Estate Tax Cases Won and Lost: 34 Cases Scored

By Eric Ridley, attorney, Ridley Law. Updated October 2026.

Who this page is for: every estate size, with the most at stake above $15 million single or $30 million married, where federal estate and gift tax is a real number. The valuation, formula-clause and partnership cases also govern gifts made well below those amounts.

Ridley Law read 34 federal court decisions that shaped estate planning for wealthy families. Taxpayers won 12, the IRS won 17, and 5 were split. Facts and formalities, meaning how a transaction was documented, carried out, timed or appraised, decided 17 of the 34, including 11 of the IRS’s 17 wins. Family partnerships produced the most IRS wins of any technique: 4 of 6 cases, with 1 split and 1 taxpayer win.

The page is a scorecard, not a sample. Each case was chosen because planners still rely on it or still lose to it, and each opinion was read before it was characterized here. Every count on this page is computed from the table below. The page is reviewed when a new decision on one of these techniques comes down.

Cite this page: Ridley Law, “Estate Tax Cases Won and Lost: 34 Cases Scored,” ridleylawoffices.com/estate-tax-cases-won-and-lost/, October 2026.

34Federal tax cases read and scored, 1968 to 2026
12 / 17 / 5Taxpayer wins / IRS wins / split decisions
11 of 17IRS wins decided by facts and formalities, not a rule of law
1 of 6Family partnership (§ 2036) cases the taxpayer won outright
5Cases decided or affirmed by the Ninth Circuit, the appeal court for California residents
40%Top federal estate and gift tax rate (IRC § 2001(c))

Do taxpayers or the IRS win more estate tax cases?

In the 34 planning cases scored here, the IRS won 17, taxpayers won 12 and 5 were split (Ridley Law case scorecard, October 2026).

That isn’t the IRS’s overall win rate. The cases here are the ones planners study, not a random draw of everything litigated. The IRS won mostly on facts and formalities: a partnership formed too close to death, a formula tied to the wrong number, a spouse who was only a pass-through, papers signed months after the date on them. The legal rules behind most of these techniques held up. Walton (GRATs), Petter (formula gifts to charity), Crummey (withdrawal rights), Levine (split-dollar) and Anenberg (QTIP trusts) are taxpayer wins on the law.

The scorecard: 34 cases, each read

Read across for one case. The citation links to the opinion on CourtListener. Where an appellate court ruled, the row is scored on that ruling and the Tax Court decision is noted. Three rows are income tax cases (Webber, Avrahami, Hoensheid). They’re here because they decide whether techniques sold to wealthy families work at all.

