Estate of Pinkerton v. Commissioner

1974 T.C. Memo. 71, 33 T.C.M. 342, 1974 Tax Ct. Memo LEXIS 247

Opinion

ESTATE OF AIRDRIE K. PINKERTON, DECEASED, ROY D. PINKERTON, ET. AL., EXECUTOR, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Estate of Pinkerton v. Commissioner

Docket No. 2066-69.

United States Tax Court

T.C. Memo 1974-71; 1974 Tax Ct. Memo LEXIS 247; 33 T.C.M. (CCH) 342; T.C.M. (RIA) 74071;

March 26, 1974, Filed.

---

Jack M. Harrison and Raymond L. Heidemann, for the petitioner.

Melvern Stein, for the respondent.

---

TIETJENS

MEMORANDUM FINDINGS OF FACT AND OPINION

TIETJENS, Judge:^* The Commissioner determined a deficiency of $92,166.95 in the Federal estate tax of Airdrie K. Pinkerton (hereafter decedent). ¹

The issues for decision are: (1) the value of certain shares of stock owned by decedent at her death; and (2) the extent to which decedent's funeral expenses may be deducted from her gross estate.

FINDINGS OF FACT

The stipulated facts are so found and are incorporated herein by this reference.

Decedent, a resident of Ojai, California, died testate on June 26, 1966. Roy D. Pinkerton (hereafter petitioner), of Ojai, California, Airdrie Paula Martin, of Ojai, California, and Roy H. Pinkerton, of Sacramento, California, are the duly appointed, qualified and acting executors of decedent's will.

On or about May 8, 1967, petitioner filed a Federal estate tax return with the district director of internal revenue at Los Angeles, California, and elected to use the date of decedent's death as the date of valuation of the estate.

Decedent's estate was administered under the jurisdiction of California. Decedent's funeral expenses of $510.50 were paid by decedent's estate.

At the time of her death, decedent owned a one-half community property interest in the following shares of corporate stocks:

(a) 16 shares of Class A capital stock of John P. Scripps Newspapers.

(b) 16 shares of Class B capital stock of John P. Scripps Newspapers.

(c) 10 shares of Class A capital stock of Tulare Newspapers, Inc.

(d) 10 shares of Class B capital stock of Tulare Newspapers, Inc.

(e) 10 shares of Class A capital stock of Watsonville Newspapers, Inc.

(f) 10 shares of Class B capital stock of Watsonville Newspapers, Inc.

(g) 10 shares of Class A capital stock of Redding Record, Inc.

(h) 30 shares of Class B capital stock of Redding Record, Inc.

The Class A, no par capital stock of each of the four corporations is voting stock whereas the Class B is non-voting. In all other respects there is no distinction between the Class A and Class B stock of any of the corporations.

There have never been any sales of shares of capital stock of any of the four subject corporations from which the fair market value of such shares could be determined as of June 26, 1966.

John P. Scripps Newspapers

John P. Scripps Newspapers (hereafter Scripps), was incorporated under the laws of the State of California in 1935. From March 1935 until the date of decedent's death, the issued and outstanding capital stock of Scripps was owned as follows:

	Class A, no-par shares	Class B, no-par shares	Total
Decedent and her surviving husband, Roy D. Pinkerton, as community property	16	16	32
John P. Scripps	64	32	96
Edgar F. Elfstrom and Thelma A. Elfstrom, Trustees	16	16	32
Totals	96	64	160

As of June 26, 1966, Scripps published the daily Ventura County Star-Free Press (hereafter the Star-Free Press) in Ventura, California, and the daily News-Chronicle in Thousand Oaks, California. The Star-Free Press was acquired by Scripps in 1946 although it was started as a daily newspaper by Roy D. Pinkerton on June 15, 1925. The News-Chronicle is the successor of the Conejo News, a weekly newspaper purchased by Scripps in 1961. The Star-Free Press is circulated throughout Ventura County, California, and the News-Chronicle is circulated in Southeastern Ventura County.

As of June 26, 1966, the Star-Free Press was printed on a six unit Goss letter press which was approximately 40 years old. Throughout the industry, letter presses were becoming obsolete and were being replaced by more modern offset presses. The market for used letter presses was very depressed.

