Bank of California, of the Estate of Daisy Manning v. United States

The controversy in this estate tax case centers around the proper method of valuing a charitable remainder in computing the deduction available to a decedent’s estate under I.R.C. § 2055, 26 U.S.C. § 2055 . The specific question presented is whether, in computing this deduction, the life expectancy of a life tenant suffering from an undiagnosed terminal cancer should be measured by actuarial tables or by his actual date of death. We affirm the district court’s conclusion that it was proper for the government to rely on actuarial tables. We also affirm the district court’s denial of appellant’s claimed deduction for administrative expenses incurred in the preparation of its Claim for Refund.

I. BACKGROUND:

By her will, Daisy Manning (Decedent) left her son Victor Geary (Victor) a life estate interest in a charitable remainder unitrust. Under I.R.C. § 2055 ( 26 U.S.C. § 2055 ), Decedent’s estate is entitled to a charitable deduction equal to the value of the. remainder interest of the charitable beneficiaries.

In this case, the date of Decedent’s death is the relevant date for valuation of the charitable remainder. The values of both the life estate and the remainder are…