiring actual expenditure before a claim could be
deducted is inconsistent with the 1932 statute which also authorized a
deduction to an estate for spousal support "actually expended."[^126] No
case construing claims against the estate has considered the 2001
amendment to Section 2053(d) or addition of Section 2058, and the IRS
blithely ignores both. Many have ignored those decisions in their own
circuit that applied date of death valuation to claims that were not
actually paid.[^127] Rather, these courts and the IRS have treated
Section 2053 (or its predecessor) as if it were devoid and bereft of any
context or history, and "merely . . . a mechanism."[^128] In essence,
these courts, and the IRS, failed to examine "the language \[of Section
2053\] itself, the specific context in which that language is used, and
the broader context of the statute as a whole."[^129]

Also, many of these courts have argued that the fundamental excise tax
nature[^130] of the estate tax on the net value of the estate,[^131] on
the transfer by the decedent of the benefits and burdens of
property,[^132] does not apply because the deduction for claims against
the estate is not the charitable deduction.[^133] Instead, most of these
courts, in reaching their conclusions, simply make bald assertions about
Congress wanting actual payment, without any single cite to any
statutory language, committee report, legislative analysis, statement by
any elected official, or other basis for that conclusion because no such
basis exists.[^134] Sometimes, these courts make similar bald assertions
about the reasons behind using date of death valuation, such as that
such valuation would mean that the deduction for claims depends on the
decedent's awareness of the claim or frustrate congressional purposes to
motivate decedents when enacting estate tax deductions.[^135] Awareness
of claim has never been argued as the basis for deduction of a claim and
even the IRS does not justify the proposed regulations on such
grounds.[^136] Moreover, no party has argued that the deduction for
claims against the estate is based on some congressional motivation
relating to influencing estates' litigating posture.[^137] This purblind
approach to understanding Section 2053 has led courts and the IRS to the
untenable and unsupportable conclusion that the deduction for claims
against the estate is based on amounts actually paid.

In contrast, whenever a court properly analyzed Section 2053, by
considering it in context,[^138] harmonizing it with other estate tax
statutes,[^139] and construing it to support and not defeat or destroy
such other statutes,[^140] that court has concluded that the date of
death valuation principle must apply. For example, if a court considered
the nature of the estate as a tax imposed on the act of transfer by the
decedent,[^141] it has applied the date of death principle to claims
against the estate. Every appellate court that has considered the
deduction for mortgages while considering the deduction for claims
against the estate has concluded that the deduction for claims against
the estate is based on the date of death valuation.[^142] The only
appellate court decision to analyze in detail the 1954 statutory change
from "allowed" to "allowable" also applied the date of death
principle.[^143] That, in part, is why, despite IRS efforts and pleas,
in the last decade the IRS has struck out in three different appellate
courts when it tried to advance its position stated in the proposed
regulations -- these courts actually considered the estate tax regime
and harmonized the statute in context. Thus, in light of (i) the 1954
and 2001 amendments to Section 2053, (ii) the basic nature of the estate
tax, and (iii) the context of Section 2053, Section 2053(a) has only one
plain, unambiguous meaning: the deduction for claims against the estate
equals the date of death value of the claims.

**C. The Proposed Regulations Are Unreasonable**

Notwithstanding the above, even if a reviewing court determines that
Section 2053 is ambiguous and that no court has stated that the statute
is clear, the IRS proposed regulations should not be upheld because they
are unreasonable.[^144] The author wishes to provide a few examples to
elucidate why these IRS proposals are unreasonable or arbitrary and
capricious.

> Example 1: Jane files a lawsuit against Jon, alleging that Jon owes
> Jane \$1,000X. Jane and Jon die the next day, and the sole asset of
> Jane's estate is the claim and Jon's estate owns one asset worth
> \$1,000X. Assume further that no other deductions or assets exist, the
> value of Jane's claim at date of death is \$500X, and ignore each
> decedent's applicable exclusion amount. Assume also that at the time
> of the filing of the estate tax return, the claim is still pending.
>
> Example 2: Assume the same facts as Example 1, except that Jane
> alleged that Jon stole a particular asset worth \$1,000X and that
> asset is the sole asset of Jon's estate.
>
> Example 3: Assume the same facts as Example 1 except Jon's sole asset
> is an interest in a wholly owned business and Jane's suit named Jon
> and that business as co-defendants.

In all three examples, Jane's estate is subject to tax on the value of
the claim as of the date of death.[^145] Thus, Jane would have a taxable
estate of \$500X. This value does not change regardless of the results
in the lawsuit.

However, the tax on Jon's estate changes in each of these three
examples.

In Example 1, under these proposed regulations, \$500X + \$1,000X would
be subject to estate tax because Jane has a taxable estate of \$500X and
Jon would have a taxable estate of \$1,000X and no deduction for the
contingent claim.

In Example 2, only \$1,000X is subject to estate tax because Jane has a
taxable estate of \$500X and Jon would have a taxable estate of \$500X
as the fair market value of the \$1,000X asset would be reduced by the
\$500X contingent liability to Jane's estate.[^146]

In contrast, in Example 3, on Jon's death, the business is also subject
to the claim for \$500X, and Jon's estate would value that business, and
thus the estate's interest in that business, subject to its share of the
liability under the claim.[^147] Thus, in Example 3, under these
proposed regulations something less than \$1,000X + \$500X but more than
\$1,000X would be subject to estate taxes.