As of June 26, 1966, the News-Chronicle was printed on a three unit offset press. The News-Chronicle operated from two different buildings, one of which was an old, remodeled church which had become inadequate for the newspaper's needs. It was not adaptable to remodeling, and the cost of replacing it was estimated at from $150,000 to $200,000.

As of June, 1966, there were profit-sharing agreements in existence between Scripps and certain of its key employees. On December 7, 1965, the executive committee of Scripps increased the reserve account from $350,000 to $400,000 from its earned surplus to provide for its liability under the profit-sharing agreements.

The following schedules reflect certain information relevant to our determination of the value of decedent's interest in Scripps:

(1) John P. Scripps Newspapers
	Net Income Before Federal Income Taxes	Federal Income Taxes	Dividends Paid
1956	$235,507	$115,595	$ 38,400
1957	231,239	114,709	38,400
1958	244,319	121,250	38,400
1959	304,759	151,949	38,400
1960	315,262	157 ,258	76,800
1961	350,721	175,642	76,800
1962	232,326	114,076	76,800
1963	227,006	111,296	76,800
1964	141,322	42,091	76,800
1965	264,817	111,709	76,800
1966	242,585	106,739	76,800

(2) Ventura County Star-Free Press
	Total Revenues	Net Operating Profit	Average Paid Daily Circulation	Total Pages Printed	Total Advertising Inches
1956	$1,071,561	$237,693	19,961	7,220	737,812
1957	1,131,237	237,131	20,342	7,464	749,857
1958	1 ,206,284	249,056	21,449	7,418	720,278
1959	1,374,926	306,645	23,182	7,936	796,813
1960	1,534,811	309,115	23, 995	8,130	837,941
1961	1,700,785	397,695	24,230	8,462	868,567
1962	1,767,893	353,332	25,090	8,796	881,181
19 63	1,937,494	385,787	26,208	9,438	903,827
1964	2,080,790	378,611	27,627	10,236	964,335
1965	2,338,131	456,496	28,894	10,534	1,020,221
1966	2,535,362	317,582	29,273	12,170	1,065,433
(3) News-Chronicle
	Total Revenues	Net Operating (Loss)	Average Paid Daily Circulation	Total Pages Printed	Total Advertising Inches
7 months ended December 31,
1961	$ 60,661	[50,997)	1,308	778	63,526
1962	151,491	(119,884)	2,454	1,636	150,922
1963 *	191,46 2	(154,583)	3,829	2,020	181,857
1964**	244,632	(220,232)	4,662	2,810	198,267
1965	347,020	(187,636)	4,310	3,540	230,896
1966	509,111	( 36,577)	6,285	4,409	326,491

(4) John P. Scripps Newspapers
(a) For the Years 1961, 1962, and 1963
	1961	1962	1963
Circulation income	$ 358,990	$ 384,123	$ 411,168
Advertising income	1,392,824	1,520,708	1,701,932
Miscellaneous income (shopping news circulars, commercial printing, etc.)	9,631	14,553	15,855
Interest income	12,463	7,853	4,009
Dividend income	2,790	2,790	2,790
Gain or (loss) on sale of capital assets	(1,155)	(40)	89
Total Income	$1,775,543	$1,929,987	$2,135,843
Operating expense*	1,415,502	1,687,548	1,898,605
Interest expense	9,320	10,113	10,232
Operating profit before Federal income taxes	$ 350,721	$ 232,326	$ 227,006
Federal income taxes	175,642	114,076	111,296
Net profit after Federal income taxes	$ 175,079	$ 118,250	$ 115,710
*Includes depreciation expense in the amounts of	$ 40,350	$ 42,431	$ 42,071
(b) For the years 1964, 1965, and 1966
	1964	1965	1966
Circulation income	$ 445,719	$ 469,661	$ 550,775
Advertising income	1,861,176	2,125,653	2,387,390
Miscellaneous income (shopping news, circulars, commercial printing)	18,526	170,565	265,965
Interest income	4,485	5,323	4,807
Dividend income	2,790	2,790	2,836
Gain or (loss) on sale of capital assets	(276)	1,384	(367)
Total Income	$2,332,420	$2,775,376	$3,211,406
Operating expense*	2,167,921	2,482,207	2,924,238
Interest expense	23,177	28,352	44,583
Operating profit before federal income taxes	$ 141,322	$ 264,817	$ 242,585
Federal income taxes**	42,091	111,709	106,739
Net profit after federal income taxes	$ 99,231	$ 153,108	$ 135,846
*Includes depreciation expense in the amounts of	$ 53,387	$ 70,717	$ 78,686
**After reduction for investment credits in the amounts of	$ 20,385	$ 7,641	$ 2,105

