Court Opinion

ID: 2657494
Source: CourtListenerOpinion
Date Created: 2014-03-20 21:20:12.06088+00
Date Added: 2024-06-11T13:00:27.697402
License: Public Domain

FOR PUBLICATION

      UNITED STATES COURT OF APPEALS
           FOR THE NINTH CIRCUIT

 ESTATE OF GERTRUDE H. SAUNDERS,                    No. 12-70323
 Deceased; RICHARD RIEGELS, Co-
 Executor; WILLIAM SAUNDERS, Co-                     Tax Ct. No.
 Executor,                                            10957-09
              Petitioners-Appellants,

                      v.                              OPINION

 COMMISSIONER OF INTERNAL
 REVENUE,
             Respondent-Appellee.

                  Appeal from a Decision of the
                    United States Tax Court

                     Argued and Submitted
          February 13, 2014—San Francisco, California

                       Filed March 12, 2014

     Before: Consuelo M. Callahan and Milan D. Smith, Jr.,
     Circuit Judges, and Alvin K. Hellerstein, Senior District
                             Judge.*

              Opinion by Judge Milan D. Smith, Jr.

 *
  The Honorable Alvin K. Hellerstein, Senior District Judge for the U.S.
District Court for the Southern District of New York, sitting by
designation.
2                 ESTATE OF SAUNDERS V. CIR

                           SUMMARY**

                                 Tax

    The panel affirmed the tax court’s decision disallowing an
estate’s deduction based on a claim that was disputed at the
date of the decedent’s death and for which the estimated
value on that date was not ascertainable with reasonable
certainty, but allowing a deduction of the subsequent
settlement amount.

                             COUNSEL

Thomas R. Daniel, Esq. (argued), Gelber, Gelber & Ingersoll,
Honolulu, Hawaii, for Petitioners-Appellants.

Kathryn Keneally, Jonathan S. Cohen, and Jennifer M. Rubin
(argued), Tax Division, Department of Justice, Washington,
D.C., for Respondent-Appellee.

  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                ESTATE OF SAUNDERS V. CIR                    3

                         OPINION

M. SMITH, Circuit Judge:

     In this appeal from the tax court, we consider whether the
Estate of Gertrude Saunders (the Estate) properly claimed a
$30 million deduction on its estate tax return for a lawsuit
pending at the time of Gertrude Saunders’ death (the
Stonehill Claim, or the Claim), even though the suit
ultimately settled for a smaller sum. The Commissioner of
Internal Revenue (the Commissioner) disallowed the $30
million deduction. Because the estimated value of the
Stonehill Claim at the time of Gertrude Saunders’ death was
not ascertainable with reasonable certainty, the tax court
properly upheld the Commissioner’s disallowance of the $30
million deduction, but allowed a deduction in the amount for
which the Claim settled. We therefore affirm the decision of
the tax court.

  FACTUAL AND PROCEDURAL BACKGROUND

    William Saunders, Sr., an attorney residing in Hawaii,
died on November 2, 2003. His wife, Gertrude Saunders,
died slightly more than one year later, on November 27,
2004.

I. The Stonehill Claim

    Prior to his death, William Saunders represented Harry S.
Stonehill. On September 24, 2004—after the deaths of both
Stonehill and William Saunders—Stonehill’s estate filed suit
in Hawaii state court against the estate of William Saunders.
Stonehill’s estate asserted that William Saunders committed
legal malpractice, breach of confidence, breach of the duty of
4                 ESTATE OF SAUNDERS V. CIR

loyalty, and fraudulent concealment in connection with his
representation of Stonehill. Specifically, Stonehill’s estate
alleged that William Saunders provided damaging
information about Stonehill to the Internal Revenue Service,
thereby breaching the fiduciary duty he owed to Stonehill,
and allegedly exposing Stonehill to considerable tax liability.
Stonehill’s estate sought to recover damages of at least $90
million.1

    A jury trial on the Stonehill Claim began on May 28,
2007—several years after Gertrude Saunders’ death—and the
jury delivered its verdict about six weeks later. While the
jury determined that William Saunders had breached his
duties to Stonehill, it also concluded that William Saunders’
misconduct did not cause any damages to Stonehill or his
estate. The Stonehill estate appealed. Thereafter, while the
appeal was pending, the parties to the Stonehill Claim settled
their dispute. Under the terms of the settlement, William
Saunders’ estate agreed to pay $250,000 in exchange for a
complete release from liability.