However, the results in Example 1 and Example 2 and Example 3 should be
the same -- the type of claim Jane has and the assets in Jon's estate
should not impact the estate tax consequences. Nothing in the code
provides any basis to conclude that the taxes should change based on the
nature of the claim or the nature of the estate-defendant's assets.
Rather Section 2053 provides a deduction for claims without any
qualification or description,[^148] so all claims must be treated
equally. However, these proposed regulations make some claims more equal
than others. In fact, it seeks to amend the statute to allow a deduction
for only "*finally determined as valid* claims against the
estate."[^149] However, the IRS cannot amend a statute.

These proposed regulations again raise the following questions raised in
1934 by a court: "Why insert a further limitation when Congress acted
three times \[as of 1934\] to amend the section and left it out? Why add
words of limitation when the effect of such addition produces results
which do not square with one\'s sense of fairness? Why impose words of
limitation when the language of the statute, literally construed, does
not include such limitations?"[^150] Over seventy years later, the
proposed regulations still are unable to answer these questions. The
proposed regulations thereby create an unreasonable, schizophrenic
system, where tax consequences vary based upon actions of unrelated
plaintiffs or upon whether the estate is the plaintiff or defendant. A
court should refuse to swallow these IRS sour grapes regulations, and
their attempt to force an unreasonable position down the law's throat.

**D. The IRS Bases for the Proposed Regulations are Unpersuasive**

Initially, the IRS argues that it needs to issue regulations because
different estates are treated differently based in which circuit the
estate is being administered.[^151] That different circuits have
different positions, and thus federal law is applied differently among
the circuits, is how the federal judicial system works. The only way to
resolve circuit conflict is (1) a Supreme Court decision or (2) a change
in the law by Congress. The IRS is seeking to add a third option: when
an administrative body says so. That is not how our federal judicial
system works. The IRS is not a pseudo-Supreme Court or super-Congress.
It is an administrative agency obligated to abide by and follow the law,
including court rulings as to that law. If there is a conflict in the
circuits, it must apply the law differently, depending on the circuit.

Besides, if it were to pick sides in the dispute, the IRS fails to
provide any cogent reason why the regulations should reject the Supreme
Court in favor of a lower court (and the distinct minority) position. A
reasonable person would assume that the Supreme Court should always be
preferred and followed. That there should be uniformity sounds
reasonable, but the IRS may not overrule a court, and uniformity does
not support the IRS spurning the Supreme Court.

As another basis arguing for its position, the IRS states that using a
date of death valuation approach: "generally results in a deduction that
is different from the amount actually paid on disputed claims."[^152] In
other words, if the deduction is not equal to the amounts actually paid,
the deduction does not equal the amounts actually paid. Besides stating
the obvious and being circular, that statement is unhelpful.

Anyway, if an estate seeks to deduct amounts for unfounded or fabricated
claims, the IRS can adequately protect against that by audit or by
requiring the estate to provide an independent appraisal valuing the
claim. The IRS could also pursue fraud actions against an estate
attempting this shenanigan. The IRS also has valued claims before,[^153]
and in cases where the estate is the plaintiff, the issue of valuing the
claim has never been debated as being impossible or not doable.[^154]

In the examples above, Jane's estate could and would value the claim at
date of death, and the IRS could challenge that valuation. If Jane
recovered more or less than that valued amount, Jane's estate does no
get a tax refund or an increased tax liability. The same parallel
valuation approach should be used for Jon's estate, but for some
unexplained reason the IRS rejects that. It can be done, it is done, and
it should be done. So, this basis is unpersuasive.

As another basis for its position, the IRS argues fairness and
efficiency. Yet, fairness actually cuts the other way. "The decedent
transfers his obligations along with his assets and, as a matter of
fairness as well as administrative convenience, the determination
whether an obligation exists in the estate should be made at the time of
death."[^155] Moreover, forcing the estate to settle prematurely and in
excess of what is reasonable can hardly be described as fair to the
taxpayer-estate. As for efficiency, the IRS proposal exacerbates rather
than "alleviates the uncertainty and delay in estate administration
which may result if events occurring months or even years after a
decedent's death could be considered in valuing a claim against the
estate."[^156] Efficient administration of estates is completely lost if
these regulations are finalized as written.

As yet another basis for its position, the IRS expresses concern about
re-litigating underlying state law issues. However, the same argument
could be made about any valuation requiring an expert opinion, such as
for fractional or minority interests, interest in closely-held
businesses, unsecured debts (whether assets or liabilities), or other
contingent assets and liabilities. That all these other values are based
on date of death strongly argues for valuing claims at date of death.
Also, the statute does not explicitly require different treatment for
claims. So, this concern is misplaced.

