The appeals court based its $14 million refund award to the estate on the experts’ determination that discounts of 52 percent to 80 percent should apply.
Wierbicki said the only problem with this positive outcome as a precedent was that the Fifth Circuit focused on the fact that the IRS had failed to meet its burden of proof. “It’s unlikely that in the future the IRS wouldn’t present a percentage argument” for an appropriate discount. Nevertheless, the decision was “such a favorable result that even though it may be hard to use it as a precedent, to have those types of percentage discounts out there will help,” she said.
Wierbicki noted that in the 2007 Stone v. U.S. case in which the Ninth Circuit allowed a 5 percent discount, the taxpayer had argued for 44 percent discount. “It’s very likely that when the Elkins tax return was being prepared, they looked to the discounts that were asked for in Stone,” and asked for 44.75 percent.
Going forward, she said, when people ask for discounts on their estate tax return, companies that are making discount assessments will have the 5 percent from Stone to look at as well as the 52 to 80 percent range in the Elkins case.