Academic journal article Journal of Accountancy

Palimony Claim Is a Valid Estate Tax Deduction

Academic journal article Journal of Accountancy

Palimony Claim Is a Valid Estate Tax Deduction

Article excerpt

The U.S. Court of Appeals for the Ninth Circuit reversed the U.S. District Court for the District of Nevada, saying a palimony claim could be a valid deduction from a taxable estate and that the district court had misconstrued Nevada law regarding contracts between cohabitating individuals.

Bernard Shapiro and Cora Jane Chenchark lived together for 22 years and never married. Chenchark provided homemaking services and Shapiro paid the living expenses, including a weekly allowance to Chenchark. Chenchark brought no assets to the relationship and did not work outside the home. Allegedly, Shapiro promised to take care of her for the rest of her life.

In 1999, after learning that Shapiro was involved with another woman, Chenchark filed a palimony suit in Nevada state court against Shapiro for approximately $5 million, alleging breach of contract and breach of fiduciary duty Shapiro died in 2001 during the palimony suit. Shapiro's will made provisions for Chenchark, but she was dissatisfied with the provisions and challenged the will. A jury found in favor of Shapiro's estate in the palimony action, and the court granted the estate's motion for summary judgment in the will contest. The parties later settled both actions for a total value of $1,012,641.

Shapiro's estate had earlier filed the estate tax return and paid $10,602,238 in estate and generation-skipping taxes. In June 2003, the estate filed an amended estate tax return seeking a reduction of the taxable estate based on Chenchark's claim. The IRS disallowed the reduction. In August 2006, the estate filed a suit in federal district court seeking a refund of $4,863,480.

The district court ruled in favor of the government's summary judgment motion, stating no evidence existed that Chenchark ever contributed anything other than love, support and management of Shapiro's household. The court looked at Western States Construction Inc. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.