As a fifth and final basis for its position, the IRS argues that under
current law an estate is forced to "take contradictory positions on the
estate tax return and in the substantive court pleadings and may
actually increase the taxpayer's potential liability."[^157] There is no
evidence of any "forcing" or mandating of an estate's position on the
return versus its position in the court pleadings. In valuing a claim as
of date of death, all reasonable possibilities, including the potential
for a complete defense victory, should be considered. If the estate
takes any reasonable position in the court pleadings, that position is
not at all "contradictory" with the estate tax return value. Moreover,
this IRS argument implicitly assumes that the estate tax return is
discoverable and admissible evidence. However, tax returns of
decedent-estates may not be discoverable at all.[^158]

Also, there is no reason why the estate tax result should be different
if the estate were the plaintiff or the claim were against a particular
asset. The estate would have to value the claim at date of death, and as
a plaintiff in valuing the asset subject to the claim could be pressured
to undervalue its potential recovery, saving estate taxes, but which may
hinder recovery in the underlying litigation. If Congress were concerned
about such potential whipsaw effect on estates, it would have taxed
claims differently from any other item. It did not. The IRS cannot
change the law to have such different treatment.[^159]

In addition, nothing suggests that Congress intended the estate tax to
be a club by plaintiffs to force a fiduciary of an estate to settle,
based solely on tax considerations, what may be defensible claims.
Jane's estate would know that under the regulations, Jon's estate has to
pay estate taxes currently without any benefit from a deduction for the
claim. That may substantially impact Jon's estate's financial condition
and ability to defend itself. In addition, it allows Jane's estate to
essentially bargain for a larger up front settlement because Jon's
estate may need to take advantage of the tax deduction currently, rather
than waiting years to obtain any tax deduction for the claim. Also,
Jane's estate could take that deduction into account when settling its
claim, because in essence Jon's estate is saving, roughly, 45 cents in
taxes on every dollar paid in the settlement.[^160]

**IV. VALUING THE CLAIM AT DATE OF DEATH IS THE ONLY REASONABLE
INTERPRETATION**

In contrast, valuing the claim at date of death avoids the club to the
estate and is perfectly reasonable. In fact, no other interpretation
allows for the smooth and efficient functioning of the estate tax
regime, complies with the excise nature of the estate tax, is consistent
with the 1954 and 2001 statutory amendments to Section 2053, implements
congressional intent as determined by courts, reasonably implements the
statute in a manner consistent with its purposes and origins, and
harmonizes Section 2053 with other estate tax statutes.

By using the date of death valuation, Section 2053(a) is
harmonized[^161] and construed consistent with the plain language[^162]
of Section 2053 because the requirement of Section 2053(d) for actual
payment is not transposed and amended to Section 2053(a) by regulations.
Section 2058 is not unjustifiably morphed onto Section 2053(a) either.
Section 6166 and Section 2057 issues are resolved promptly and can be
determined prior to the time of filing the return, as these statutes
contemplate. The estate is not forced to choose between claiming the
benefits of Section 2053 and claiming the benefits of the statute of
limitations. Date of death valuation allows the executor to file a
complete return as of the due date. Future events, such as the amount
actually paid, do not require an amended return or a heretofore never
before invented or statutorily authorized protective claim be filed for
an unknown amount.

Date of death valuation also avoids state law liability exposure for
settling or defending a claim. The ability to deduct the claim does not
depend on such actions. The executor does not have to worry about its
duties and liability exposure because certain beneficiaries bear the
taxes while others receive the property subject to the claim. Also, such
date of death valuation avoids the incongruous and anomalous results
that the proposed regulations create because a claim that is an asset, a
claim valued against a particular estate asset, and a claim against all
the estate's assets all are valued the same way. The nature of the claim
or the nature of the assets in Jon's estate will not make a difference
to the estate taxes due.

Also date of death valuation equals the amount determined under a
weighting and measuring of reasonably probable outcomes. It does not
equal the amount claimed or the absolute maximum of a highly
fictionalized, theoretical potential. It is based on all reasonable
outcomes, the time value of money (how long between date of death and
resolution of the claim), and other defensible and objective
calculations. Having the valuation supported by an independent
appraisal, particularly when the amount deducted is large, would serve
to greatly reduce if not eliminate bogus or fraudulent claims.

Further, neither the estate nor the IRS gains any advantage from date of
death valuation in terms of taxes paid. For every case where the date of
death value is less than the amount actually paid,[^163] increasing tax
revenue, there likely will be a case where the date of death value is
more than the amount actually paid, benefiting the estate. Lawsuits are
not prematurely settled at artificial numbers, adjusted for estate tax
savings, which is the result the proposed regulations promote.

Thus, the statutorily mandated, reasonable approach -- valuing claims at
the date of death -- should be adopted. It is the only approach
consistent with Section 2053 and the estate tax regime, and is
reasonable, and the only one that provides a consistent result
regardless of the nature of the claim and the nature of the estate's
assets.

**V. CONCLUSION**

As more fully discussed above, the IRS in its proposed regulations is
seeking to have claims against the estate be deductible only when and to
the extent actually paid. Having struck out in the courts, the IRS is
now seeking to issue new regulations that attempt to overturn these
decisions. The IRS proposals are destroy and defeat the estate tax
regime, harm the estate, lead to absurd and indefensible distinctions
based on the type of claim or the type of assets in the decedent's
estate, and add non-statutory duties and burdens on an executor. With an
unquenched thirst for more money, the IRS has cast logic and reason to
the winds and driven its troika up, over, and past the law, courts, and
reasonable implementation of statutes. The proposed regulations are
contrary to the express statutory language of Section 2053, its history,
its origin and purposes, the underlying basic nature of the estate tax
regime, and the estate tax regime itself, and are unreasonable. For
these reasons, the proposed regulations are invalid.