II. The Challenged Deduction

    At the time of Gertrude Saunders’ death on November 27,
2004, the Stonehill Claim remained pending and contested.
On February 23, 2006, her Estate filed its Form 706 estate tax
return. In connection with that return, the Estate deducted
$30 million for the estimated date-of-death value of the
Stonehill Claim. The Estate based the amount of its

    1
    On the same day that it brought the Stonehill Claim in state court,
Stonehill’s estate also filed suit against William Saunders’ estate in the
U.S. District Court for the District of Hawaii. The federal case was
dismissed shortly thereafter, but the state-court action proceeded.
                  ESTATE OF SAUNDERS V. CIR                             5

deduction for the Stonehill Claim on an August 30, 2005
appraisal letter prepared by attorney John Francis Perkin.2

    On February 10, 2009, the Commissioner issued a Notice
of Deficiency to the Estate. In that Notice, the Commissioner
asserted that the Estate had improperly deducted $30 million
for the Stonehill Claim, and that its return therefore reflected
an estate tax deficiency of $14.4 million.3

III.     Prior Proceedings

    On May 8, 2009, the Estate petitioned in tax court for
redetermination of the deficiency claimed by the
Commissioner. To support their respective positions, the
parties proffered expert reports to the court, each of which
endeavored to assign a date-of-death value to the Stonehill
Claim. The Estate submitted two letters from Perkin, and
reports from Philip M. Schwab and James J. Bickerton. The
Commissioner countered with reports from James E. King
and James E. McCann.

     2
      Even though the Stonehill Claim was pending against William
Saunders’ estate rather than Gertrude Saunders’ estate, the parties agreed
that the deductibility of the Claim would be resolved in connection with
Gertrude Saunders’ estate. As the tax court observed, “the parties have
assumed that the valuation date is the date of [Gertrude Saunders’] death,
rather than the date of [William] Saunders’ death, because of the
agreement closing the [William] Saunders estate.” Estate of Saunders v.
Comm’r, 136 T.C. 406, 418 (2011).
 3
  The Commissioner acknowledged that the Estate could properly deduct
$1,921,745 in attorney’s fees and costs incurred in connection with the
Stonehill Claim. That determination is not at issue here.
6              ESTATE OF SAUNDERS V. CIR

    A. Expert Valuations

    The experts’ opinions varied widely. As noted above,
Perkin opined in his 2005 letter that, given the “the wide
range of unknowns as of November 2003,” the Stonehill
Claim was worth $30 million at the date of William
Saunders’ death. He acknowledged, however, that an adverse
judgment on the Stonehill Claim could result in liability
ranging “between one dollar ($1) and ninety million dollars
($90,000,000).” In his 2009 letter, Perkin revised his
valuation downward to $25 million. Relying on information
from Perkin, Schwab calculated what he termed the
“aggregate weighted monetary value of all outcomes” as of
the date of Gertrude Saunders’ death. Using this approach, he
valued the Stonehill Claim at $19.3 million. Finally,
Bickerton determined that the Claim was worth at least $22.5
million when it was filed.

    The Commissioner’s experts calculated much lower
estimates. According to King, the Claim was worth, at most,
$3.06 million on the date of Gertrude Saunders’ death.
Relying on information from King, McCann assigned the
Stonehill Claim a value of $3.2 million, $6.3 million, or $7.5
million as of that date, depending on the damages award
assumed.

