UNITED STATES TAX COURT

T.C. Memo.

2011-163

UNITED STATES TAX COURT

ESTATE OF ElvILIA W. OLIVÒ, DECEASED, ANTHONY M. OLIVO,

ADMINISTRATÒR, Petitioner V:

COMMISE IONER OF INTERNAL REVENUE, Respondent

Docket No. 15428-07.

Filed July 11, 2011.

John R. Crayton, for petïrtioner.

Kristina L. Rico, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

WELLS, Judge:

Respondent determined a deficiency in the

Federal estiate tax of ¯the. Estate of Emilia W. Olivo (the estate)

of $348,852.05 and a penalty Ôf $13,309.29 pursuant to section

- 2 -

6662(g) .I

After concessions, the issues we must decide are:

(1)

Whether the estate is entitled to deduct as an expense the claim

on the estate tax return for services rendered by Anthony M.

Olivo (Mr . Olivo) , the son of Emilia W . Olivo ( decedent ) , to

decedent before her death;

(2) whether the estate is entitled to

deduct the administrator's commission paid to Mr. Olivo; and (3)

whether the estate is entitled to deduct the accountant's and

attorney's fees claimed by Mr. Olivo.

FINDINGS OF FACT

Some of the facts and certain exhibits have been stipulated.

The parties' stipulations of fact are incorporated in this

opinion by reference and are -found accordingly.

Decedent died intestate on April 26, 2003.

At the time of

her death, decedent was a widow who resided in Haddonfield, New

Jersey.

Decedent was survived by four children:

Mr.. Olivo,

Matthew P. Olivo (Dr. Olivo), Marcia O. Hamilton (Ms. Hamilton),

and Emilia H . Glaes (Ms . Glaes ) .

Mr. Olivo, the administrator of the estate, resided with

decedent at the time of her death and had provided care for her

for many years before her death.

Mr.« Olivo began providing

nearly full-time care for decedent -and her late husband,e Matthew

Unless otherwise indicated, section references are to the

Internal Revenue Code of 1986 (Code) , as amended and in effect as

of the date of decedent's death, and Rule references are to the

Tax Court Rules of Practice and Procedure .

3 -

W. Olivo, his parents (we sometimes refer to Matthew W. Olivo as

his father)., arotnd September 18, 1994, when decedent fell and

suffered a compr ssion fracture of her lower spine that left her

nearly paralyzed in both legs.

At that time, Mr. Olivo's father

was already havirg severe health problems, including insulindependent diabetes and congestive heart failure.

His father had

suffered a heart attack in the early 1990s and underwent several

medical prdcedures on his heagt, including an open-heart bypass

surgery.

Around the time of decedent's fall during September 1994,

Mr. Olivo began to find it increasingly difficul~t to maintain his

practice as an attorney.

He had received his J.D. from'Rutgers

University School of Law (Canden) in 1976 and his LL.M. in

taxation from New York University School of Law in 1979,.

Mr.

Olivo practiced law at private firms in Cherry Hill, New Jersey,

from 1976'untile

9885 when helbegan his own practice. ~ However,

his solo practice began to disintegrate during the mid-1990s, in

part because of

he amount of time he devoted to his'parents'

health problems.

He earned"n

significant income from hi's law

practice during the period when he was caring for- his parents,

from 1994, through 2003.

Mr. Olivo prepared a durable power of attorney for his

father, which his father execúted on February 15, 1995..

Olivo's father'died test'ate oþ September 21, 1995.

Mr.

His will

- 4 designated decedent and Dr. Olivo as coexecutors of his estate.

The probating of- Matthew W. Olivo' s will was apparently quite

contentious, . and a New Jersey, court ultimately hady to intervene

and appoint Ms . Hamilton as administrator of, the estate .

During

that period, -Mr. Olivo represented decedent, and he prepared a

durable power -of attorney for her, which she executed on February

27, 1996.

Family relationships remained strained for several

years af ter his f ather' s death, and decedent and Dr . Olivo. were

estranged for a while, but family relationships were generally

restored -by the year. 2000 .

Decedent had numerous health problems during the last tyears

of her ,life.

The compression fractures to her, spine left her a

incapable of caring for herself and ,basically paralyzed ein both

legs .

