Tax Type
Estate Tax
Description
Value of decedent's estate
Topic
Computation of Tax
Date Issued
06-12-1997
June 12, 1997
Re: Request for Ruling: Probate Tax
Dear********************
This will reply to your letter requesting a ruling on the application of the probate tax on claims filed on behalf of estates by personal administrators.
FACTS
You have stated that you disagree with my March 19, 1997, ruling to the************. Specifically, you object with my conclusion that a pending action should be included in the value of an estate. You state that only actions reduced to judgment should be included in the value of a decedent's estate since the cause of action in Bagley v. Weaver was reduced to judgment.
RULING
Unfortunately, there is no clear statutory guidance or case law on this issue. In Bagley v. Weaver, 211 Va. 779 (1971), copy enclosed, the Court said in dicta that in a cause of action which survives the decedent "... the amount of damages that can be proved, is an asset of the decedent's estate and is subject to the payment of his debts." While it is true that the cause of action in Bagley was reduced to judgment, the Court specifically stated that the amount of damages that could be proved should be included in the decedent's estate. It did not hold that the damages which should be included in the decedent's estate are limited to those which are reduced to judgment.
I agree that it is difficult for a court clerk to place a value on pending causes of action. However, it is established in federal estate law that the fair market value of a pending cause of action is a question of fact and it is includable in the decedent's estate at the time of death or at the alternative valuation date. This expressly overrules P.D. 97-131, copy enclosed, which stated that a court clerk could adjust probate taxes after pending actions have been rendered to judgment.
I trust the foregoing has responded to your questions. If you should have any further questions regarding this ruling, you may contact ********* at**********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12435B
Rulings of the Tax Commissioner