Federal estate, gift and related tax cases that shaped planning for wealthy families, scored on the last court that decided them. Read by Ridley Law, October 2026.
Case and citation Year Court Technique Who won Holding in one sentence Lesson
Walton v. Commissioner, 115 T.C. 589 2000 U.S. Tax Court GRATs Taxpayer A GRAT annuity paid to the grantor or, if she dies during the term, to her estate is a qualified annuity for the full term, and the regulation example that took the opposite view is invalid. Zeroed-out GRATs rest on this case. Write the annuity so it keeps running to the estate if the grantor dies during the term.
Badgley v. United States, 957 F.3d 969 2020 U.S. Court of Appeals, 9th Cir. GRATs IRS When a grantor dies during a GRAT's term, her annuity is a substantial present economic benefit, so the GRAT's date-of-death value is in her estate under § 2036(a)(1). A GRAT works only if the grantor outlives the term. Short terms manage that risk. Nothing removes it.
Succession of McCord v. Commissioner, 461 F.3d 614 (rev'g 120 T.C. 358 (2003)) 2006 U.S. Court of Appeals, 5th Cir. Defined value and formula clauses Taxpayer The Tax Court erred by using a later agreement among the donees to value a formula gift, so the gift values the donors reported under their assignment agreement stood, along with their charitable deduction. What the recipients agree among themselves afterward doesn't change what the donor gave.
Estate of Christiansen v. Commissioner, 586 F.3d 1061 (aff'g 130 T.C. 1 (2008)) 2009 U.S. Court of Appeals, 8th Cir. Defined value and formula clauses Taxpayer A formula disclaimer was valid as to the amount that passed to a charitable foundation, and the estate got a charitable deduction for it. Formula disclaimers to charity work. The part routed to a charitable lead trust failed in the Tax Court and wasn't appealed.
Estate of Petter v. Commissioner, 653 F.3d 1012 (aff'g T.C. Memo. 2009-280) 2011 U.S. Court of Appeals, 9th Cir. Defined value and formula clauses Taxpayer Transfer documents that sent any LLC units above a set dollar amount to charitable foundations didn't make the charitable gift conditional, so the deduction for those extra units was allowed. A formula gift with a charity taking the excess holds up in the Ninth Circuit, where California appeals go.
Wandry v. Commissioner, T.C. Memo. 2012-88 2012 U.S. Tax Court Defined value and formula clauses Taxpayer Gifts of LLC units worded as a dollar value, with the number of units to adjust if the IRS revalued them, were gifts of that dollar value, even though no charity took the excess. Give a dollar value, not a fixed number of units, and tie it to the value as finally determined for gift tax purposes.
Nelson v. Commissioner, 17 F.4th 556 (aff'g T.C. Memo. 2020-81) 2021 U.S. Court of Appeals, 5th Cir. Defined value and formula clauses IRS Transfers of partnership interests worth a stated dollar amount "as determined by a qualified appraiser" moved the percentage the appraiser fixed, so a higher court-found value meant gift tax was due. Tie the formula to value as finally determined for federal gift tax purposes, not to one appraiser's number.
Kimbell v. United States, 371 F.3d 257 (vacating a district court judgment) 2004 U.S. Court of Appeals, 5th Cir. Family partnerships and LLCs (§ 2036) Taxpayer A transfer to a family partnership for a proportionate interest, with formalities kept and substantial business reasons, was a bona fide sale for adequate and full consideration, so § 2036(a) didn't apply. Proportionate capital accounts, kept formalities and a real business reason are what save a partnership.
Strangi v. Commissioner, 417 F.3d 468 (aff'g T.C. Memo. 2003-145) 2005 U.S. Court of Appeals, 5th Cir. Family partnerships and LLCs (§ 2036) IRS The partnership's assets were in the estate because the transfer lacked a substantial nontax purpose and the decedent kept their enjoyment, including payment of his debts and expenses. A partnership that keeps paying the founder's bills is still his property for estate tax purposes.
Estate of Bongard v. Commissioner, 124 T.C. 95 2005 U.S. Tax Court Family partnerships and LLCs (§ 2036) Split Moving company stock into an LLC to position the company for a liquidity event was a bona fide sale, but moving LLC units into a family partnership wasn't, and part of the value came back into the estate. Each layer of an entity structure needs its own nontax reason.
Estate of Powell v. Commissioner, 148 T.C. 392 2017 U.S. Tax Court Family partnerships and LLCs (§ 2036) IRS The decedent's ability, with the other partners, to dissolve the partnership brought its assets under § 2036(a)(2), with § 2043 limiting inclusion to the excess over the interest she received, and a gift made under a power of attorney that didn't authorize it was void or revocable under California law. Late-life partnerships fail, and an agent can't make large gifts unless the power of attorney says so.
Estate of Moore v. Commissioner, T.C. Memo. 2020-40 (aff'd on the charitable deduction issue only, No. 20-73013 (9th Cir. 2021)) 2020 U.S. Tax Court Family partnerships and LLCs (§ 2036) IRS A partnership set up four days after a hospital discharge into hospice care, while the decedent kept running the farm, lacked a significant nontax reason, so the farm's value was in his estate under § 2036(a)(1). Timing near death and continued control decide these cases.
Estate of Fields v. Commissioner, No. 25-60403 (5th Cir. July 31, 2026) (revised opinion; aff'g T.C. Memo. 2024-90) 2026 U.S. Court of Appeals, 5th Cir. Family partnerships and LLCs (§ 2036) IRS After an agent moved $17 million of a declining decedent's assets into a limited partnership, and with no nontax purpose shown, § 2036(a) included the assets and the 20% penalty stood. A partnership formed by an agent as health fails is the textbook loss, now with a penalty attached.
Holman v. Commissioner, 601 F.3d 763 (aff'g 130 T.C. 170 (2008)) 2010 U.S. Court of Appeals, 8th Cir. Valuation, appraisals and entity gifts IRS Transfer restrictions in a partnership holding Dell stock weren't a bona fide business arrangement under § 2703(b)(1), so they were ignored in valuing gifts of partnership interests. A partnership of marketable stock whose restrictions mainly keep children from spending gets smaller discounts.
Pierre v. Commissioner, 133 T.C. 24; T.C. Memo. 2010-106 (two opinions in one case, scored as one row) 2010 U.S. Tax Court Valuation, appraisals and entity gifts Split Gifts of interests in a single-member LLC are valued as LLC interests, not as the underlying assets, but same-day gifts and sales were collapsed into two 50% blocks under the step transaction doctrine. The entity counts. Cutting one transfer into pieces to shrink each piece doesn't.
Estate of Kollsman v. Commissioner, T.C. Memo. 2017-40 (aff'd, No. 18-70565 (9th Cir. 2019)) 2017 U.S. Tax Court Valuation, appraisals and entity gifts IRS Two Old Master paintings reported at $600,000 together were worth $2,370,000, and the estate's appraiser wasn't credible because he was seeking the auction business at the same time. An appraiser with a stake in the sale isn't independent.
Estate of Jones v. Commissioner, T.C. Memo. 2019-101 2019 U.S. Tax Court Valuation, appraisals and entity gifts Taxpayer The court accepted the estate expert's income approach and tax-affecting of pass-through earnings, and rejected an asset-based value for a timber partnership with no likelihood of selling its land. An appraisal that prices the business the way a real buyer would wins.
Grieve v. Commissioner, T.C. Memo. 2020-28 2020 U.S. Tax Court Valuation, appraisals and entity gifts Taxpayer Nonvoting units in family LLCs were valued with the taxpayer's discounts (12.7% to 13.4% for lack of control, 25% for marketability), because the IRS expert's assumed purchase of the voting units wasn't reasonably probable. Value the interest actually given, not a deal the family wouldn't make.
Smaldino v. Commissioner, T.C. Memo. 2021-127 2021 U.S. Tax Court Valuation, appraisals and entity gifts IRS LLC units a husband gave his wife, which she passed to a dynasty trust the next day, were his gift to the trust: she never became a member, had promised to pass them on, and the papers were signed months later. Using a spouse's exemption takes a real, independent gift and documents signed when they say they were.
Estate of Jackson v. Commissioner, T.C. Memo. 2021-48 2021 U.S. Tax Court Valuation, appraisals and entity gifts Split Michael Jackson's image and likeness was worth $4,153,912, against $2,105 on the return and $161,307,045 claimed by the IRS, but the trust holding his interest in Mijac Music (NHT III) was worth $107,313,561, and no penalties applied. Hard-to-value assets need appraisals a court can believe. Both sides' extreme numbers lost.
Crummey v. Commissioner, 397 F.2d 82 1968 U.S. Court of Appeals, 9th Cir. Trust gifts and reciprocal trusts Taxpayer A beneficiary's right to demand contributions to the trust made the gifts present interests that qualified for the annual exclusion, including gifts to minor children. Withdrawal rights are what make gifts to a trust, including an insurance trust, qualify for the annual exclusion.
United States v. Estate of Grace, 395 U.S. 316 1969 U.S. Supreme Court Trust gifts and reciprocal trusts IRS Interrelated trusts that leave each spouse in the same economic position as if each had made a trust for himself are uncrossed, with no need to prove a tax motive or a quid pro quo. Two spousal trusts need real differences in terms, timing and assets.
Estate of Cahill v. Commissioner, T.C. Memo. 2018-84 2018 U.S. Tax Court Life insurance, split-dollar and buy-sell IRS (pretrial motion) The court denied the estate's motion for partial summary judgment on split-dollar rights reported at $183,700 that the IRS valued at $9,611,624, because the decedent could end the arrangements together with the trust. A termination right held jointly with the trust is still a right the IRS can count. This was a pretrial ruling, not a final valuation.
Estate of Morrissette v. Commissioner, T.C. Memo. 2021-60 2021 U.S. Tax Court Life insurance, split-dollar and buy-sell Split Sections 2036 and 2038 didn't reach the policies because the split-dollar transfers were bona fide sales, but the rights reported at $7,479,000 were valued using the IRS expert's discount rates and a 40% penalty applied. An estate can win the structure and still lose on value.
Estate of Levine v. Commissioner, 158 T.C. No. 2 2022 U.S. Tax Court Life insurance, split-dollar and buy-sell Taxpayer Only the decedent's split-dollar receivable was in her estate, not the policies' cash values, because only the irrevocable trust could end the policies, so §§ 2036, 2038 and 2703 didn't apply. Split-dollar holds up when the trust, not the insured, controls termination.
Connelly v. United States, 602 U.S. 257 2024 U.S. Supreme Court Life insurance, split-dollar and buy-sell IRS A corporation's contractual obligation to redeem a deceased owner's shares isn't necessarily a liability that reduces its value, so life insurance it held to fund the redemption counted in valuing his shares. Company-owned insurance used to buy out an owner raises the value of his shares. Buy-sell agreements written before 2024 deserve a fresh look.
Webber v. Commissioner, 144 T.C. 324 2015 U.S. Tax Court Insurance as an income tax shelter (income tax case) IRS A policyholder who directed the investments inside private placement life insurance owned those assets and was taxed on their income, though he avoided the penalty because he relied on professional advice. PPLI defers income tax only if the policyholder gives up investment control.
Avrahami v. Commissioner, 149 T.C. No. 7 2017 U.S. Tax Court Insurance as an income tax shelter (income tax case) IRS Payments to a related micro-captive weren't insurance premiums, so they weren't deductible, and the captive's § 831(b) election was invalid. A captive has to be real insurance, with real risk distribution and real premiums.
Estate of Atkinson v. Commissioner, 309 F.3d 1290 (aff'g 115 T.C. 26 (2000)) 2002 U.S. Court of Appeals, 11th Cir. Charitable gifts and trusts IRS A charitable remainder annuity trust that never paid the required annuity during the donor's life wasn't a valid CRAT, so the estate lost the entire charitable deduction. A charitable remainder trust is judged by how it runs as well as by how it's drafted.
Estate of Hoensheid v. Commissioner, T.C. Memo. 2023-34 2023 U.S. Tax Court Charitable gifts and trusts (income tax case) IRS Stock given to a donor-advised fund after the right to sale proceeds was fixed left the donors taxed on the gain, and the deduction was denied without a qualified appraisal, though no penalty applied. Give before the deal is fixed, and use a qualified appraiser.
Estate of Clayton v. Commissioner, 976 F.2d 1486 (rev'g the Tax Court) 1992 U.S. Court of Appeals, 5th Cir. Marital deduction, QTIP and portability Taxpayer Property qualified for the marital deduction even though the will let the executor's QTIP election decide what went into the marital trust. An executor can decide after death how much goes to the QTIP trust.
Estate of Sower v. Commissioner, 149 T.C. No. 11 2017 U.S. Tax Court Marital deduction, QTIP and portability IRS The IRS may examine a predeceased spouse's estate tax return to correct the unused exclusion passed to the survivor, even after a letter accepting that return as filed. A portability return is reviewable when the second spouse dies, so it has to be right the first time.
Estate of Anenberg v. Commissioner, 162 T.C. No. 9 2024 U.S. Tax Court Marital deduction, QTIP and portability Taxpayer Ending QTIP trusts early and distributing the property to the surviving spouse wasn't a taxable gift by her, even assuming § 2519 applied, because she got the property back and made no gratuitous transfer. A surviving spouse can take a QTIP trust's property outright without gift tax on her side.
McDougall v. Commissioner, 163 T.C. No. 5; T.C. Memo. 2026-58 (two opinions in one case, scored as one row) 2026 U.S. Tax Court Marital deduction, QTIP and portability Split The surviving spouse made no gift when a QTIP trust was ended in his favor, but the children who gave up their remainder interests for nothing made taxable gifts, later valued at $35,141,321 each. Remainder beneficiaries who consent to ending a QTIP trust for nothing are making gifts.

Which estate planning techniques produce the most IRS wins?

Family limited partnerships produced the most IRS wins: of the 6 § 2036 partnership cases scored here, the IRS won 4, 1 was split and the taxpayer won 1 (Ridley Law case scorecard, October 2026). The charitable and income tax shelter groups had no taxpayer wins, but only two cases each.

Who won, by techniqueTaxpayerIRSSplitGRATs110Defined value and formula clauses410Family partnerships and LLCs (§ 2036)141Valuation, appraisals and entity gifts232Trust gifts and reciprocal trusts110Life insurance, split-dollar and buy-sell121Insurance as an income tax shelter020Charitable gifts and trusts020Marital deduction, QTIP and portability211

Counts computed from the 34-case scorecard above. Split means each side won an issue that mattered.
Technique Cases Taxpayer won IRS won Split
GRATs 2 1 1 0
Defined value and formula clauses 5 4 1 0
Family partnerships and LLCs (§ 2036) 6 1 4 1
Valuation, appraisals and entity gifts 7 2 3 2
Trust gifts and reciprocal trusts 2 1 1 0
Life insurance, split-dollar and buy-sell 4 1 2 1
Insurance as an income tax shelter 2 0 2 0
Charitable gifts and trusts 2 0 2 0
Marital deduction, QTIP and portability 4 2 1 1
All cases 34 12 17 5

Cases by technique

GRATs: 1 taxpayer, 1 IRS, 0 split

  • Walton v. Commissioner (2000, taxpayer win). Zeroed-out GRATs rest on this case. Write the annuity so it keeps running to the estate if the grantor dies during the term.
  • Badgley v. United States (2020, IRS win). A GRAT works only if the grantor outlives the term. Short terms manage that risk. Nothing removes it.

The strategy comparison shows where a GRAT fits against a sale to a grantor trust.

Defined value and formula clauses: 4 taxpayer, 1 IRS, 0 split

  • Succession of McCord v. Commissioner (2006, taxpayer win). What the recipients agree among themselves afterward doesn't change what the donor gave.
  • Estate of Christiansen v. Commissioner (2009, taxpayer win). Formula disclaimers to charity work. The part routed to a charitable lead trust failed in the Tax Court and wasn't appealed.
  • Estate of Petter v. Commissioner (2011, taxpayer win). A formula gift with a charity taking the excess holds up in the Ninth Circuit, where California appeals go.
  • Wandry v. Commissioner (2012, taxpayer win). Give a dollar value, not a fixed number of units, and tie it to the value as finally determined for gift tax purposes.
  • Nelson v. Commissioner (2021, IRS win). Tie the formula to value as finally determined for federal gift tax purposes, not to one appraiser's number.

Formula gifts are reported on a gift tax return. See gift tax in 2026.

Family partnerships and LLCs (§ 2036): 1 taxpayer, 4 IRS, 1 split

How a California family partnership is built to survive these cases: family limited partnerships in California.

Valuation, appraisals and entity gifts: 2 taxpayer, 3 IRS, 2 split

Appraisal practice at death is covered in date-of-death appraisals in California.

Trust gifts and reciprocal trusts: 1 taxpayer, 1 IRS, 0 split

  • Crummey v. Commissioner (1968, taxpayer win). Withdrawal rights are what make gifts to a trust, including an insurance trust, qualify for the annual exclusion.
  • United States v. Estate of Grace (1969, IRS win). Two spousal trusts need real differences in terms, timing and assets.

Grace is the reason a SLAT for each spouse needs real differences, and Crummey is the reason an irrevocable life insurance trust sends withdrawal notices.

Life insurance, split-dollar and buy-sell: 1 taxpayer, 2 IRS, 1 split

Connelly changed how a buy-sell agreement in California should be funded.

Insurance as an income tax shelter: 0 taxpayer, 2 IRS, 0 split

  • Webber v. Commissioner (2015, IRS win). PPLI defers income tax only if the policyholder gives up investment control.
  • Avrahami v. Commissioner (2017, IRS win). A captive has to be real insurance, with real risk distribution and real premiums.

Other arrangements sold to wealthy families are covered in money myths.

Charitable gifts and trusts: 0 taxpayer, 2 IRS, 0 split

The rules these trusts have to follow while they run: charitable remainder trusts in California.

Marital deduction, QTIP and portability: 2 taxpayer, 1 IRS, 1 split

See estate tax portability in California and QTIP trust administration.

What the pattern says

Facts and formalities decided 17 of 34 cases (50%), and 19 of 34 (56%) turned on them at least in part. They decided 11 of the IRS’s 17 wins (65%). This classification is our judgment, case by case, and the counts are below so you can check it.

What decided the caseTaxpayerIRSSplitFacts and formalities4112A legal rule861Both, on different issues002

Ridley Law's classification of each case's deciding ground. Facts and formalities means how the transaction was documented, carried out, timed or appraised.
What decided it Cases Taxpayer won IRS won Split
Facts and formalities 17 4 11 2
A legal rule 15 8 6 1
Both, on different issues 2 0 0 2

Three habits show up again and again in the losses. The transaction came late, often when the client was already ill (Powell, Moore, Fields). The client kept acting as if nothing had changed, using the money, running the business, or holding a right to end the deal (Strangi, Moore, Cahill). Or the paperwork didn’t match the story: documents signed after the date on them, a formula pointing at the wrong value, an appraiser who wasn’t independent (Smaldino, Nelson, Kollsman, Hoensheid).

The wins share the opposite habits. Kimbell kept formalities and had a business reason. Wandry and Petter tied the gift to value as finally determined. Grieve and Jones won with appraisals that priced the interest the way a real buyer would. Levine left control of the policies with the trust.

Worked example: what the Nelson wording cost

Using the Nelson figures, the difference between the appraiser’s value and the court’s value moved about $4.55M more than the family meant to transfer. A clause tied to value as finally determined for gift tax purposes would have moved fewer units and left about 11.06 percentage points of the partnership with the parents.

The family transferred interests worth $2,096,000 by gift and $20,000,000 by sale, as determined by an appraiser who valued a 1% interest at $341,000. The Tax Court found a 1% interest worth $411,235, and the Fifth Circuit held the transfers moved the percentages the appraiser fixed. The last column is a hypothetical: the same dollar amounts under a Wandry-style clause. If the $4.55M were taxed at the 40% top rate (IRC § 2001(c)), the tax would be about $1.82M. That assumes no exemption is left, which won’t be true for everyone.

Nelson: value on the gift documents vs. value the court foundStated valueCourt valueGift of partnership interests$2.10M$2.52MSale to the trust$20.00M$24.12M

Stated values, percentages and court values are from Nelson v. Commissioner (5th Cir. 2021): a 1% interest appraised at $341,000 and found worth $411,235. The last column is our arithmetic for a hypothetical clause tied to value as finally determined for gift tax purposes (stated dollars divided by $411,235 per 1%).
Transfer Stated value Percentage moved Court value of that percentage Value moved beyond the stated amount Percentage a Wandry-style clause would have moved
Gift $2,096,000 6.14% $2,524,983 $428,983 5.10%
Sale for a note $20,000,000 58.65% $24,118,933 $4,118,933 48.63%
Total $22,096,000 64.79% $26,643,916 $4,547,916 53.73%

Don’t do this: form a family partnership through an agent while the owner is failing, then keep using the money. Fields lost that way in the Fifth Circuit in 2026, after an agent moved $17 million into a partnership, and the estate also paid a 20% penalty. Powell lost the same way, under California power of attorney law, and Moore lost after a partnership set up four days after a hospital discharge into hospice care.

What works and what fails

What won and what lost, by technique, drawn from the cases on this page.
Technique What won What lost
GRAT Annuity that keeps running to the estate (Walton) Grantor dies during the term (Badgley)
Formula gift Dollar value tied to value as finally determined (Wandry, Petter) Dollar value tied to one appraiser's number (Nelson)
Family partnership Proportionate interests, kept formalities, a business reason (Kimbell) Formed near death, founder keeps using the assets (Strangi, Moore, Fields)
Entity gift through a spouse A real gift the spouse controls Prearranged pass-through, papers signed later (Smaldino)
Appraisal Prices the interest actually given (Grieve, Jones) Appraiser with a stake in the sale (Kollsman)
Split-dollar Only the trust can end it (Levine) Insured can end it with the trust (Cahill), or the value is lost at trial (Morrissette)
Buy-sell funding Structures where insurance doesn't inflate the shares Company-owned insurance for a redemption (Connelly)
Charitable gift of a company Gift made before the sale is fixed, with a qualified appraisal Gift after the deal is fixed (Hoensheid)
QTIP and portability Executor elects after death (Clayton), or the trust ends in the spouse's favor (Anenberg) Children give up remainders for nothing (McDougall), or the DSUE goes unchecked (Sower)

What changes in California

  • Appeals go to the Ninth Circuit. An individual’s appeal from the Tax Court goes to the circuit where the taxpayer legally resides (IRC § 7482(b)(1)(A)). For a California family that’s the Ninth Circuit. The Ninth Circuit decided or affirmed Crummey, Petter, Kollsman, Badgley and Moore (Moore on the charitable deduction only). The Fifth Circuit’s partnership cases (Kimbell, Strangi, Fields) and its formula-clause cases (McCord, Nelson) are persuasive in California but don’t bind its courts.
  • California families are on the record. 6 cases here involved a California decedent, donor or petitioner: Webber, Powell, Cahill, Smaldino, Jackson and Anenberg. Kollsman’s executor also lived in California, and its appeal went to the Ninth Circuit.
  • California law decides who owns what. In Powell, the Tax Court held that a gift made under the decedent’s power of attorney was void or revocable under California law, because the document didn’t authorize gifts that large. Check every California power of attorney before an agent makes a gift.
  • No California estate tax to plan around. California’s estate tax equals a federal credit for state death taxes (R&TC § 13302), so these are federal fights. The California cost is income tax, Prop 19 and community property rules, covered in high-net-worth estate planning in California.

Methodology

We chose cases that planners still cite for families with taxable estates, across nine techniques. We read each opinion through CourtListener, Midpage or DingDuff before writing about it, and quoted the deciding language into our source file. Each case is one row, scored on the last court that decided the issues shown. Where one case produced two opinions (Pierre, McDougall), it’s one row. “Split” means each side won an issue that mattered to the result. Cahill is scored as an IRS win but marked as a pretrial ruling. Moore is scored on the Tax Court’s § 2036 holding, because on appeal the estate challenged only the charitable deduction.

For each Tax Court decision shown without an appeal, we searched federal appellate opinions on CourtListener by case name and subject on October 9, 2026, and found none. The “what decided it” column is Ridley Law’s judgment. Report an error to eric@ridleylawoffices.com.

For more on planning at this level, see ultra-high-net-worth estate planning in California and estate planning strategies that backfire.

Who this is for

This page is for families with a federal estate tax problem, the CPAs and advisers who work with them, and anyone checking whether a technique they’ve been sold has been tested in court. If you already have a family partnership, a formula gift, a split-dollar arrangement or a buy-sell agreement funded with company-owned insurance, the cases above are the questions an IRS examiner will ask.

Working with Ridley Law

I work alongside your CPA and, where the matter calls for it, co-counsel. Work at this level is built for each family and quoted in writing before any drafting starts. The first call is free and runs 30 minutes, by phone or Zoom. Book my 30-minute call or call 805-244-5291.

Frequently asked questions

Who wins more estate tax cases, taxpayers or the IRS?

In the 34 planning cases on this page, the IRS won 17, taxpayers won 12 and 5 were split. Most IRS wins came from bad facts, like late timing or poor paperwork, not from the technique itself being invalid.

Why do family limited partnerships lose in Tax Court?

Because the founder kept using the assets or formed the partnership with no real nontax reason, often near death. Section 2036 then pulls the assets back into the estate. Kimbell shows the version that survives: proportionate interests, kept formalities and a business purpose.

Do defined value clauses work?

Yes, when the clause transfers a dollar value tied to value as finally determined for gift tax purposes, as in Wandry and Petter. Nelson lost because the clause tied the value to an appraiser’s number, so the percentages were fixed when the appraisal came in.

What does Connelly mean for buy-sell agreements?

Life insurance a company holds to buy back an owner’s shares counts in valuing those shares, and the redemption obligation doesn’t offset it. A buy-sell funded with company-owned insurance can raise the estate tax on the shares it was meant to buy.

Can the IRS change a portability election after the first spouse dies?

Yes. In Sower, the Tax Court held the IRS may examine the first spouse’s estate tax return to correct the unused exclusion when the second spouse dies, even after a letter accepting the first return.

Which court hears a California family’s estate tax appeal?

The Ninth Circuit. Appeals from the Tax Court go to the circuit of the taxpayer’s legal residence (IRC § 7482(b)(1)(A)). Petter, Badgley and Crummey are Ninth Circuit decisions.

This page is general information about federal and California law as of its update date. It isn’t legal, tax, or investment advice for your situation, and reading it doesn’t create an attorney-client relationship.

Sources

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