## Facts

- Charles A. Riegelman, senior partner in a New York law partnership, died on July 20, 1950.
- The partnership had no significant tangible assets, and Riegelman had made no capital contributions.
- The partnership agreement provided the partnership would continue after a partner’s death and required payments to the deceased partner’s estate.
- The agreement entitled the estate to (i) the decedent’s share of undistributed pre-death profits and profits attributable to pre-death work collected after death, and (ii) for a set period, a share of post-death fees and profits attributable to work performed after death on matters pending at death and new matters.
- The executors included category (i) amounts in the gross estate but excluded category (ii) payments; the parties stipulated the date-of-death value of the excluded right as $95,000.
- The Commissioner determined a deficiency by including the $95,000 in the gross estate; the Tax Court sustained the deficiency.

## Issues

1. Whether the gross estate must include the date-of-death value of the estate’s contractual right, under a partnership agreement, to receive payments measured by post-death partnership income attributable to work performed after the decedent’s death.

## Decision

- The Second Circuit affirmed the Tax Court.
- The $95,000 stipulated value of the estate’s right to receive post-death payments was includible in the decedent’s gross estate.
- The relevant property interest was the enforceable contractual right existing at death, not whether the later receipts could be characterized as post-death income.

## Legal Principles

- The gross estate includes the date-of-death fair market value of property interests and enforceable claims owned by the decedent at death, including contractual rights payable to the estate.
- A contractual right existing at death is includible even if its value is measured by future earnings or receipts generated after death.
- The absence of capital investment in a personal-services partnership does not preclude estate-tax inclusion where the estate’s entitlement arises from a contract right created before death.

## Conclusion

Because the decedent possessed, at the moment of death, an enforceable contractual claim to specified partnership payments, the date-of-death value of that right—though measured by post-death fees—was part of the gross estate, and the estate-tax deficiency was properly sustained.


Estate of Riegelman v. Commissioner, 253 F.2d 315 (2d Cir. 1958)