[^1]: Prop. Reg. § 20.2053-4.

[^2]: IRC § 2053(a)(3).

[^3]: *Estate of Van Horne* (1982) 78 T.C. 728, 736-37, *affd* (9th Cir.
    1983) 720 F.2d 1114.

[^4]: *See Jacobs v. Commissioner* (8th Cir. 1929) 34 F.2d 233, *cert.
    den.* 280 U.S. 603; *but see Helvering v. Northwestern Natl. Bank &
    Trust Co. of Minneapolis* (8th Cir. 1937) 89 F.2d 553 (limiting
    *Jacobs* to cases without claimants).

[^5]: *See Commissioner v. Strauss* (7th Cir. 1935) 77 F.2d 401, 405
    (the law "does not require the allowance of the debt by the court or
    its payment by the estate in order that it may be deducted from the
    gross estate.").

[^6]: *See*. *e.g.*, *Estate of Smith*, (5th Cir. 1999) 198 F.2d 515,
    *nonacq*. 2000-19 IRB; *Estate of McMorris* (10th Cir. 2001) 243
    F.3d 1254; *Estate of O'Neal* (11th Cir. 2001) 258 F.2d 1265

[^7]: *Estate of Kyle* (1990) 94 T.C. 829, 848; Rev. Rul. 84-42, 1984-1
    C.B. 194.

[^8]: F.S.A. 200217002

[^9]: *Estate of Lester* (1972) 57 T.C. 503.

[^10]: *See* Prop. Reg. § 20.2053-1, -4.

[^11]: Prop. Reg. § 20.2053-4(a)(1)(iii), (a)(2),

[^12]: *See Estate of Kyle*, *supra*, 94 T.C. at 848.

[^13]: *See* Background to Prop. Reg. § 20.2053; Prop. Reg. §
    20.2053-4(b)(1), (2).

[^14]: Prop. Reg. § 20.2053-4(b).

[^15]: *See* Prop. Reg. § 20.2053-1(b)(1); 20.2053-4(a)(1)(iii).

[^16]: *See* Explanation of Provisions to Prop. Reg. § 20.2053; Prop.
    Reg. § 20.2053-4(b)(1).

[^17]: Prop. Reg. § 20.2053-4(b)(1).

[^18]: *See* Prop. Reg. § 20.2053-4(b).

[^19]: Prop. Reg. § 20.2053-4(b)(3), (4).

[^20]: Prop. Reg. § 20.2053-4(b)(3), (4).

[^21]: *See Ithaca Trust Co. v. United States* (1929) 279 U.S. 151.

[^22]: *See Jacobs*, *supra*, 34 F.2d at 235 ("The claims which Congress
    intended to be deducted were actual claims, not theoretical ones.")

[^23]: *Jacobs*, *supra*, 34 F.2d 233; *Estate of Sachs* (8th Cir. 1988)
    856 F.2d 1158, 1162 (deduction limited to actual payment).

[^24]: *Compare Estate of Chesterton* (Ct. Cl. 1977) 551 F.2d 278, *cert
    denied* (1977) 434 U.S. 835 (deduction for only amounts actually
    paid) *with* *Fehrs v. United States* (Ct. Cl. 1979) 45 AFTR 2d
    80-1695, *adopted* (1980) 80-1791 (*Estate of Chesterton* only meant
    that post-death events arising prior to filing tax return are
    relevant); *Estate of Nesslerodt* (1978) 51 TCM 1406.

[^25]: *Commissioner v. State Street Trust Co.* (1st Cir. 1942) 128 F.2d
    618 (deduction for actuarial value based on post-death court order,
    even though future payments were contingent); *Estate of Shivley*
    (2nd Cir. 1960) 276 F.2d 372 (events prior to filing estate tax
    return may be considered); *Estate of Taylor* (1962) 39 T.C. 371
    (same); *Estate of Metcalf* (1946) 7 T.C. 153, *affm by unpublished
    order* (6th Cir. 1947).

[^26]: *See Commissioner v. Strauss*, *supra*, 77 F.2d 401; *Propstra v.
    United States* (9th Cir. 1982) 680 F.2d 1248; *Estate of Smith*,
    *supra*, 198 F.2d 515; *Estate of McMorris*, *supra*, 243 F.3d 1254;
    *Estate of O'Neal*, *supra*, 258 F.2d 1265. The 1st, 2nd, and 8th
    Circuits, and possibly the 9th Circuit, have issued conflicting
    decisions on this point. *Compare Commissioner v. Lyne* (1st Cir.
    1937) 90 F.2d 745; *Helvering v. O'Donnell* (2nd Cir. 1938) 94 F.2d
    852; *Helvering v. Northwestern Natl. Bank & Trust Co. of
    Minneapolis* (8th Cir. 1937) 89 F.2d 553; *Propstra*, *supra*, 680
    F.2d 1248 *with Commissioner v. State Street Trust Co.*, *supra*,
    128 F.2d 618; *Estate of Shivley*, *supra*, 276 F.2d 372; *Estate of
    Sachs*, *supra*, 856 F.2d 1158; *Buck v. Helvering* (9th Cir. 1934)
    73 F.2d 760 (*per curiam*).

