Estate of Bonner v. United States

84 F.3d 196 (1996)

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Estate of Bonner v. United States

United States Court of Appeals for the Fifth Circuit
84 F.3d 196 (1996)

Facts

On January 11, 1989, Louis F. Bonner Sr. died owning undivided fractional interests in two pieces of real property and a boat. The rest of the ownership of these three assets was held by a trust that had been established by Louis’s late wife (Mrs. Bonner), who died in 1986. Mrs. Bonner’s estate claimed a marital deduction for the undivided fractional interests that passed from her estate to the trust, utilizing provisions for qualified terminable-interest property (QTIP). Louis’s estate (plaintiff) included his fractional interests in the assets in his taxable estate, but in the appraisal of his assets, his estate reported discounts on the fair market value of the assets that were owned in fractional interests, recognizing established precedent that allowed discounts for less-than-full ownership. The Internal Revenue Service (IRS) (defendant) assessed taxes based on the non-discounted amount, and the estate sued to recover the difference. The IRS moved for summary judgment, arguing that the fractional interests of the decedent and those held in the QTIP trust merged at the time of Louis’s death, so that the fractional-interest discount should not be applied. The district court agreed and granted the motion for summary judgment. Louis’s estate appealed.

Rule of Law

Issue

Holding and Reasoning (Per curiam)

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