IRD and the Tax Court

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., Woodbury, New York
• Pages: 129-130

129

IRD AND THE TAX

COURT

According to the United States Tax Court in Chastain v. Commissioner,

59 T.C. 461 (1972) the fractional rule is used in determining the IRD

deduction that is applicable to a recipient of an IRD amount. The Tax

Court opinion stated in part the following:

The parties are not in disagreement as to the general operation of

section 691(c). First, a fraction is determined in which the nu-

merator consists of the section 691(a) items of income received

by the taxpayer during the year and in which the denominator

consists of the sum of all the section 691(a) items. The fraction is

632,402.84 / 793,092.06. So much is agreed to by the parties. That

fraction is then to be multiplied by the amount of estate tax at-

tributable to the net value for estate taxes of all the section 691(a)

items. . . .

In the Estate of Kincaid v. Commissioner, 85 T.C. 25 (1985), Mrs.

Kincaid was the recipient of IRD payments. The value of the right to

the IRD payments was includable in Mr. Kincaid’s gross estate and was

eligible for the marital deduction under Sec. 2056(a) of the Code.

According to the Tax Court’s opinion in Kincaid:

[T]he section 691(c)(1)(A) deduction is computed by creating a

fraction in which the numerator is the IRD received by Mrs. Kin-

caid during the year and included in her income and in which the

denominator is the value of all IRD included in Mr. Kincaid’s gross

estate. That fraction is multiplied by the estate tax attributable to

all IRD included in his gross estate. The result is the section 691(c)

(1)(A) deduction.

Furthermore: