FILED
NOT FOR PUBLICATION MAR 26 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ESTATE OF ELLEN D. FOSTER, No. 11-73400
deceased, Ashley Bradley and Tara
Shapiro, Co-Executors, Tax Ct. No. 16839-08
Petitioner - Appellant,
MEMORANDUM*
v.
COMMISSIONER OF INTERNAL
REVENUE,
Respondent - Appellee.
Appeal from a Decision of the
United States Tax Court
Argued and Submitted February 13, 2014
San Francisco, California
Before: CALLAHAN and M. SMITH, Circuit Judges, and HELLERSTEIN, Senior
District Judge.**
The Estate of Ellen D. Foster (the Estate) appeals from a decision of the tax
court finding an estate tax deficiency of $3,253,910. Because the parties are
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Alvin K. Hellerstein, Senior District Judge for the U.S.
District Court for the Southern District of New York, sitting by designation.
familiar with the facts and procedural history of this case, we repeat only those
facts necessary to resolve the issues raised on appeal. We affirm.
As a preliminary matter, we reject the Estate’s argument that the tax court
erred in valuing the marital trusts’ assets, rather than Ellen Foster’s beneficial
interest. The Estate expressly acknowledged on its tax return that “the assets of all
three marital trusts are includible in the estate of the decedent,” and its expert
provided valuations of the assets in the marital trusts. Because the Estate proffered
evidence of the value of the underlying assets, it may not now argue that the tax
court erroneously considered the value of those assets. Cf. Sovak v. Chugai
Pharm. Co., 280 F.3d 1266, 1270 (9th Cir. 2002).
Further, the tax court did not err in declining to apply discounts for hazards
of litigation, lack of control, or lack of marketability. The plaintiffs in the Keach
lawsuit did not seek to recover specific, unique assets from the defendants, and the
Keach lawsuit did not cloud the title of the trust assets. Because a hypothetical
buyer of the trust assets would not become a defendant in the Keach lawsuit, the
tax court properly rejected any hazards of litigation discount. See Shackleford v.
United States, 262 F.3d 1028, 1031 (9th Cir. 2001). Similarly, the tax court
properly declined to apply discounts for lack of control and lack of marketability.
As the tax court correctly observed, the freeze applied to Ellen Foster, not the
2
underlying trust assets. And the tax court did not clearly err in finding that the
freeze was “loosely enforced.”
Finally, the tax court properly rejected the Estate’s alternative argument that
the estimated date-of-death value of the Keach lawsuit was deductible as a claim
against the Estate. Because the lawsuit was disputed at the date of Ellen Foster’s
death, post-death events may be considered in computing the allowable deduction.
See Estate of Saunders v. Comm’r, —F.3d—, 2014 WL 949246, at *4 (9th Cir.
Mar. 12, 2014). Further, in view of the sharp discrepancies in expert valuations of
the lawsuit, the tax court correctly concluded that the lawsuit’s estimated date-of-
death value was not ascertainable with reasonable certainty. See id. at *6–7. The
Estate’s argument to the contrary confuses the valuation of assets held by an estate
with the deduction for claims pending against an estate. Id. at *6.
For the foregoing reasons, we affirm the decision of the tax court.
AFFIRMED.
3