The court cited Internal Revenue Code Section 2033, defining a gross estate as including all property value at the time of death, and U.S. Treasury Regulation Section 20.2031-1(b), which states that such property’s value is its fair market value at the time of death.
Implications for Future Cases
The estate argued that the Eighth Circuit’s ruling conflicted with decisions from the Ninth and Eleventh circuits, potentially depriving closely held corporations of a critical tool for continuity after an owner’s death.
However, the justices noted, “A corporation that pays out $3 million to redeem shares should be worth less than before the redemption.”
Taxing on Estate Insurance Payout: Conclusion
Kannon K. Shanmugam of Paul Weiss, representing the estate, declined to comment. The U.S. Department of Justice did not immediately respond to a request for comment.
The estate was represented by Kannon K. Shanmugam, William T. Marks, and Yishai Schwartz of Paul Weiss Rifkind Wharton & Garrison LLP, and Robert L. Devereux and Mary C. Devereux of Aegis Law. The government was represented by Solicitor General Elizabeth B. Prelogar and several other attorneys from the U.S. Department of Justice.