    B. The Tax Court’s Decision

    The tax court handed down its opinion on April 28, 2011,
concluding that the Commissioner properly disallowed the
Estate’s $30 million deduction for the Stonehill Claim.
Instead, the tax court determined that the Estate could deduct
the amount actually paid in connection with the Claim. On
December 30, 2011, the tax court entered a decision finding
                ESTATE OF SAUNDERS V. CIR                    7

an estate tax deficiency of $12,400,223. The Estate timely
appealed.

   JURISDICTION AND STANDARD OF REVIEW

    We have jurisdiction under 26 U.S.C. § 7482. We review
the tax court’s legal conclusions, including its interpretation
of the Internal Revenue Code and Treasury Regulations, de
novo. Metro Leasing & Dev. Corp. v. Comm’r, 376 F.3d
1015, 1021 (9th Cir. 2004) (citing Boeing Co. v. United
States, 258 F.3d 958, 962 (9th Cir. 2001)).

                       DISCUSSION

I. Legal Framework

    “The federal estate tax is a tax on the privilege of
transferring property upon one’s death.” Marshall Naify
Revocable Trust v. United States, 672 F.3d 620, 623 (9th Cir.
2012) (quoting Propstra v. United States, 680 F.2d 1248,
1250 (9th Cir. 1982)) (internal punctuation omitted). To
determine the value of the taxable estate, the gross estate is
reduced by any deductions allowable under the Internal
Revenue Code. 26 U.S.C. § 2053(a). “Claims against the
estate are one type of deduction allowable under the Internal
Revenue Code.” Naify, 672 F.3d at 623 (citing 26 U.S.C.
§ 2053(a)(3)).

   A. Treasury Regulations

   Treasury Regulations applicable at the time of Gertrude
Saunders’ death clarify the deductibility of claims against an
8                 ESTATE OF SAUNDERS V. CIR

estate.4 Under these Regulations, claims against an estate are
“personal obligations of the decedent existing at the time of
his death, whether or not then matured, and interest thereon
which had accrued at the time of death.” Treas. Reg.
§ 20.2053-4. Further, “[o]nly claims that are ‘enforceable
against the decedent’s estate may be deducted.’” Naify,
672 F.3d at 623 (quoting Treas. Reg. § 20.2053-4).

    Of course, the exact value of a claim pending against an
estate at the time of the decedent’s death is not always
known. Recognizing this, the Regulations permit an estate to
deduct the estimated value of such a claim in some
circumstances. See Treas. Reg. § 20.2053-1(b)(3). “The
Treasury Regulations mandate that, in order to deduct the
estimated amount of a claim against the estate, the estate must
show that it is, inter alia, ‘ascertainable with reasonable
certainty.’” Naify, 672 F.3d at 624 (quoting Treas. Reg.
§ 20.2053-1(b)(3)). Further, the Regulations provide that the
estimated amount of a claim is deductible only if the amount
“will be paid.” Treas. Reg. § 20.2053-1(b)(3). Thus, the
Treasury Regulations preclude an estate from deducting “a
claim based on a vague or uncertain estimate.” Naify,
672 F.3d at 624 (citing Treas. Reg. § 20.2053-1(b)(3)).
Rather, if a claim’s estimated value at the date of death is not
ascertainable with reasonable certainty, but becomes certain
post-mortem, “an estate may petition the tax court or file a

 4
  In 2009, the IRS amended the applicable Treasury Regulations, but the
amendments “apply to the estates of decedents who died on or after
October 20, 2009.” Naify, 672 F.3d at 623 n.5 (citing T.D. 9468, 2009-2
C.B. 570). As the parties agree, the new Regulations do not apply here.
Accordingly, all citations to the Regulations refer to the versions
applicable in 2004.
                ESTATE OF SAUNDERS V. CIR                       9

claim for a refund.” Naify, 672 F.3d at 624 (citing Treas.
Reg. § 20.2053-1(b)(3)).

    B. Case Law

    We have applied the Regulations at issue in this case
several times. In so doing, we have classified claims as either
“certain and enforceable,” on the one hand, or “disputed or
contingent,” on the other. See Naify, 672 F.3d at 626–28.
This distinction governs whether courts may consider post-
death events—such as the settlement here—when
determining the permissible deduction for claims against an
estate. In Propstra, we held that “when claims are for sums
certain and are legally enforceable as of the date of death,
post-death events are not relevant in computing the
permissible deduction.” Propstra, 680 F.2d at 1254. We also
held, however, that “post-death events are relevant when
computing the deduction to be taken for disputed or
contingent claims.” Id. at 1253 (emphasis added). Thus,
under our case law, courts may “consider post-death events
when valuing a disputed or contingent claim against an
estate.” Naify, 672 F.3d at 626.

    Our distinction between certain and enforceable claims
and disputed or contingent claims flows naturally from the
text of the governing Treasury Regulations. When, as in
Propstra, a certain and enforceable claim is pending against
an estate at the date of the decedent’s death, it follows that the
estimated date-of-death value of such a claim is
“ascertainable with reasonable certainty.” Treas. Reg.
§ 20.2053-1(b)(3); see also Estate of Van Horne v. Comm’r,
720 F.2d 1114, 1116–17 (9th Cir. 1983) (declining to
consider post-death events in computing deduction for
undisputed spousal support obligation). When, however, a
10              ESTATE OF SAUNDERS V. CIR

claim is disputed or contingent, its estimated date-of-death
value is far less likely to be reasonably ascertainable. See
Propstra, 680 F.2d at 1253 (basing distinction on
Regulations’ disallowance of deductions for vague or
uncertain estimates). In such circumstances, estates must
“petition the tax court or file a claim for a refund” once the
claim’s value “later becomes certain.” Naify, 672 F.3d at 624
(citing Treas. Reg. § 20.2053-1(b)(3)).

II. Status of the Stonehill Claim at the Date of Gertrude
    Saunders’ Death

   According to the Estate, the Stonehill Claim was “certain
and enforceable” at the date of Gertrude Saunders’ death. As
such, the Estate asserts that the Claim’s estimated date-of-
death value was ascertainable with reasonable certainty as a
matter of law. We disagree.

     A. Claim Classification

    In its opinion, the tax court did not expressly classify the
Stonehill Claim as either “certain and enforceable” or
“disputed or contingent.” As the Estate observes, this
analysis appears, at least superficially, to contravene the
claim-classification dichotomy established in Propstra and
reaffirmed in Naify. The Propstra case concerned “whether
an estate could deduct the full value of undisputed pre-death
liens against a decedent’s real property even though the estate
later settled the lien claims for less than their full value.”
Naify, 672 F.3d at 627 (citing Propstra, 680 F.2d at
1253–54). We began our analysis in Propstra by stating that
“[a]s a preliminary matter we must determine the nature of
the lien claims against the estate.” Propstra, 680 F.2d at
1253. We then explained that the nature of the claims—i.e.,
                   ESTATE OF SAUNDERS V. CIR                              11

whether they were “certain and enforceable” or “disputed or
contingent”—determined whether “post-death events are
relevant” in computing the allowable deduction. Id. Nearly
thirty years after deciding Propstra, we reaffirmed the vitality
of “our precedent that distinguishes between certain and
enforceable claims and disputed or contingent claims.” Naify,
672 F.3d at 628.

    Here, although the tax court declined to follow the
Propstra framework explicitly, its failure to do so was
inconsequential. For the reasons discussed below, the
Stonehill Claim was “disputed” at the time of Gertrude
Saunders’ death. As such, the tax court properly considered
post-death events in computing the allowable deduction.5

    B. The Stonehill Claim was not “Contingent,” but it
       was “Disputed”

     The Estate is correct that the Stonehill Claim was not
“contingent” as that term has been used in our case law. In
Naify, we explained that a claim against an estate is
contingent if it is unasserted. See Naify, 672 F.3d at 625–26
(citing O’Neal v. United States, 258 F.3d 1265 (11th Cir.
2001), and Estate of Smith v. Comm’r, 198 F.3d 515 (5th Cir.

