## Facts

- Dean A. Chenoweth died owning 100% of the outstanding stock of Chenoweth Distributing Company, Inc.
- The estate reported the entire 100% stock interest in the gross estate at a single value accepted by the Commissioner.
- Under the will, 51% of the stock passed to the surviving spouse in a bequest qualifying for the marital deduction under I.R.C. § 2056, and 49% passed to the decedent’s daughter.
- The estate initially computed the marital deduction as 51% of the accepted total stock value.
- The estate later claimed the spouse’s 51% block was a controlling interest and should be valued higher than a pro rata 51% share due to a control premium.
- The Commissioner determined an estate tax deficiency and moved for summary judgment under Tax Court Rule 121, arguing the marital deduction could not exceed a simple pro rata allocation of the accepted 100% value.

## Issues

1. Whether the marital deduction under I.R.C. § 2056 may reflect a control premium by valuing the spouse’s 51% controlling block above its pro rata share, even though the 100% stock value included in the gross estate is fixed and accepted.
2. Whether, on summary judgment, the Commissioner showed the estate is barred as a matter of law from asserting any control premium for the 51% block.

## Decision

- The Tax Court denied the Commissioner’s motion for summary judgment.
- The court held the estate is entitled to attempt to prove that the 51% majority block passing to the surviving spouse warrants additional value attributable to corporate control.
- The court concluded the Commissioner did not establish the absence of a genuine issue of material fact as to the value of the controlling block.

## Legal Principles

- For I.R.C. § 2056, the marital deduction is based on the fair market value of the specific property interest passing to the surviving spouse.
- Valuation for estate tax purposes may be interest-specific; a controlling block can be valued differently from a minority block even when the total 100% value is accepted for gross-estate inclusion, so long as the dispute concerns allocation within that total.
- A control premium for a majority interest is a factual valuation question that may require evidence on control attributes and market realities.
- Under Tax Court Rule 121, summary judgment is improper where genuine disputes of material fact remain; the moving party bears the burden, and inferences are drawn in favor of the nonmovant.

## Conclusion

The Tax Court allowed the estate to proceed on its claim that the spouse’s 51% controlling stock interest could be valued above a pro rata share for the marital deduction, holding that the existence and amount of any control premium present factual issues unsuitable for summary judgment.


Estate of Chenoweth v. Commissioner, 88 T.C. 1577 (1987)