Mr . Olivo had to use a sliding. board to move decedent in

and out of bed.

He found it difficult to move-her using ,the

sliding board because she was very overweight at that, time.

As a

result, he eventually purchased a Hoyer lift, « which -made it

easier to move her from bed to her wheelchair and back. .

She also

required assistance- to use the bathroom, to get dressed, and to

bathe.

Decedent suffered from a numbere of urinary tract

infections and, during 1995, she developed incontinence, which

required Mr. Olivo to clean up after her and change her clothes

Decedent was diabetic and became insulin-dependent - during 1999,

which required Mr. Olivo to test the insulin levels in her bloód,

- 5 several times each day and, if needed, inject her with insulin.

Mr. Olivo was also responsible for preparing all meals and doing

general housekeeping.

He employed home health aids to assist

him, but the aids were not registered nurses and therefore could

not administer decedent's medications or, do the blood sticks and

insulin injectiors she required.

He was also frequently -unable

1

to get aids to help him on -th

weekends, and they were not'

available at all hours.

Mr. Olivo kept extensive records of decedent's medications,

hospital visits, and diagnoses.

He also kept a composition

notebo'ok where he recorded her blood sugar levels, blood.

press re, pulse, and body temperature.

He- took those a

measurements two to three times each day.

He also used the

composition notebook to keep track of decedent's bodily functions

and of when he applied dermatological cream to rashes and sores

she developed from being bedridden.

He recorded observations in

the composition book about se en times each day.

Decédent's other health problems included

hyperparathyroidism, hyperthyroidism, hypertension, osteoporosis,

and chronic deep vein thrombosis.

She also had periodic bouts

with pneumonia, and she developed congestive heart failure and

coronary artery disease during the last several years of her

life.

She was hospitalized approximately 25 times during the

last decade of her life.

Caring for decedent took a toll on Mr. Olivo.' At some point

during'1998,. Dr. Olivo became concerned about Mr. Olivo's'health.

Mr. Olivo had been losing weight, and,his sleep was frequently

interrupted by decedent's needs.

In fact, die had been,sleeping

on the couch with his clothes on every night. «During 1998, as a

result of his concern about Mr. Olivo's health, Dr. Olivo had ra.

conversation about decedent's care with decedent and Ms.

Hamilton.

Dr. Olivo believed that his brother,. Mr.s Olivo, was

providing excellent care for decedent, and his only concern was

that Mr. Olivo not injure his own health.

Dr. Olivo, Ms. -Hamilton, and.decedent subsequently had a

conversation with Mr. Olivo about his care for decedent.

Mr.

Olivo was upset about criticism he had received from Ms . Glaes

and hesoffered to stop providing such care and to hire round-theclock nurses instead.

Dr. Olivo, Ms. Hamilton, and,decedent

asked Mr. Olivo to continue caring for decedent; which he agreed

to do.

Mr. Olivo continued to care for -decedent until her death on

April 26., 2003.

After her death, Mr. Olivo began to prepare an

inventory of herr estate, and he sought to be the estate's

administrator by requesting that his siblings renounce,their

rights to 'that position.

However, Ms. Glaes refused to do so

until August 2004, at which point she apparently relented, and

Mr. Olivo was appointed administrator of the estate.

By that

- 7 -

point, Mr. Olivo had already filed the estate's tax return, which

the IRS teceived on July 31, ½004.

On that return, he claimed a

deduction of $44;200, which hê calculated was the statutory

amount to which te would be entitled as a commission for hiss

services as admir.istrator of the estate.

He also estimated

attorney's fees of $50,000, which he calculated on an hourly rate

of $150

and accountant's fees of $5,000

Finally, he also

claimed a deduction of $1,240,000 as a debt the estate owed to

him for the care he provided to decedent pursuant to an alleged

agreement he had with her to compensate him for his services in

caring for her (Elleged agreement).

When he filed the estate s return, Mr. Olivo had not

actually been pajd an administrator's commission- and the

attorney's fees te claimed on the estate tax return on behalf of

the estate.

On September 23,12006, Mr. Olivo wrote a $44,200

check ifrom the estate to himself in payment of- an administrator's

commission.

From December 31, 2004, "to"December 31, 2008, Mr.

Olivo wrote himself a series of checks from the estate to -pay for

attorney's fees ind litigation expenses.

$55,400.

Those checks totaled

The estate has not actually paid Mr. Olivo any of the

$1,240,000 claimed as a deduction on the return pursuant to the

alleged agreement.

The'probate court has neither finalized the

administrätion of the estate nor approved the payment of any

expenses.

- 8 -

On or about April 6, 2007, respondent issued and mailed a

notice of deficiency to Mr. Olivo, as administrator of the

estate.

On behalf of the estate, Mr. Olivo timely filed a

petition with this Court.

OPINION

Burden of-Proof

In general, the Commissioner' s determinations are -presumed

correct, and the taxpayer bears the burden of proving otherwise.

Rule 142(a); Welch v.»Helvering, 290 U:.S.

111,

115

(1933).

However, section 7491(a) places the burden* of proof on the

Commissioner with respect to any factual issue relevant to a

taxpayer's liability for tax if:

(1) The taxpayer introduces

credible 3eyidence with respect to such issue; and (2) the

taxpayer satisfies certain other conditions, including

substantiation of any item, proper maintenance* of all required

records, and cooperation with the Government's requests for e witnesses,«documents, and the like. , Sec. 7491(a) (2); see also

Rule 142 (a),(2)-.

Taxpayers bear .the burden of proving that they

have met the requirements of section 7491(a). sRolfs v.

Commissioner, ,135 T.C. 471,

483

(2010).

The estate contends that the burden of proof has shifted to

respondent pursuant to section 7491(a).

However, as we discuss

below, the only evidence the estate produced to -substantiate any

of the claimed deductions was the testimony of Mr. Olivo.

The

estate failed to provide a written contract or any other

documentary or corroborating evidence to substantiate the alleged

agreement,-and it-¯failed to provide any records or other written

documentation or other corroborating evidence to ¯show how much

legal work Mr. OJ:ivo provided for the estate.

Overall, the

evidence, in the form of testimony, provided by the estate to

substantiate its deductions is not credible within the meaning of

section 7491(a).

Consequently,. we conclude that the burden of

proof has not shifted to respþndent with respect to-any factual

issue pursuant to section 749 L (a) .

The Claimed Deduction Based Upon the Alleged Agreement and

Alternatively Quantum Meruit

Section 2051(a) provides that the value of the taxable

estate shall be determined by deducting from the value of the

gross estate such amounts for claims against the estate and

administration expenses as are allowable by the laws of the

jurisdiction under which the estate is being administered.

Administration expenses include executor's commissions;

attorney's fees, including those fees associated with contesting

an asserted deficiency; and miscellaneous expenses such as

appraiser's fees, accountant's fees, and court costs.

Sec.

20.2053-3, Estate Tax Regs.

Ne first consider the estate's contention that it is

entitled to deduct $1.24 mill on to pay Mr. Olivo for decedent's

care pursuant to the alleged agreement.

Regarding the alleged

- 10 -

agreement between Mr. Olivo and decedent, Mr. Olivo testified

that at some point during 1998, he learned« that one of his

sisters, Ms. Glaes, had made a comment that all he did was sit

around and watch television while getting free -room and;board.

He was upset by the remark, and he told decedent about it when

she noticed that he was upset.

Mr. Olivo testified that decédent

subsequently offered to pay him $1,000 per -week for the caregiving ,that he provided for her.

Mr. Olivo further testified

that he suggested that $200 per day would be agreeable to hiní.

However, he additionally testified that during the next several

days, he became worried about her finances, and he suggested to

her that she not pay him anything then but that she defer the

payment until -her death.

Mr. Olivo also testified thats decedent

agreed to his suggestion but that, to avoid a complicated

interest calculation, she agreed to-pay him $400 per day, all of

which would be deferred until her death.

However, Mr. Olivo

never reduced the alleged agreement to writing.

He acknowledged

during his testimony at trial that he "could have and should

have" memorialized their agreement, but he was too distracted by

the day-to-day details of caring for decedent.

He explained that-

he was not thinking like a lawyer during that time.

The only evidence the estate offered to prove the alleged

agreement was the testimony of Mr. Olivo.

Mr. Olivo never

reduced the alleged agreement to writing, nor were there any

a

4 11 -

other witnesses to the alleged agreement or any other

corroborating evidence.

We ne d not accept testimony that is

improbable, self-serving, and uncorroborated by other evidence.

See,

e.g., Baird v.

Commissioner, 438 F.2d 490, 493

(3d Cir.

1970), vacating T.C. Memo. 1969-67; Shea v. Commissioner, 112

T.C.

183,

189

(1999); Tokarski v. Commissioner,

87 T.C. 74,

77

(1986).

Moreover, under New Jersey law, the oral promise of a

decedent must be proved by clear and convincing evidence.

N.J.

Stat. Ann. sec.

Stäte

2A:81-2

Bank, 432 A.2d 892,

(West 1994); Haynes vs First Natl.

901 n.6

(N.J. 1981).

The clear and

convincing evidence standard requires the trier of fact to have •

"'a*fiim belief oc conviction as to the truth of the allegations

sought to be estaalished.'"

A.2d 989,

Land,

1046

Abbott ex rel. Abbott v. Burke, 971

(N.J.

2009)

(quoting Liberty Mut.

892 A.2d 1240,

1244

(N.J. 2006)).

Ins. Co. v.

We need not decide

whether to apply New Jersey's clear and convincing standard because we conclude, on the båsis of our analysis below, that Mr3

Olivo's testimony fails to satisfy even the less exacting

preponderance standard normally applied by this Court.2

2Although the standard of proof normally applied in Tax

Court cases is a preponderance of the evidence, when we are

applying State law, we have often applied the standard of proof

under State law.

See Ward v. Commissioner, 87 T.C. 78, 93 n.4

(1986) (and cases 'cited thereat).

However, as stated above,

because we conclude that the estate's claim fails to satisfy even

(continued...)

- 12 Mr. Olivo's testimony recounting the facts surrounding the

alleged agreement strikes us as shighly questionable.

Although we

understand that Mrs Olivo had a lot on his mind during, the years

when he was caring for his parents, his claim that he was unable

to think like a lawyer during that period is belied by the fact

that he; prepared powers of attorney for both of his parents and

had them execute those powers of attorney during 1995 and 1996.

Given Mr. Olivo's training and experience as an attorney, given

how contentious the probating, of his father's estate .had been,

given the apparent animosity between Mr. Olivo ands Ms. Glaes, -and

given Mr. Olivo's vested interest in ensuring that he would

receive compensation from decedent pursuant to the alleged ,

agreement, we find it -difficult to believe that helwould not have

reduced the alleged agreement to writing or at least have some

corroborating evidence beyond his self-serving testimony.

In light of the,foregoing, we decline to accept Mr. Olivo's

uncorroborated testimony regarding the .alleged agreement .

Accordingly, we conclude that the estate has failed to establish

that decedent entered into the alleged agreement with Mr. Olivo.

Consequently, we hold that Mr. Olivo's claim for compensation

2 ( . . . continued)

the preponderance-standard, we need not decide whether toa apply

New Jersey' s clear and convincing standard to the existencesof a

the oral promise. See id.

- 13 pursuant to the alleged agreement may not be~ deducted by the

estate . .

In the alternative

the estate contends that Mr. Olivo is

entitled to some recovery under quantum meruit.

e

Even in the

absence of a contract, when one party has conferred a benefit on.

another and the circumstances are such that it would be

inequitable to deny recovery to- the party conferring the benefit,

New Jersey courts allow recovery-in quasi-contract.

Realtors v. Ryan, 608 A.2d 280, 285 (N.J. 1992)..

Weichert Co.

Quantum meruit

is a type of quas i-contractual recovery that allows a plaintif f

to recover the re asonable value of services rendered when the

plaintiff conferring the services had a reasonable expectation of

payment.

Id.

To recover under a ftheory of quantum meruit, a

plaintiiff must establish:

good faith,

"' (1) the performance of services in

(2) t he acceptance of the services by the ,person to

whom =they are rendered,

(3) an.expectation of compensation

therefor, and (4) the reasonable value of the services.'"