     5
       The Estate argues that considering post-death events in these
circumstances violates the Supreme Court’s mandate that “[t]he estate so
far as may be is settled as of the date of the testator’s death.” Ithaca Trust
Co. v. United States, 279 U.S. 151, 155 (1929). But we have long held
that this language “is not a formulation of immutable principle,” and that
“Congress did not intend to make events at the date of death invariably
determinative in computing the federal estate tax obligation.” Naify,
672 F.3d at 626 (quoting Estate of Shedd v. Comm’r, 320 F.2d 638, 639
(9th Cir. 1963)) (internal quotation marks and alteration omitted).
12              ESTATE OF SAUNDERS V. CIR

1999)). Because the Stonehill Claim was asserted before
Gertrude Saunders’ death, it was not contingent under Naify.

     Yet, even though the Stonehill Claim was not contingent
at the date of Gertrude Saunders’ death, it was disputed. The
Claim was litigated through trial, and, as reflected in the post-
mortem settlement agreement, the estate of William Saunders
“at all times denied and continue[d] to deny any and all
liability, negligence, breach of duty, breach of any agreement,
misconduct, violation of statute, and/or wrongdoing of any
kind . . . .” Because the Stonehill Claim was contested at the
time of Gertrude Saunders’ death, it was “disputed” under our
case law. See Naify, 672 F.3d at 625–26 (describing
contested lawsuits pending at the time of death as
“disputed”); see also Propstra, 680 F.2d at 1253 (describing
“disputed or contested” claims).

    The Estate nevertheless asserts that, at the time of
Gertrude Saunders’ death, the Claim was “certain and
enforceable,” rather than disputed. The Estate bases this
counterintuitive argument on our decision in Estate of
Shapiro v. United States, 634 F.3d 1055 (9th Cir. 2011).
According to the Estate, Shapiro stands for the proposition
that when a lawsuit is pending at the date of the decedent’s
death, and states a cognizable cause of action under the
applicable substantive law, the value of such a claim must be
ascertainable with reasonable certainty, irrespective of post-
death events. The Estate’s reliance on Shapiro is misplaced
for several reasons.

   Shapiro concerned “whether love, support, and
homemaking services provided by a cohabitant to her partner
were sufficient consideration to support a contract claim
against an estate.” Naify, 672 F.3d at 628 (citing Shapiro,
                ESTATE OF SAUNDERS V. CIR                     13
634 F.3d at 1059). Concluding that such services constituted
legally sufficient consideration, the Shapiro court remanded
to the district court with instructions to assign a date-of-death
value to the claim against the estate. Shapiro, 634 F.3d at
1059. In the portion of its decision on which the Estate relies,
the court explained that “[u]nder this court’s precedent, the
claim [against Shapiro’s estate] must be valued as of the date
of Shapiro’s death.” Id. Without providing any reasoning,
the Shapiro court implied that events after Shapiro’s death
were irrelevant because “[a]ll that was known at the time of
Shapiro’s death was that [Shapiro’s former partner] had
asserted a plausible claim under Nevada law.” Id.

    The Estate argues that Shapiro stands for the proposition
that post-death events—such as the settlement of the
Stonehill Claim—are always irrelevant in computing the
deduction for disputed lawsuits pending against an estate at
the time of death. But the portion of Shapiro on which the
Estate relies constitutes less than a paragraph and a sentence
in a footnote, and the Shapiro court signaled no intention to
break with existing precedent. See Shapiro, 634 F.3d at 1059,
1060 n.1. Indeed, as we explained in Naify, Shapiro “did not
address the distinction in the Ninth Circuit between certain
and enforceable claims and disputed or contingent claims.”
Naify, 672 F.3d at 628. Moreover, as Naify further clarified,
“as a three-judge panel, the court in Shapiro could not
reconsider or overrule [our] precedent” permitting courts to
consider post-death events in computing the allowable
deduction for disputed or contingent claims. Id. (citing
United States v. Gay, 967 F.2d 322, 327 (9th Cir. 1992)).

