## Facts

- Virginia C. Andrews, an internationally known best-selling paperback author, died on December 19, 1986.
- The Estate filed a federal estate tax return in November 1987, paid estate tax, and did not list Andrews’s name as an asset.
- In November 1990, the IRS asserted Andrews’s name was an estate asset worth $1,244,910.84 as of death and assessed an estate tax deficiency.
- The Estate paid the assessed deficiency and interest (totaling $947,483.87) under protest in 1991 and filed a refund claim; the IRS did not act within six months.
- The Estate brought a refund suit in federal district court; the matter was tried to the court.
- Evidence showed Andrews’s books had substantial pre-death commercial success and her name functioned as a recognizable marketing brand tied to a loyal readership.
- After Andrews’s death, publishing arrangements continued to release books under her name written by a ghostwriter, with marketing that minimized that she was not the writer.
- The parties disputed whether Andrews’s name was includable in the gross estate and, if so, its fair market value as of the date of death.

## Issues

1. Whether a commercially valuable author’s name constitutes an intangible property interest includable in the gross estate for federal estate tax purposes.
2. If includable, what was the name’s fair market value as of the decedent’s date of death under the willing-buyer/willing-seller standard.

## Decision

- The court held Andrews’s name constituted intangible property includable in the gross estate.
- The court rejected the Estate’s position that the name had no ascertainable value at death.
- The court rejected the IRS’s $1,244,910.84 valuation as overstated.
- The court determined the fair market value of the Andrews name as of December 19, 1986 was $703,500.
- Judgment entitled the Estate to a partial refund corresponding to the tax and interest attributable to valuing the name above $703,500.

## Legal Principles

- For federal estate tax purposes, the gross estate includes all transferable property interests held at death, including intangible interests with income-producing potential.
- Fair market value is determined as of the date of death: the price a hypothetical willing buyer and willing seller would agree upon, neither compelled to act, both with reasonable knowledge of relevant facts.
- Post-death events may be considered only insofar as they confirm what was reasonably foreseeable at the valuation date; valuation cannot be based on hindsight.
- A commercially exploitable name may be valued by reference to reasonably expected income from licensing or similar exploitation, adjusted for risk and uncertainty (including market risk and uncertainty of future commercialization).

## Conclusion

The court treated a famous author’s name as a taxable, transferable intangible asset and valued it at $703,500 as of the date of death, awarding a partial estate tax refund by reducing the IRS’s higher valuation to a risk-adjusted fair market value.


Estate of Andrews v. United States, 850 F. Supp. 1279 (E.D. Va. 1994)