Posted On: June 13, 2007
Proposed Regulations: Estate Tax and Claims
In the June 2007 edition of IICLE Estate Planning & Probate FlashPoints, Patricia Brosterhous mentions that the U.S. Treasury has proposed regulations dealing with the estate treatment of claims against an estate. This has always been a tricky area. On the one hand, we know that an estate tax deduction is allowed for claims against an estate pursuant to Section 2053(a)(3) of the Internal Revenue Code. On the other hand, the amount of these claims can be in question far beyond the date on which the estate tax return needs to be filed. How do we value these claims? Here's what the proposed regulations say:
[T]he proposed regulations adopt rules based on the premise that an estate may deduct under section 2053(a)(3) only amounts actually paid in settlement of claims against the estate. If the resolution of a contested or contingent claim cannot be reached prior to the expiration of the period of limitations for claims for refund, the estate may file a protective claim for refund to preserve its right to claim a deduction under section 2053(a).
The proposed regulations -- which appeared in the April 23, 2007 Federal Register -- can be found here.