[^27]: Background to Proposed Regulations.

[^28]: *See Commissioner v. Lyne*, *supra*, 90 F.2d 745; *Commissioner
    v. State Street Trust Co.*, *supra*, 128 F.2d 618.

[^29]: *See Helvering v. O'Donnell*, *supra*, 94 F.2d 852; *Estate of
    Shivley*, *supra*, 276 F.2d 372.

[^30]: *See Estate of Smith*, *supra*, 198 F.2d 515.

[^31]: *See Commissioner v. Strauss*, *supra*¸77 F.2d 401.

[^32]: *See Helvering v. Northwestern Natl. Bank & Trust Co. of
    Minneapolis*, *supra*, 89 F.2d 553.

[^33]: *See Propstra v. United States*, *supra*, 680 F.2d 1248.

[^34]: *See Estate of McMorris*, *supra*, 243 F.3d 1254.

[^35]: *See Estate of O'Neal*, *supra*, 258 F.2d 1265.

[^36]: *See Fehrs*, *supra*, 45 AFTR 2d 80-1695.

[^37]: *See* *Estate of Sachs* (1987) 88 T.C. 769, *affm in part and*
    *revd in part*, *Estate of Sachs*, *supra*, 856 F.2d 1158; *see also
    Estate of Lester*, *supra*, 57 T.C. 503; *see generally Estate of
    Thiele* (1947) 9 T.C. 473. With respect to claims against the
    estate, the Tax Court uses date of death valuation in cases
    involving disputes about value, but requires actual payment in cases
    involving enforceability. *See*, *e.g.*, *Estate of Smith* (1997)
    108 T.C. 412, *revd Estate of Smith*, *supra*, 198 F.2d 515.

[^38]: *See Russell v. United States* (N.D. Ill 1966) 260 F. Supp. 493;
    *Greene v. United States* (N.D. Ill. 1978) 447 F. Supp. 885; *Wilder
    v. Commissioner* (D. OH 1983) 581 F. Supp. 86.

[^39]: *See* *Estate of Smith*, *supra*, 198 F.2d 515; *Estate of
    McMorris*, *supra*, 243 F.3d 1254; *Estate of O'Neal*, *supra*, 258
    F.2d 1265

[^40]: *See Swallows Holding Ltd. v. Commissioner*, 126 T.C. 96, 147,
    *appeal pending* 3rd Circuit; *Holder v. United States* (N.D. Ga
    1968) 289 F.Supp. 160 (invalidating IRS regulation that sought to
    accomplish what IRS failed to accomplish in litigation), *affd* *per
    curiam* (5th Cir. 1969) 412 F2d 1189.

[^41]: *See United States v. Ron Pair Enterprises, Inc.* (1989) 489 U.S.
    235, 241; *Robinson v. Shell Oil Co.* (1997) 519 U.S. 337, 341.

[^42]: *Merkel v. Commissioner* (9th Cir. 1999) 192 F.3d 844, 848
    (citations and quotations omitted).

[^43]: *See United States v. Ron Pair*, *supra*, 489 U.S. at 242;
    *Helvering v. Northwestern Natl. Bank & Trust Co. of Minneapolis*,
    *supra*, 89 F.2d at 555 ("a plain unambiguous statute cannot be
    amended by administrative regulation").

[^44]: *Id*.; *see Community Bank of Arizona v. G.V.M. Trust* (9th Cir.
    2004) 366 F.3d, 982, 986.

[^45]: *Bernier v. Bernier* (1893) 147 U.S. 242, 246.

[^46]: *National Assoc. of Home Builders v. Defenders of Wildlife*
    (2007) 551 U.S. \_\_\_, slip. opn. at 18-19 (citations and
    quotations omitted).

[^47]: *National Cable & Telecomm. Assn. v. Brand X Internet Servs.*
    (2005) 545 U.S. 967, 982.

[^48]: *See Chevron* *USA v. Natural Resources Defense Council* (1984)
    467 U.S. 837, 843 n.9.

[^49]: *But see Estate of Gerson* (2006) 127 T.C. 139, *appeal pending*
    3rd Circuit (if there are conflicting judicial interpretations, IRS
    may issue regulations that trumps a court's declaration as to the
    unambiguous meaning of the statute). The author is not related to
    any party in this case.

[^50]: *See Chevron*, *supra*, 467 U.S. at 843; *see Boeing Co.*,
    *supra*, 258 F.3d at 963.

[^51]: *National Cable*, *supra*, 545 U.S. at 980.

[^52]: *Cottage Savings Assn. v. Commissioner* (1991) 499 U.S. 554,
    560-61.

[^53]: *See Chevron*, *supra*, 467 U.S. at 844; *Boeing Co. v. United
    States* (2003) 537 U.S. 437 (upholding IRS regulation as reasonable
    and not arbitrary).