(5) John P. Scripps Newspapers
(a) As of December 31, 1961 and 1962
Assets	12/31/61	12/31/62
Cash on hand and in banks	$ 208,618	$ 105,591
Securities at cost	85,824	160,824
Notes and accounts receivable - net	315,973	208,368
Inventories and supplies	45,699	41,236
Land, buildings and equipment - net	507,293	657,502
Goodwill - purchased	49,827	49,827
Deferred charge	8,105	7,969
Organization expense	599	599
Miscellaneous assets	12,308	975
Total Assets	$1,234,246	$1,232,891
Liabilities and Capital
Current liabilities	$ 182,267	$ 140,409
Notes payable-non-current	163,145	166,510
Prepaid subscriptions	5,379	5,647
Miscellaneous non-current liabilities	10,706	6,127
Reserve for liability under employee profit sharing agreements	350,000	350,000
Capital stock (160 shares)	1,600	1,600
Capital surplus	98,631	98,631
Earned surplus	422,518	463,967
Total Liabilities and Capital	$1,234,246	$1,232,891
(b) As of December 31, 1963 and 1964
Assets	12/31/63	12/31/64
Cash on hand and in banks	$ 114,252	$ 97,958
Securities at cost	173,162	194,061
Notes and accounts receivable - net	217,189	262,751
Inventories and supplies	42,609	51,710
Land, buildings and equipment - net	638,946	957,925
Goodwill - purchased	49,827	49,827
Deferred charge	8,663	10,040
Organization expense	599	599
Miscellaneous assets	56,728	90
Total Assets	$1,301,975	$1,624,961
Liabilities and Capital
Current liabilities	$ 168,269	$ 114,640
Notes payable-non-current	169,415	523,970
Prepaid subscriptions	7,316	7,791
Miscellaneous non-current liabilities	3,867	3,020
Reserve for liability under employee profit sharing agreements	350,000	350,000
Capital stock (160 shares)	1,600	1,600
Capital surplus	98,631	98,631
Earned surplus	502,877	525,309
Total Liabilities and Capital	$1,301,975	$1,624,961
(c) As of December 31, 1965 and June 30, 1966
Assets	12/31/65	6/30/66
Cash on hand and in banks	$ 175,057	$ 117,625
Securities at cost	194,061	194,061
Notes and accounts receivable - net	323,904	325,298
Inventories and supplies	44,759	60,262
Land, buildings and equipment - net	1,091,831	1,064,634
Goodwill - purchased	274,827	274,827
Deferred charge	62,897	66,519
Organization expense	599	599
Miscellaneous assets	316	4,967
Total Assets	$2,168,251	$2,108,792
Liabilities and Capital
Current liabilities	$ 232,358	$ 212,709
Notes payable-non-current	871,606	774,107
Prepaid subscriptions	9,534	11,170
Miscellaneous non-current liabilities	2,905	2,557
Reserve for liability under employee profit sharing agreements	400,000	400,000
Capital stock (160 shares)	1,600	1,600
Capital surplus	98,631	98,631
Earned surplus	551,617	608,018
Total Liabilities and Capital	$2,168,251	$2,108,792

(6) Securities owned by John P. Scripps Newspapers as of December 31, 1965, and June 30, 1966
Description	Cost
$ 50,000 U.S. Treasury bonds - 4% of 8/15/70	$ 50,000
40,000 U.S. Treasury bonds - 2 1/2% of 6/15/69	37,337
20,000 U.S. Treasury bonds - 3 7/8% of 5/15/68	20,000
10,000 U.S. Treasury bonds - 2 1/2% of 12/15/69	10,000
558 shares of 5% Series "A" cumulative preferred stock of E.W. Scripps Company	55,824
100 shares of common capital stock (20% interest) by Entsunews, Inc., publisher of Simi-Enterprise-Sun & News, Simi, California	20,900
Total	$194,061

Tulare Newspapers, Inc.

