ANTHONY v. U.S.
520 F.3d 374 (2008)
Tincy ANTHONY, Administratrix of the Succession of James Louis Bankston, Sr., on behalf of James Louis Bankston, Sr., Plaintiff-Appellant,
UNITED STATES of America, Defendant-Appellee.
United States Court of Appeals, Fifth Circuit.
March 4, 2008.
Walter C. Antin, Jr. (argued), John Gerhardt Toerner, Antin Law Firm, Hammond, LA, for Plaintiff-Appellant.
Francesca Ugolini Tamami, Jonathan S. Cohen (argued), U.S. Dept. of Justice, Tax Div. Appellate Section, Washington, DC, James L. Nelson, Asst. U.S. Atty., Baton Rouge, LA, for Defendant-Appellee.
Before BARKSDALE, DENNIS and SOUTHWICK, Circuit Judges.
SOUTHWICK, Circuit Judge:
A decedent's administratrix seeks our reversal of the district court's conclusion that a non-transferable private annuity must be valued, for estate tax purposes, in accordance with certain tables set out in the Internal Revenue Code. Because we conclude that this case presents no applicable exception to valuation of the relevant annuities by use of the tables, we affirm.I. FACTS AND PROCEEDINGS
James Louis Bankston, Sr., sustained serious injuries in an automobile accident in 1990. He filed suit seeking damages from various defendants. In May 1991, Bankston agreed to a structured settlement of his claims and thereby became the beneficiary of three annuities. The annuities were owned by three separate insurance companies. Each annuity guaranteed monthly or annual payments for a period of at least fifteen years.1 The payments due under two of the annuities could not be "anticipated, sold, assigned or encumbered." The third annuity provided that payments were "non-assignable." The prohibitions on assignment form the foundation for the arguments made by the taxpayer.
Bankston died on July 30, 1996. At the time of his death, Bankston was scheduled to receive ten additional annual payments from one annuity and monthly payments until July 2006 from the other two. Bankston's estate ("the Estate") initially estimated the present value of Bankston's right to the guaranteed payments to be $2,371,409, using the tables prescribed by 26 U.S.C. § 7520 and the accompanying regulations (the "annuity tables" or "Section 7520 tables"). In April 1997, the Estate reported a tax liability on the annuities in the amount of $468,078. An audit by the Internal Revenue Service resulted in an additional tax of $142,605. The Estate paid its total tax liability ($610,683) plus interest in monthly installments between May 1997 and March 2001.
In September 2001, the Estate claimed that it had overvalued the annuities in its initial filing and was due a refund of estate taxes in the amount of $427,620 plus interest.2
According to the Estate, the annuities should have been assigned their "fair market value" without regard to the annuity tables because the non-transferability clauses rendered the annuities subject to a restriction under 26 C.F.R. § 20.7520-3(b)(1)(ii). The IRS denied the claim.
The Estate filed suit against the United States in March 2002. Both parties moved for partial summary judgment on the issue of the proper method of valuation for the annuities. The district court ruled in favor of the government, finding that the prohibitions on assignment of the annuities did not justify a departure from the tables. The district court also found that the result produced by the annuity tables was not unreasonable or unrealistic. Therefore, the district court found that the annuities were properly valued under the tables and no tax refund was due. The Estate appealed.