Starkey, Kelly, Blaney & White v. Estate of Nicolaysen, 796 A.2d

238,

242-243

25 F.3d 94.,

(N.

98

. -20 02)

(quo ing Longo v. • Shore & Reich; Ltd . ,

(2d Cir. 1994) ) .

Mr. Olivo's care for decedent during the last years of her

life was extraordinary, and the efforts he expended lon:her behalf

are commendable .

However, we conclude that the estate has not

established that Mr. Olivo is entitled to recover for that care

- 14 -

under -quasi-contract because it has not shown entitlement under

New Jersey law.

There is a presumption under New Jersey law that

services rendered to a family member living -in the same household

are rendered gratuitously.

The New Jersey Supreme Court has

explained the presumption as follows:

-

"Ordinarily, where services are rendered and voluntarily

accepted, the law will imply a promise upon the part of the

recipients to pay for them; but where the services.are

rendered by members of a family, living as one household, to

each other, i there will be no such implication from the mere e

rendition and acceptance of the services.

In order to

recover for the services, the plaintiff must affirmatively

show either that an express contract for remuneration

existed or that the circumstances under which ,the . services .

were rendered were such as exhibit a reasonable and proper

expectation that there would be 'compensation. The areason of

this exception to the ordinary rule is that the household

family relationship is presumed to abound in reciprocal acts

of kindness and good will, which tend to the mutual comfort

and convenience-of the members of the family, and are

gratuitously performed; and, where that relationship

appears, the .ordinary implication of a promise to pay fors

service does not arise because the presumption, which

supports such implication, is nullified by the presumption

that between members of a household services are

gratuitously-rendered. The proof 'of the services,, and assa o

well of the family relation, leaves the case in equipoise,

from which the plaintiff must remove it, "or fail."

. *

Waker v

Bergen,

v. Durand,

24 A.

132 A.

669,

545,2546

669-670

(N.J.

(N.J.

1926)

(quoting Disbrow

1892))e. * Applying New Jersey law

to the instant case,3 we must presume that Mr." Olivo's services

were gratuitous unless the estate can prove by a prepondenance of

the evidence that Mr. ,Olivo was sentitled to recompense -for his

3The standard of proof is by a preponderance of the evidence

regardless of whether the New Jersey law presumption applies.

15 -

services .

Children do provide gratuitous care for their aging

parents.

Indeed, it is uncontested that Mr. Olivo provided care

to his parents from 1994 until 1998 with no expectation of

compensation.

Other than the testimony of Mr. Olivo, the estate

has offered no other evidence that Mr. Olivo's services beginning

in 1998 were not gratuitous só as to overcome the New Jersey law

presumption that the services were gratuitous.

As with Mr.

Olivo's uncorroborated, self-serving testimony regarding the

alleged agreement., we decline to accept Mr . Olivo' s testimony to

establish that the services he performed were not gratuitous.

Moreover, the est-ate has made no payments to Mr . Olivo to

compensate him for decedent' s care, the probate court has not

authorized any such payments, and the record contains no evidence

that Mr. Olivo hé.s made any claim against the estate for his

services.

Consequently, we hold that the estate is not entitled

to deduct any re<tovery under quasi-contract for the services Mr.

Olivo rendered to decedent du ing the last years of her life.

The Claimed Deduction for Adm nistrator' s Commission

Ne next con ider whether the estate may deduct the

administrator's <:ommission paid to Mr. Olivo.

When Mr. Olivo

filed the estate" s tax return, he had not yet been paid an

administrator's <:ommission.

For decedents who died before

October 20, 2009, the regulations provide that a deduction for an

administrator's <:ommission will be allowed on the final audit of

- 16 the return, even if the commission has not actually yet been paid

or fixed by a decree of the proper court, so slong as three

conditions are met:

(i) The district director is reasonably satisfied that

the commissions claimed will be paid;

(ii) The amount claimed as a deduction is within the

amount allowable by the laws of the jurisdiction in which

the estate is being administered; and

(iii) It is in accordance with the usually accepted

practice in the jurisdiction to allow such.an amount in

estates of similar size and character.

Sec. 20.2053-3(b) (1), Estate Tax Regs.

