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Estate of Andrews v. United States - 850 F. Supp. 1279 (E.D. Va. 1994)

Rule:

The "relevant facts" for purposes of setting value on the date of death to be those that the hypothetical willing buyer and seller could reasonably have been expected to know at that time. Subsequent events are not considered in fixing fair market value, except to the extent that they were reasonably foreseeable at the date of valuation, in estate tax cases, the date of death. Subsequent events may serve to establish both that the expectations were entertained and also that such expectations were reasonable and intelligent.

Facts:

Plaintiff Estate sued defendant United States for a refund of federal estate tax and interest assessed on the value of the decedent's name. The Estate did not list the decedent's name on its federal estate tax return, prompting the United States to issue a notice of deficiency, asserting the value of the name of the decedent, V.C. Andrews. It  then assessed deficient taxes on that asset.

Issue:

Is the plaintiff estate entitled to a refund of federal estate tax on the value of the decedent's name?

Answer:

Yes.

Conclusion:

At the time of her death, V.C. Andrews, was becoming known as an internationally  known, best-selling author. However, the court  held that the Estate was entitled to a refund because the Estate overcame the presumption of correctness enjoyed by the Internal Revenue Service in determining the value of the decedent's name and established by a preponderance of the evidence that the assessed tax was not correct. The value of the deceased author's name at the time of her death was based on its fair market value; events subsequent to her death could be considered only to the extent that they were reasonably foreseeable at the date of death.

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