Estate of Dieringer v. Commissioner
United States Court of Appeals for the Ninth Circuit
917 F.3d 1135 (2019)

- Written by Joe Cox, JD
Facts
Victoria Dieringer was the matriarch of a successful family. She was the chairperson of Dieringer Properties, Inc. (DPI), which managed properties in Oregon and Texas. Several of Victoria’s children were also officers of DPI. Victoria’s will provided that on her death, all of her estate would pass to a trust. Her children were to receive some personal items, but the trust was to make $600,000 in donations to several charities, with the reminder going to the Bob and Evelyn Dieringer Family Foundation (the foundation) as a charitable contribution. The foundation was a valid Internal Revenue Code § 501(c)(3) tax-exempt organization, with Eugene Dieringer as the sole trustee. When Victoria died, Eugene was appointed executor of her estate (plaintiff). The estate had DPI appraised as of the date of Victoria’s death. DPI was worth $17,777,626, and Victoria’s shares were worth $14,182,471. The estate filed an estate-tax return claiming a charitable deduction of $18,812,181 based on the valuation of Victoria’s DPI shares at her death. After Victoria’s death, her children took action to devalue her stock, including Eugene’s decision to apply a minority discount to the redemption value of Victoria’s DPI shares. While the estate claimed a charitable deduction of over $18.2 million for assets transferred to the foundation, the foundation received assets worth just roughly $6.4 million. The Commissioner of the Internal Revenue (the commissioner) (defendant) issued a notice of deficiency for $4,124,717 against the estate, based on the value of assets the foundation actually received. The estate argued that the economic downturn was responsible for the decreasing value of the DPI shares and that, regardless, the value of the contribution should be considered based on the date of Victoria’s death. The tax court affirmed the commissioner’s finding of a deficiency, finding that the actions of Victoria’s children caused the stock devaluation.
Rule of Law
Issue
Holding and Reasoning (Paez, J.)
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