Tulare Newspapers, Inc. (hereafter Tulare) was incorporated under the laws of the State of California in 1945. From the date of incorporation until the date of decedent's death, the issued and outstanding capital stock of the corporation was owned as follows:

	Class A, no-par shares	Class B, no-par shares	Total
Decedent and her surviving husband, Roy D. Pinkerton, as community property	10	10	20
John P. Scripps	80	80	160
Harry Green	10	10	20
Totals	100	100	200

As of June 26, 1966, Tulare's principal business activity consisted of the publication of a daily newspaper, the Tulare Advance Register and Tulare Times (hereafter the Register-Times) in Tulare, California. The Register-Times was started as a daily newspaper by Tulare in December 1945. The Register-Times is circulated in Tulare County.

As of June 26, 1966, the plant and equipment used in the production of the Register-Times was old and outdated. The Register-Times was printed on a Goss letter press, and, in 1966, the estimated cost of converting to an offset press operation was $300,000.

Tulare did not pay any dividends during the years 1956 through 1970.

The following schedules reflect certain information relevant to our consideration of the value of decedent's interest in Tulare:

(1) Tulare Newspapers, Inc.

	Net Income Before Federal Income Taxes	Federal Income Taxes
1956	$16,480	$ 4,944
1957	11,273	3,382
1958	23,509	7,053
1959	21,136	5,741
1960	34,877	12,636
1961	10,244	3,073
1962	12,832	3,850
1963	1,498	444
1964	38,393	11,102
1965	34,550	11,506
1966	26,087	7,335

(2) Tulare Advance Register and Tulare Times

(2) Tulare Advance Register and Tulare Times

	Total Revenues	Net Operating Profit	Average Paid Daily Circulation	Total Pages Printed	Total Advertising Inches
1956	$286,144	$ 24,661	4,771	3,454	283,154
1957	280,708	19,082	4,847	3,432	268,919
1958	311, 533	31,034	4,819	3,426	274,907
1959	318,871	16,673	5,047	3,508	271,769
1960	377,477	42,420	5,018	3,740	290 ,573
1961	362,652	17,980	5,200	3,728	277,760
1962	385,629	20,239	5,239	3,896	289,867
1963	390,294	4,972	5,2 59	4,028	273,175
1964	416,020	42,153	5,201	3,836	281,859
1965	433,067	39,725	5,353	3,826	284,406
1966	461,515	30,832	5,599	4,126	296,728

(3) Tulare Newspapers, Inc.
(a) For the years 1961, 1962, and 1963
	1961	1962	1963
Circulation income	$ 63,189	$ 63,417	$ 67,449
Advertising income	289,328	307,141	308,464
Miscellaneous income (shopping news, circulars, commercial printing, etc.)	10,135	15,071	14,381
Gain on sale of capital assets	-0-	-0-	2,000
Total Income	$362,652	$385,629	$392,294
Operating expense *	344,672	365,391	385,322
Interest expense	7,736	7,406	5,474
Operating income before federal income taxes	$ 10,244	$ 12,832	$ 1,498
Federal income taxes	3,073	3,850	444
Net profit after federal income taxes	$ 7,171	$ 8,982	$ 1,054
*Includes depreciation expense in the amounts of	$ 5,351	$ 5,350	$ 5,297
(b) For the Years 1964, 1965, and 1966
	1964	1965	1966
Circulation income	$ 74,309	$ 76,647	$ 79,477
Advertising income	322,975	330,488	347,372
Miscellaneous income (shopping news, circulars, commercial printing, etc.)	18,736	25,932	34,666
Interest income	-0-	-0-	60
Gain on sale of capital assets	1,333	-0-	-0-
Total Income	$417,353	$433,067	$461,575
Operating expense *	373,867	393,342	430,682
Interest expense	5,093	5,175	4,806
Operating income before federal income taxes	$ 38,393	$ 34,550	$ 26,087
Federal income taxes**	11,102	11,506	7,335
Net profit after federal income taxes	$ 27,291	$ 23,044	$ 18,752
*Includes depreciation expense in the amounts of	$ 6,167	$ 7,041	$ 7,260
**After reduction for investment credits in the amounts of	$ 2,276	$ 78	$ 187