[^54]: *See Koshland v. Helvering* (1936) 298 U.S. 441, 447.

[^55]: *United States v. Calamaro* (1957) 354 U.S. 351, 359; *see
    Iglesias v. United States* (2nd Cir. 1988) 848 F.2d 362.

[^56]: *Arkansas-Oklahoma Gas Co. v. Commissioner* (8th Cir. 1953) 201
    F.2d 98, 101.

[^57]: *Manhattan General*, *supra*, 297 U.S. at 134.

[^58]: *National Muffler Dealers Assn. v. United States* (1979) 440 U.S.
    472, 477.

[^59]: *See National Cable*, *supra*, 545 U.S. at 982-83; *Chevron*,
    *supra*, 467 U.S. at 843 n.9.

[^60]: *See National Cable*, *supra*, 545 U.S. at 982-83.

[^61]: *See United States v. Ron Pair*, *supra*, 489 U.S. at 242;
    *National Assoc. of Home Builders*, *supra*, 551 U.S. \_\_\_, slip.
    opn. at 18-19.

[^62]: *See Estate of Smith*, *supra*, 198 F.3d 515.

[^63]: *See* 2000-19 IRB.

[^64]: *See* IRC § 2053(d)(1)(a).

[^65]: *United States v. Calamaro*, *supra*, 354 U.S. at 359.

[^66]: *Arkansas-Oklahoma Gas Co.*, *supra*, 201 F.2d at 101; *see
    generally Lorillard v. Pons* (1978) 434 U.S. 575, 580.

[^67]: *Commissioner v. Windrow* (5th Cir. 1937) 89 F.2d 69, 71 (italics
    in original).

[^68]: *See* Random House Webster's College Dictionary (2000) p. 36
    (defining allow as, among other things, "to admit; acknowledge;
    concede . . . to approve, as for payment.")

[^69]: *See* *id*. (allowable is something "able to be allowed;
    permissible").

[^70]: *Estate of Shivley*, *supra*, 276 F.2d at 374 ("no greater amount
    than the sum of these payments actually paid can be said to be
    'allowed by the laws'.").

[^71]: *See Manhattan General Equipment Co. v. Commissioner* (1936) 297
    U.S. 129, 134.

[^72]: IRC § 2001(a).

[^73]: *See Knowlton v. Moore*, *supra*, 178 U.S. 41; *United States v.
    Manufacturers National Bank of Detroit* (1960) 363 U.S. 194, 198.

[^74]: *U.S. Trust Co. v. Helvering* (1939) 307 U.S. 57, 60.

[^75]: *Knowlton v. Moore*, *supra*, 178 U.S. at 49.

[^76]: *Y.M.C.A. v. Davis* (1923) 264 U.S. 47, 50.

[^77]: *See Tyler v. United States* (1930) 281 U.S. 497, 502-03.

[^78]: *Knowlton v. Moore*, *supra*, 178 U.S. at 49.

[^79]: *Chase National Bank v. United States* (1929) 278 U.S. 327,
    334-36.

[^80]: *See United States v. Manufacturers National Bank of Detroit*,
    *supra*, 363 U.S. at 198.

[^81]: *Helvering v. Northwestern Natl. Bank & Trust Co. of
    Minneapolis*, *supra*, 89 F.2d at 555.

[^82]: *Brown v. United States* (9th Cir.) 329 F.3d 664, 677, *cert
    den.* (2003) 540 U.S. 878 (italics in original); *see Greene v.
    United States* (D.C. Ill. 1978) 447 F. Supp. 885, 894 ("The decedent
    transfers his obligations along with his assets and, as a matter of
    fairness as well as administrative convenience, the determination
    whether an obligation exists in the estate should be made at the
    time of death.").

[^83]: *See Estate of Smith*, *supra*, 198 F.3d at 524; *Burnet v.
    Guggenheim* (1933) 288 U.S. 280, 285 ("Congress did not mean that
    the \[estate\] tax should be paid twice, or partly at one time and
    partly at another.").

[^84]: *Propstra*, *supra*, 680 F.2d at 1250; *see Estate of Simplot*
    (9th Cir. 2001) 249 F.3d 1191, 1194-95 (citations omitted); *see
    also Estate of Shedd v. Commissioner* (9th Cir. 1956) 237 F.2d 345,
    352.

[^85]: *United States v. Mitchell* (7th Cir. 1934) 74 F.2d 571, 575.

[^86]: *See* Background to Proposed Regulations ("The rationale for
    \[Section 2053\] is that those expended portions of the gross estate
    are not transferred to the decedent's legatees, beneficiaries, or
    heirs.");

[^87]: *See*, *e.g*., *Schiffman v. United States*, *supra*, 51 F. Supp
    at 732 (estate tax is on property received).

[^88]: *See* *United States v. Manufacturers National Bank of Detroit*,
    *supra*, 363 U.S. at 198.

[^89]: *National Cable*, *supra*, 545 U.S. at 982.

[^90]: *Helvering v. O'Donnell*, *supra*, 94 F.2d at 853; *but see
    Estate of Shivley*, *supra*, 276 F.2d 372.