   Consistent with Naify, we reject the argument that
Shapiro renders post-death events irrelevant in computing the
deduction for disputed claims pending against an estate at the
14              ESTATE OF SAUNDERS V. CIR

time of death. Moreover, we note that “[i]n our circuit,
statements made in passing, without analysis, are not binding
precedent.” Thacker v. FCC (In re Magnacom Wireless,
LLC), 503 F.3d 984, 993–94 (9th Cir. 2007). Rather,
“[w]here it is clear that a statement is made casually and
without analysis, where the statement is uttered in passing
without due consideration of the alternatives, or where it is
merely a prelude to another legal issue that commands the
panel’s full attention, it may be appropriate to re-visit the
issue in a later case.” In re Wal-Mart Wage & Hour Emp’t
Practices Litig., 737 F.3d 1262, 1268 n.8 (9th Cir. 2013)
(quoting United States v. Johnson, 256 F.3d 895, 915 (9th
Cir. 2001) (en banc) (Kozinski, J., concurring)).

    To the degree the Estate asserts that the Shapiro panel
tacitly departed from our circuit’s well-settled law regarding
the deductibility of disputed claims against an estate, we join
Naify in rejecting such a construction, and we conclude that
Shapiro lacks any precedential value to that effect.

III.   The Claim’s Estimated Date-of-Death Value was
       not Ascertainable with Reasonable Certainty

    Because the Stonehill Claim was disputed at the time of
Gertrude Saunders’ death, the tax court properly considered
its post-death settlement value in computing the allowable
deduction. Even so, the Estate asserts that the tax court
should have assigned it a date-of-death value,
notwithstanding the substantial disparities in expert
valuations, and the post-mortem settlement of the Claim. The
Estate’s arguments are unpersuasive.

    As one of the Estate’s experts opined, the Estate’s
potential liability in connection with the Stonehill Claim
                  ESTATE OF SAUNDERS V. CIR                           15

“range[d] between one dollar ($1) and ninety million dollars
($90 million).” In view of this uncertainty, the Estate’s
expert valuations varied widely, with one expert appraising
the Claim at $19.3 million, another valuing it at either $30
million or $25 million, and a third assigning it a value of
$22.5 million. As the tax court correctly observed, this
diversity of expert opinion is a “prima facie indication[] of
the lack of reasonable certainty.” Estate of Saunders, 136
T.C. 422.

    Under the applicable Treasury Regulations, “[a]n estate
cannot deduct a claim based on a vague or uncertain
estimate.” Naify, 672 F.3d at 624 (citing Treas. Reg.
§ 20.2053-1(b)(3)). Thus, in Naify, we concluded that a
claim’s value was not ascertainable with reasonable certainty
where the claim “had a range of possible values between $0
and $62 million.” Naify, 672 F.3d at 625. Here, one of the
Estate’s experts conceded that the range of values for the
Stonehill Claim (from $1 to $90 million) was even greater
than that rejected in Naify. For these reasons, the Stonehill
Claim’s estimated date-of-death value was not ascertainable
with reasonable certainty, and the Commissioner properly
disallowed the Estate’s $30 million deduction.6

    In arguing otherwise, the Estate contends that the
estimated value of the Stonehill Claim was reasonably
ascertainable because courts routinely value pending claims

 6
   The Estate contends that the tax court improperly discounted Schwab’s
report because, in the court’s view, Schwab relied excessively on Perkin’s
unconvincing opinions. We need not decide whether the Estate’s reports
are convincing, however. Even assuming they are, the disparity in expert
valuations shows that the Stonehill Claim’s estimated date-of-death value
was not ascertainable with reasonable certainty.
16              ESTATE OF SAUNDERS V. CIR