(4) Tulare Newspapers, Inc.
(a) As of December 31, 1961 and 1962
Assets	12/31/61	12/31/62
Cash on hand and in banks	$ 53,822	$ 39,586
Notes and accounts receivable - net	37,694	41,444
Inventories and supplies	10,111	6,386
Land, buildings and equipment - net	68,964	64,993
Goodwill - purchased	84,630	84,630
Deferred charges	1,730	1,829
Total Assets	$256,951	$238,868
Liabilities and Capital
Current liabilities	$ 18,673	$ 15,026
Notes payable-non-current	129,441	106,035
Prepaid subscriptions	2,827	2,858
Miscellaneous non-current liabilities	492	448
Capital stock (200 shares)	2,000	2,000
Earned surplus	103,518	112,501
Total Liabilities and Capital	$256,951	$238,868
(b) As of December 31, 1963 and 1964
Assets	12/31/63	12/31/64
Cash on hand and in banks	$ 22,523	$ 33,637
Notes and accounts receivable - net	36,817	43,190
Inventories and supplies	6,544	4,345
Land, buildings and equipment - net	61,847	88,030
Goodwill - purchased	84,630	84,630
Deferred charges	1,854	2,144
Total Assets	$214,215	$255,976
Liabilities and Capital
Current liabilities	$ 10,301	$ 23,259
Notes payable-non-current	84,885	86,249
Prepaid subscriptions	3,084	3,062
Miscellaneous non-current liabilities	390	560
Capital stock (200 shares)	2,000	2,000
Earned surplus	113,555	140,846
Total Liabilities and Capital	$214,215	$255,976
(c) As of December 31, 1965 and June 30, 1966
Assets	12/31/65	6/30/66
Cash on hand and in banks	$ 53,022	$ 66,082
Notes and accounts receivable - net	49,697	41,605
Inventories and supplies	6,177	4,927
Land, buildings and equipment - net	82,098	81,740
Goodwill - purchased	84,630	84,630
Deferred charges	2,822	2,334
Total Assets	$278,446	$281,318
Liabilities and Capital
Current liabilities	$ 29,193	$ 17,067
Notes payable-non-current	79,744	80,096
Prepaid subscriptions	3,009	3,516
Miscellaneous non-current liabilities	610	590
Capital stock (200 shares)	2,000	2,000
Earned surplus	163,890	178,049
Total Liabilities and Cpaital	$278,446	$281,318

Watsonville Newspapers, Inc.

Watsonville Newspapers, Inc. (hereafter Watsonville) was incorporated under the laws of the State of California in December 1945. From the date of incorporation until the date of decedent's death, the issued and outstanding capital stock of Watsonville was owned as follows:

	Class A, no-par shares	Class B, no-par shares	Total
Decedent and her surviving husband, Roy D. Pinkerton, as community property	10	10	20
John P. Scripps	60	60	120
Harry Green	10	10	20
Edgar F. Elfstrom and Thelma A. Elfstrom, Trustees	20	20	40
Totals	100	100	200

As of June 26, 1966, Wastsonville's principal business activity consisted of the publication of a daily newspaper, the Watsonville Register-Pajaronian (hereafter the Register-Pajaronian) in Watsonville, California. Watsonville acquired the Register-Pajaronian on December 31, 1945. The Register-Pajaronian is circulated in Monterey and Santa Cruz Counties.

As of June 26, 1966, old equipment and an inadequate leased building were used in the production of the Register-Pajaronian. The Register-Pajaronian had been printed on letter press but was converted to offset press in 1969 at an approximate cost of $700,000, which included the cost of the property necessary to the conversion.