[^91]: *Commissioner v. Windrow*, *supra*, 89 F.2d at 71; *but see*,
    *e.g*., *Estate of Smith*, *supra*, 198 F.3d at 521 (Section 2053 is
    ambiguous about date of valuation, but failing to discuss
    *Windrow*).

[^92]: 680 F.2d 1248.

[^93]: *See Estate of Chesterton*, *supra*, 551 F.2d at 279 (without any
    analysis, concluding that Section 2053 was "not substantially
    different" after change from allowed to allowable).

[^94]: *Propstra*, *supra*, 680 F.2d at 1254-55.

[^95]: *Id*. at 1254; *see Estate of Smith*, *supra*, 198 F.2d at
    522-23.

[^96]: *See National Cable., supra*, 545 U.S. at 985.

[^97]: *See* *Chevron*, *supra*, 467 U.S. at 843 n.9.

[^98]: *See Commissioner v. Windrow*, *supra*, 89 F.2d at 69 (stating
    that it had "no difficulty regarding, no real doubt concerning, the
    meaning of the words of the statute."); *Helvering v. O'Donnell*,
    *supra*, 94 F.2d at 853.

[^99]: *See Estate of Smith*, *supra*, 198 F.3d at 524-25.

[^100]: *See Chevron*, *supra*, 467 U.S. at 842, 843 n.9; *National
    Cable*, *supra*, 545 U.S. at 982.

[^101]: *See CWT Farms, Inc. v. Commissioner* (11th Cir. 1985) 755 F.2d
    790, 802 (upholding IRS regulation "harmonious with the origin and
    purpose of the" statute); *Thomas Int'l Ltd. v. United States* (Fed.
    Cir. 1985) 773 F.2d 300.

[^102]: *See Koshland*, *supra*, 298 U.S. at 447; *Manhattan General*,
    *supra*, 297 U.S. at 134.

[^103]: *Bernier v. Bernier*, *supra* 147 U.S. at 246.

[^104]: *See* Prop Reg. §§ 20.2053-1(b)(4), 20.2053-4(b)(1).

[^105]: *See*, *e.g.*., IRC § 2032A(c), 2053(d), 2056(b)(3), 2058, 6166;
    *Estate of Smith*, *supra*, 198 F.3d at 524 ("when Congress wants to
    derogate from the date-of-death valuation principle it knows how to
    do so.").

[^106]: Prop. Reg. § 20.2053-4(b)(3), (4).

[^107]: *See* IRC §§ 2701(e), 2702(e), 2703(b), 2704(c)(2).

[^108]: *See* IRC § 2058(b)(1).

[^109]: *See* Background to Proposed Regulations ("Section 2053, in
    fact, contemplates expenses such as funeral and administration
    expenses, which are only determinable after the decedent's date of
    death."); *see also Estate of Sachs*, *supra*, 856 F.2d at 1161.

[^110]: *See* IRC § 2057(c)(1).

[^111]: *See* § 2053(a)(4).

[^112]: *See Propstra*, *supra*, 680 F.2d at 1255-56.

[^113]: *See* Reg. § 20.2053-4.

[^114]: *See*, *e.g*., F.S. 733.707(1).

[^115]: *See*, *e.g*., *Estate of Sachs*, *supra*, 856 F.2d at 1160-61.

[^116]: *See United States v. Ron Pair*, *supra*, 489 U.S. at 242;
    *Manhattan General*, *supra*, 297 U.S. at 134; *Arkansas-Oklahoma
    Gas Co.*, *supra*, 201 F.2d at 101.

[^117]: *See* IRC § 6166(b)(6).

[^118]: *See* IRC § 2057(c)(1), (d)(1). This Statute does not apply to
    decedents dying after December 31, 2003. *See* IRC § 2057(j).

[^119]: *See* IRC § 6018; Reg. § 20.6018-3.

[^120]: *See* IRC § 6501(a).

[^121]: *See* IRC § 6501.

[^122]: *See Estate of O'Neal, supra*, 243 F.3d at 1261-62

[^123]: *See*, *e.g*., *Jacobs*, *supra*, 34 F.2d at 235

[^124]: *But see Estate of Chesterton*, *supra*, 551 F.2d at 279.

[^125]: *Compare United States v. Manufacturers National Bank of
    Detroit*, *supra*, 363 U.S. at 198 (estate tax is on the transfer);
    *Chase National Bank*, *supra*, 278 U.S. at 334-36 (same); *Estate
    of Simplot*, *supra*, 249 F.3d at 1194-95 *with Estate of Sachs*,
    856 F.2d at 1161 (estate tax is on what estate owns); *Estate of
    Chesterton*, *supra*, 551 F.2d at 281 (estate tax is on what is
    available for the beneficiaries); *Estate of Shivley*, *supra*, 276
    F.2d at 375 (estate tax is on amounts passing by gift); *Schiffman
    v. United States*, *supra*, 51 F. Supp at 732 (estate tax is on
    property received).

[^126]: Rev. Act of 1932 §303(1)(E).