held by estates, even if their date-of-death value is uncertain.
But the Estate confuses the valuation of assets held by an
estate with the deduction allowable for claims pending
against an estate. The tax court’s decision in Estate of Davis
v. Commissioner, T.C. Mem. 1993-155, 1993 WL 102487, at
*3 (Apr. 8, 1993), on which the Estate relies, concerns the
method for valuing claims held by an estate. Under
26 U.S.C. § 2031(a), the decedent’s gross estate includes all
of the decedent’s property at the time of death, including
assets of uncertain value. See Shackleford v. United States,
262 F.3d 1028, 1031 (9th Cir. 2001) (citing 26 U.S.C.
§§ 2031, 2033). By contrast, the estimated values of claims
pending against an estate are deductible only if, inter alia,
they are ascertainable with reasonable certainty. See Treas.
Reg. § 20.2053-1(b)(3). Thus, the tax court correctly
concluded that “a value may be determined for asset inclusion
purposes that does not satisfy the ‘ascertainable with
reasonable certainty’ standard for deduction purposes.”
Estate of Saunders, 136 T.C. 418–19.

    In Naify, we relied on the tax court’s decision in this very
case for the proposition that “stating and supporting a value
is not equivalent to ascertaining a value with reasonable
certainty.” Naify, 672 F.3d at 624 (quoting Estate of
Saunders, 136 T.C. 422). We further explained that “it
cannot be that simply because one can assign a probability to
any event and calculate a value accordingly, any and all
claims are reasonably certain and susceptible to deduction.”
Naify, 672 F.3d at 625 (quoting Marshall Naify Revocable
Trust v. United States, No. C 09–1604 CRB, 2010 WL
3619813, at *5 (N.D. Cal. Sept. 9, 2010)). Here, although the
Estate’s experts stated and supported various estimated values
for the Stonehill Claim, the Estate failed to show that the
Claim’s estimated value was ascertainable with reasonable
                   ESTATE OF SAUNDERS V. CIR                            17

certainty. As such, the Commissioner properly disallowed
the Estate’s $30 million deduction.7

IV.      The Tax Court Properly Allowed a Deduction
         Based on the Claim’s Post-Mortem Settlement
         Value

    Where “a claim’s value is not ascertainable with
reasonable certainty, but later becomes certain, an estate may
petition the tax court or file a claim for a refund.” Naify,
672 F.3d at 624 (citing Treas. Reg. § 20.2053-1(b)(3)).
Because the Stonehill Claim was disputed at the time of
Gertrude Saunders’ death, “post-death events are relevant
when computing the deduction to be taken” for it. Naify,
672 F.3d at 626 (quoting Propstra, 680 F.2d at 1253).
Specifically, “[t]he Treasury Regulations suggest that a
post-death settlement is dispositive of a claim’s value.”
Naify, 672 F.3d at 628–29 (citing Treas. Reg. § 20.2053-
1(b)(3)). Here, the value of the Stonehill Claim became
certain when it settled after Gertrude Saunders’ death. Thus,
the tax court properly allowed a deduction in the amount of
the Claim’s settlement value.8

  7
    The Commissioner also argues that the $30 million deduction was
properly disallowed because the Estate failed to show that any amount
“will be paid,” as the Regulations require. Treas. Reg. § 20.2053-1(b)(3).
According to the Commissioner, the “will be paid” requirement bars the
deduction of estimated amounts for claims that may never be paid. We
decline to reach this issue, because it is clear that the estimated date-of-
death value of the Stonehill Claim was not ascertainable with reasonable
certainty.
   8
    In a footnote in its opening brief, and again on reply, the Estate
contends that the tax court contravened the Tax Court Rules of Practice
and Procedure. Arguments raised only in footnotes, or only on reply, are
generally deemed waived. City of Emeryville v. Robinson, 621 F.3d 1251,
18                ESTATE OF SAUNDERS V. CIR

                         CONCLUSION

    The Claim at issue in this case was disputed at the date of
the decedent’s death, and its estimated value as of that date
was not ascertainable with reasonable certainty. Under these
circumstances, the tax court properly disallowed the Estate’s
$30 million deduction, but correctly allowed a deduction in
the amount paid to settle the Claim after the decedent’s death.
We therefore affirm the decision of the tax court.

     AFFIRMED.

1262 n.10 (9th Cir. 2010); Graves v. Arpaio, 623 F.3d 1043, 1048 (9th
Cir. 2010) (per curiam). We therefore decline to address this argument.