Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Monday, January 27, 2014

Court Adheres to the Prevailing Party Requirements

GavelRecently, the Tax Court in the Estate of Mildred T. Quidley and Karen Q. Pierce v. Commissioner, Docket No 7799-10 (Jan. 10, 2014), denied an estate taxpayer's fees because it did not meet Internal Revenue Code Section 7430. Under the applicable section the court may award reasonable administrative and litigation fees when the taxpayer is the prevailing party in litigation that the party did not unreasonably extend. The code gives the requirements to be a prevailing party as follows: "1) substantially prevail with respect to either the amount in controversy or the most significant issue or set of issues presented, and (2) meet certain net worth requirements.” The net worth requirements are met so long as the net worth of the estate does not exceed $2 million on the day of the decedents passing.

In the Estate of Mildred T. Quidley and Karen Q. Pierce v. Commissioner, the taxpayer failed to establish its net worth as of the date of the decedent's passing and thus did not satisfy the statutory requirement. The IRS reported that because of Form 706, which revealed the value of the estate on the date of the decedent’s passing, was $2,162,404. The taxpayer did not dispute this claim, but claimed that the "taxable estate" was actually a different amount. The court rationalized that there is no reason why the value of the estate's assets should be decreased and thus the taxpayer was not eligable for the costs.

See Dawn Marowitz, Administrative and Litigation Costs, Wealth Management, Jan. 22, 2014. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

http://lawprofessors.typepad.com/trusts_estates_prof/2014/01/court-adheres-to-the-prevailing-party-requirements-.html

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