As of June 26, 1966, there were profit-sharing agreements in existence between Watsonville and certain of its key employees. On December 3, 1965, the executive committee of Watsonville increased the reserve account in the amount of $50,000 from its earned surplus to provide for its liability under the profit-sharing agreements.

The following schedules reflect certain information relevant to our consideration of the value of decedent's interest in Watsonville:

(1) Watsonville Newspapers, Inc.

	Net Income Before Federal Income Taxes	Federal Income Taxes	Dividends Paid
1956	$ 56,942	$24,110	$ 18,000
1957	58,637	24,991	18,000
1958	55,590	23,205	18,000
1959	58,104	24,106	18,000
1960	76,284	33,56 0	24,000
1961	50,702	20,257	24,000
1962	68,517	29,521	24,000
1963	76,434	33,524	24,000
1964	115,710	48,784	24,000
1965	117,723	48,898	35,000
1966	110,925	46,070	36,000

(2) Watsonville Register-Pajaronian

	Total Revenues	Net Operating Profit	Average Paid Daily Circulation	Total Pages Printed	Total Avertising Inches
1956	$378,691	$ 60,245	7,449	3,908	364,855
1957	379,968	62,151	7,632	3,796	342,723
1958	380,879	57, 889	7,749	3,772	340,929
1959	393,623	57,832	7,905	3,742	328,262
1960	456,838	74,919	8,133	4,040	347,843
196 1	444,464	48,212	8,287	4,042	338,385
1962	516,011	67,835	8,389	4,386	367,346
1963	579,539	75,063	8,471	4,7 94	394,275
1964	694,936	113,954	8,654	5,370	456,473
1965	730,650	114,175	8,910	5,468	458,056
1966	760,692	104,836	9,278	5,586	467,850

(3) Matsonville Newspapers, Inc.
(a) For the years 1961, 1962 and 1963
	1961	1962	1963
Circulation income	$106,320	$106,265	$108,441
Advertising income	333,372	398,007	447,308
Miscellaneous income (shopping news, circulars, commercial printing, etc.)	4,772	11,739	23,791
Interest income	6,588	6,973	6,718
Dividend income	1,375	1,375	1,375
Gain on sale of capital assets	-0-	(1,171)	422
Total Income	$452,427	$523,188	$588,055
Operating expense*	396,252	448,176	504,476
Interest expense	5,473	6,495	7,145
Operating income before federal income taxes	$ 50,702	$ 68,517	$ 76,434
Federal income taxes	20,257	29,521	33,524
Net profit after federal income taxes	$ 30,445	$ 38,996	$ 42,910
*Includes depreciation expense in the amounts of	$ 8,488	$ 8,420	$ 7,175
(b) For the years 1964, 1965, and 1966
	1964	1965	1966
Circulation income	$128,707	$131,452	$135,685
Advertising income	531,016	566,755	599,164
Miscellaneous income (shopping news, circulars, commercial, printing, etc.)	35,213	32,443	25,844
Interest income	6,848	8,158	12,112
Dividend income	1,375	1,375	1,375
Gain on sale of capital assets	-0-	3	-0-
Total Income	$703,159	$740,186	$774,180
Operating expense*	580,982	616,474	655,856
Interest expense	6,467	5,989	7,399
Operating income before federal income taxes	$115,710	$117,723	$110,925
Federal income taxes**	48,784	48,898	46,070
Net profit after federal income taxes	$ 66,926	$ 68,825	$ 64,855
*Includes depreciation expense in the amounts of	$ 7,609	$ 8,399	$ 8,651
**After reduction for investment credits in the amounts of	$ 1,487	$ 548	$ 113

