Estate of Olivo v. Commissioner

Anthony Olivo (plaintiff) was the primary, live-in caregiver for his mother, Emilia Olivo, for the decade preceding her death. Emilia was partially paralyzed and needed around-the-clock medical and personal care. Because of Emilia’s care needs, Anthony was unable to maintain his law practice. Anthony was not paid to act as Emilia’s caregiver, and there was no written compensation agreement between Anthony and Emilia. After Emilia died intestate, Anthony was appointed as the administrator of Emilia’s estate (plaintiff). As administrator, Anthony submitted an estate tax return to the Internal Revenue Service (IRS) (defendant). On the estate tax return, Anthony reduced the value of Emilia’s estate by $1.24 million, the amount Anthony claimed Emilia had orally agreed to pay for Anthony’s caregiving services. When Anthony filed the estate tax return, he had not been paid the $1.24 million by the estate and the probate court had not approved the payment of any caregiving expenses. The IRS served a deficiency notice on Emilia’s estate, stating that the $1.24 million was improperly deducted from the estate’s total value. Anthony then filed a petition with the United States Tax Court, arguing he was entitled to deduct the $1.24 million from the estate either because he had an oral compensation agreement with Emilia, or, alternatively, because he was entitled to recovery in quantum meruit for providing caregiving services for which he reasonably expected compensation. Anthony failed to present any evidence supporting the existence of the alleged compensation agreement other than his own testimony.