Victory Over IRS in Estate Appraiser Dispute

By John O'Grady, O'Grady Law Group

estate-planning-pulling-estate-taxesMany people think the IRS is just too big to beat, and that when the tax collector sends you a bill, you better just pay up instead of trying to defend yourself. But like David bravely fighting Goliath, some taxpayers have stood up for their rights in court—and won.

John A. Pulling, Jr. epitomizes this fighting spirit. After his father died in 2005, John Jr. managed the estate, which included three parcels of land in Florida. The estate also held a minority share in the Temple Citrus Land Trust (TCLT), which owned two parcels bordering Pulling’s properties. John Jr. had the three parcels appraised along with a separate appraisal for the minority share in TCLT as of his father’s date of death, and included those amounts on the federal estate tax return. But the IRS argued that the estate undervalued the properties and owed estate tax on all five properties (collectively valued at $2,370,000) because, they claimed, there existed a “reasonable likelihood” that the parcels would be sold as a single unit for residential development.

So the IRS sent Pulling a bill for more than a million dollars. Pulling’s lawyers countered that TCLT had rejected a previous offer to sell all five parcels for real estate development. The Tax Court therefore concluded that there was no reasonable likelihood of future assemblage, and that Pulling was only required to pay estate tax on the lower three-parcel valuation.

This case is one among many proving that the IRS is not always right.  Those who play fair and act reasonably can sometimes find relief in Tax Court.  Estate of John A. Pulling Sr. et al. v. Commissioner, Case No. 1660-09 (July 23, 2015).

About the author
John O‘Grady, O’Grady Law Group, was the 2012 chair of BASF’s Estate Planning, Trust & Probate Section.