Respondent contends, citing In re Linn' s Estate, 199 A. 396

(N. J." 1938 ) ,

In re Smith' s Estate ,

153 A .

647

(N . J.

1931) , and In

re Jula's Estate, 130 A. 733 (N.J. 1925), that the amounts paid

to Mr. Olivo are not deductible because New Jersey law requires

that those amounts be approved by a probate court .

agree.

We do not

An amendment to N.J. Stat. Ann. sec. 3B:18-14. (West 1983

& Supp. 2011) enacted during 2000 clarifies that, under New

Jersey law, the commissions fixed by statute do not require

judicial app9oÔai.4

Rather, that statute provides that

commissions fixed by statute may be _reduced by the court

4The statements accompanying the bill amending the statute

specifically noted that the amendment was intended to repudiate a

position taken by the Internal Revenue Service at that time, and

'taken by'respondent in this case, that administrator's

commissions were not allowed under New Jersey law until approved

by a probate court. Assemb. B. 2049, 209th Leg. (N.J. 2000) ;

S..B.

952,

209th Leg.

(N.J. 2000) .

Y

i.- 17 -

only upon application byta beneficiary adversely affected

upon an affirmative showing that the services rendered were

materially deficient or that the actual pains, trouble and

risk of the fiduciary in settling the estate were

substantially less. than generally required for estates of

domparable size.

Id.

Unless a beneficiary objects to the commissions and proves

that they are excessive, the statutory formula determines the

amount of commission that will be allowed.

Consequently, under

current New Jersey law, in the absence of a judgment from the

probate court directing otherwise, the allowable administrätor's

commissions are determined as follows:

5 percent on the first

$200,000 of the estate; 3.5 percent on the excess over $200,000

up to $1 million, and 2 percent on the excess over $1 million.

Id.

Applying the statutory formula to the estate value of

$1,711,163.81 reported on the return yields an administrator's

commission of $52,223.28.

Mr. Olivo testified that he used the

statutory formula to calculate the deduction he claimed on behalf

of the estate on its return.

However, the estate claimed a

deduction of only $44,200.

In its brief, the estate contends

that Mr. Olivo made a calculation error.

It is unclear whether

the estate will pay Mr. Olivo the difference between the amount

calculated by applying the statutory formula and the amount

actually paid.

Pursuant to the regulations, for the difference

to be deductible by the estate, the amount must actually be paid

- 18 -

or the district director must be "reasonably satisfied" that such

amount will be paid.

See sec. 20.2053-3(b) (1),a Estate Táx Regs

In the instant case, we 'hold that the parties shall use the

foregoing formula to calculate the administrator' s commission

that the estate is entitled to deduct under New Jersey law.

However, if the estate does not actually pay Mr. Olivo the

difference between what he has already been paid and the amount

permitted under the statutory formula, the estate shall be

allowed to deduct only the amount actually paid unless the

parties agree otherwise in the Rule 155 computations, which we

order below.

The Claimed Deduction for Attorney's Fees

Finally, we consider whether the estate is entitled to

deduct $55, 40 0 in accountant ' s and attorney' s f ees actually paid

to Mr. Olivo.

The regulations in effect at the time of

decedent's death provided that attorney's fees of an estate are

allowable on the final audit of its return even if not yet paid,

nor awarded by the proper court, as long as

the district director is reasonably satisfied that the

amount claimed will be paid and that it does not texceed a

reasonable remuneration for the services rendered, taking

into account the sitze and character of the estate.and the

local law and practice.

Sec. 20.2053-3(c) (1), Estate Tax Regs.

Additionally, a deduction

"for reasonable attorneys' fees actually paid in contesting an

asserted deficiency * * * will be allowed even though the

19 -

deduction, as such, was not claimed in the estate tax return".

Sec. 20.2053 3(c) (2), Estate Tax Regs.

Réspondent does not contest -that the attorney's fees

incurred by the estate in contesting the determined deficiency

before this Court are deductible, and we.see no reason why they

should not be deductible.

Accordingly, we conclude that those

attorney's fees are deductible by the estate."

Respondent contends that the estate is not entitled to the

$55,000 deduction claimed on its return for attorney's and

accountant's fees because it has not substantiated those fees.