[^127]: *See*, *e.g.*, *Estate of Sachs*, *supra*, 856 F.2d 1158
    (ignoring *Helvering v. Northwestern Nat. Bank & Trust Co. of
    Minneapolis*, *supra*, 89 F.2d 553); *Estate of Shivley*, *supra*,
    276 F.2d 372 (ignoring *Helvering v. O'Donnell*, *supra*, 94 F.2d
    852); *Commissioner v. State Street Trust Co.*, *supra*, 128 F.2d
    618 (ignoring *Commissioner v. Lyne*, *supra*, 90 F.2d 745); *Estate
    of Thompson* (7th Cir. 1983) 730 F.2d 1071 (ignoring *Commissioner
    v. Strauss*, *supra*, 77 F.2d 401)

[^128]: *See Estate of Sachs*, *supra*, 856 F.2d at 1161.

[^129]: *United States v. Ron Pair*, *supra*, 489 U.S. at 242.

[^130]: *See U.S. Trust Co. v. Helvering*, *supra* , 307 U.S. at 60;
    *Chase National Bank*, *supra*, 278 U.S. at 334-36.

[^131]: *See United States v. Manufacturers National Bank of Detroit*,
    *supra*, 363 U.S. at 198; *United States v. Mitchell*, *supra*, 74
    F.2d at 575; *Estate of Smith*, *supra*, 198 F.3d at 524; *Estate of
    Simplot*, *supra*, 249 F.3d at 1194-95.

[^132]: *See U.S. Trust Co. v. Helvering*, *supra* , 307 U.S. at 60;
    *Chase National Bank*, *supra*, 278 U.S. at 334-36.

[^133]: *See Estate of Sachs*, *supra*, 856 F.2d at 1161; *Estate of
    Chesterton*, *supra*, 551 F.2d at 280-81; *Jacobs*, *supra*, 34 F.2d
    at 235-36.

[^134]: *See* *Jacobs*, *supra*, 34 F.2d at 235-36; *Estate of Shively*,
    *supra*, 256 F.2d at 375; *Estate of Chesterton*, *supra*, 551 F.2d
    at 280-81.

[^135]: *See Estate of Sachs*, *supra*, 856 F.2d at 1161.

[^136]: *See United States v. Simmons* (5th Cir. 1965) 346 F.2d 213
    (lack of awareness of claim for refund not relevant to estate tax
    valuation);

[^137]: *See generally Helvering v. Safe Deposit & Trust Co.* (1942) 316
    U.S. 56, 65 (post-death "events controlled by beneficiaries\[\] can
    determine inclusion or not of certain *assets* with the decedent's
    gross estate.") (emphasis added).

[^138]: *See United States v. Ron Pair*, *supra*, 489 U.S. at 242.

[^139]: *See National Muffler*, *supra*, 440 U.S. at 477.

[^140]: *Bernier v. Bernier*, *supra* 147 U.S. at 246.

[^141]: *See Estate of Smith*, *supra*, 198 F.3d at 524.

[^142]: *See*, *e.g.*, *Propstra*, *supra*, 680 F.2d 1248; *Estate of
    Smith*, *supra*, 198 F.2d 515; *Estate of McMorris*, *supra*, 243
    F.3d 1254; *Estate of O'Neal*, *supra*, 258 F.3d 1265.

[^143]: *See Propstra*, *supra*, 680 F.2d 1248.

[^144]: *See Chevron*, *supra*, 467 U.S. at 842-43; *National Cable*.
    *supra*, 545 U.S. at 980.

[^145]: *See* IRC § 2031.

[^146]: *See id*.

[^147]: *See id*.

[^148]: IRC § 2053(a)(3).

[^149]: *See* Background to Proposed Regulations (citing *Jacobs*,
    *supra*, 34 F.2d at 235).

[^150]: *United States v. Mitchell, supra*, 74 F.2d at 575.

[^151]: *See* Background to Proposed Regulations

[^152]: Background to Proposed Regulations.

[^153]: *See Estate of Smith* (2003) 82 T.C.M. 909, *affm* (5th Cir.
    2002) 54 Fed. Appx. 413

[^154]: *See Estate of Smith*, *supra*, 198 F.3d at 525-26.

[^155]: *Greene v. United States*, *supra*, 447 F. Supp. at 894.

[^156]: *Estate of O'Neal*, *supra*, 258 F.3d at 1261-62.

[^157]: Background to Proposed Regulations.

[^158]: *See Wenn v. Standard Oil Co.* (1957) 49 Cal. 2d 509; *King v.
    Mobile Home Rent Review Board* (1989) 216 Cal. App. 3d 1532; *see
    also Beller & Keller v. Kindor* (S.D. N.Y. 2003) 2003-2 USTC ¶
    50,5056; *but see Heathman v. District Court* (9th Cir. 1974) 503
    F.2d 1032 (court may order taxpayer defendant to disclose tax
    information); *see generally* IRC § 6103(e)(1)(E).

[^159]: *Manhattan General*, *supra*, 297 U.S. at 134.

[^160]: *See* IRC § 2001(c)(2)(B).

[^161]: *See National Muffler*, *supra*, 440 U.S. at 477.

[^162]: *See United States v. Ron Pair*, *supra*, 489 U.S. at 241-42.

[^163]: *See Estate of Smith*, *supra*, 82 T.C.M. 909 (date of death
    value of claim was about \$475,640, but allowed deduction for
    \$681,840 paid because of IRS concession).