On th'e estate's return, Mr. Olivo estimated and deducted $50,000

for attorney's fees and $5,000 for accountant's fees. .However,

according to Mr. Olivo's testimony, the actual payments the

estate made for expenses totaling $55,400 were all for legal fees

or reiinbursements.

It does not appear from the record that any

accounting fees were incurred.-

Accordingly, we will streat all

those fees together as legal fees.

New Jersey law provides -that, where the administrator of an

estate is also an attorney and performs legal work in -addition to

his services as administrator

he wil-1 be entitled to- a

reasonable legal fee in.addit on to the administrator's

commission.

N.J. Stat. Ann. gec. 3B:18-6

(West 1983 -& Supp.

sthe amount of those attorney's fees shall be included in

the Rule 155 computations that we order below.

- 20 2011) :

The burden is on the attorney to substantiate the legal

fees claimed, and New Jersey courts will consider a number of

factors in determining whether those amounts are reasonable,

including:

The size and coinplexity of the estate; the time :

required to complete necessary legal work; the degree of legal

skill- required to complete that work; whether the estate was

involved in any litigation and the outcome of that litigation;

and any other factors the court considers important.»

Estate of Simon, 226 A.2d 639,

641

196'7/);

129 A.2d 35,

In re Estate of Bloomer,

App. Div.,

195'7);

In re Turnbull,

(N.J. Super.

37

In re -

Ct. App. Div.

(N.J. Super. =Ct

1 N.J. Misc. 41,

41-42

(1923)

In determining the appropriate value for legal fees where tthe

attorney was also the executor or administrator of the estate

the court must. distinguish between those duties -that actually

required legal expertise and those that were performed ass

executor or administrator.

In re Estate of- Simon, supra eat 642

We apply the standards set forth in New Jersey law in deciding

the deductibility -of the attorney's fees by. the estate in the

instant case.

The record shows that Mr. Olivo did perform some legal

services for the estate, in addition to his' services as

administrator. . For instance, he filed the estate's tax return

handled the IRS examinat;i.on on behalf of the estate, and filed

the estate's original petition with this Court.

However, the

- 21 -

record does not establish the value of his legal services.

Mr.

Olivo testified that the $55,400 rinrattorney's fees claimed by

the estate and p id to him included:

$300 for an appraisal of

decedent's home; $200 for the surrogate's fee to initiate the

administration of the estate; $40 in filing fees for releasing

the funding bonds ; and $60 for filing the petition in this Court.

Mr. Olivo testified that the remaining $54,800 consisted of

payments for legal services he rendered to the estate.

However,

Mr. Olivo kept nc. records of jher time he spent performing legal

services for the estate.

Instead, he merely estimated the number

of hours and used. a billing rate of $150 per hour.

On accound of

the lack of corrcborating evidence in the record concerning the

attorney's fees issue, we decline to accept Mr. Olivo's estimates

of the amount of time he spent performing legal services for the

estate.

Where a taxpayer has established that a deductible expense

has been paid but not substantiated the amount, we may estimate

the amount, bearing heavily against the taxpayer "whose

inexactitude is cf his own making."

F.2d 540, 544 (2d Cir. 1930).

Cohan v. Commissioner, 39

However, if the evidence provides

us no |basis on which to make an estimate, we will not allow any

deductiion.

Vanicek v. Commissioner, 85 T.C.

731, 742-743

(1985).

The record provides a paucity of evidence from which we could

make any estimate as to the amount of specifically legal work

-

performed by Mr. Olivo.

422

-

Accordingly, we are unable to estimatie

the amount of attorney's fees that the estate may be'entitled to

deduc t ine payment f or Mr . Olivo ' s services .

However , we conc lude

that the estate is entitled to deduct $600 for the administrative

fees for appraisals -and various filings.

Additionally,eas stated

above, sit is entitled to deduct the amount of attorney's fees it

incurs in contesting the deficiency in the instant case.

In reaching the' foregoing holdings, we have considered alle

of the parties' arguments, and to the extent not addressed

herein, we 'conclude that they are moot, irrelevant, or without

merit.

To reflect the foregoing

Decision will be entered

under Rule 155.