(4) Watsonville Newspapers, Inc.
(a) As of December 31, 1964 and 1962
Assets	12/31/61	12/31/62
Cash on hand and in banks	$ 40,203	$ 63,048
Securities at cost	97,629	97,629
Notes and accounts receivable - net	119,276	129,970
Inventories and supplies	9,106	8,690
Land, buildings and equipment - net	58,374	53,255
Goodwill - purchased	104,293	104,293
Deferred charges	1,235	2,676
Total Assets	$430,116	$459,561
Liabilities and Capital
Current liabilities	$ 34,633	$ 49,953
Notes payable-non-current	92,009	93,084
Prepaid subscriptions	7,646	6,776
Miscellaneous non-current liabilities	3,588	2,512
Reserve for liability under employee profit sharing agreements	125,000	125,000
Capital stock (200 shares)	2,000	2,000
Earned surplus	165,240	180,236
Total Liabilities and Capital	$430,116	$459,561
(b) As of December 31, 1963 and 1964
Assets	12/31/63	12/31/64
Cash on hand and in banks	$ 81,580	$119,732
Securities at cost	115,054	115,054
Notes and accounts receivable - net	105,111	120,975
Inventories and supplies	6,096	10,868
Land, buildings and equipment - net	56,172	69,800
Goodwill - purchased	104,293	104,293
Deferred charges	2,514	2,069
Miscellaneous assets	1,500	1,000
Total Assets	$472,320	$543,791
Liabilities and Capital
Current liabilities	$ 48,969	$ 71,169
Notes payable-non-current	88,089	94,350
Prepaid subscriptions	7,379	7,583
Miscellaneous non-current liabilities	1,737	1,617
Reserve for liability under employee profit sharing agreements	118,500	112,000
Capital stock (200 shares)	2,000	2,000
Earned surplus	205,646	255,072
Total Liabilities and Capital	$472,320	$543,791
(c) As of December 31, 1965 and June 30, 1966
Assets	12/31/65	6/30/66
Cash on hand and in banks	$ 60,763	$ 35,194
Securities at cost	115,054	115,054
Notes and accounts receivable - net	218,510	211,740
Inventories and supplies	9,808	11,577
Land, buildings and equipment - net	69,226	126,818
Goodwill - purchased	104,293	104,293
Deferred charges	4,555	12,416
Miscellaneous assets	1,000	1,000
Total Assets	$583,209	$618,092
Liabilities and Capital
Current liabilities	$ 70,089	$ 45,850
Notes payable-non-current	100,594	135,095
Prepaid subscriptions	8,103	8,914
Miscellaneous non-current liabilities	1,526	1,994
Reserve for liability under employee profit sharing agreements	155,500	149,000
Capital stock (200 shares)	2,000	2,000
Earned surplus	245,397	275,239
Total Liabilities and Capital	$583,209	$618,092

(5) Securities owned by Watsonville

As of December 31, 1965 and June 30, 1966

Description	Cost
$50,000 U.S. Treasury bonds - 2 1/2% of 6/15/69	$ 47,412
30,000 U.S. Treasury bonds - 4% of 8/15/70	30,000
10,000 U.S. Treasury bonds - 3 7/8% of 5/15/68	10,125
275 shares of 5% Series "A" cumulative preferred stock of E.W. Scripps Company	27,517
Total	$115,054

Redding Record, Inc.

Redding Record, Inc. (hereafter Redding) was incorporated under the laws of the State of California on October 17, 1938. From the date of incorporation until the date of decedent's death, the issued and outstanding capital stock of Redding was owned as follows:

	Class A, no-par shares	Class B, no-par shares	Total
Decedent and her surviving husband, Roy D. Pinkerton, as community property	10	30	40
John P. Scripps	80	40	120
Paul C. Bodenhamer	5	15	20
Harry O. Bostwick, Jr.	5	15	20
Totals	100	100	200

As of June 26, 1966, Redding's principal business activity consisted of the publication of a daily newspaper, the Redding Record-Searchlight and The Courier-Free Press (hereafter the Record-Searchlight), in Redding, California. Redding started the Record-Serachlight on October 17, 1938. The Record-Searchlight is circulated in Shasta County.

As of June 26, 1966, the Record-Searchlight was printed on a forty year old five unit letter press and production was carried on in two separate locations, one of which was owned by Redding and the other leased. The estimated cost of consolidating operations and converting to an offset press was $950,000.

As of June 26, 1966, there were profit-sharing agreements in existence between Redding and certain of its key employees. On December 3, 1965, the executive committee of Redding increased the reserve account from $125,000 to $200,000 from its earned surplus to provide for its liability under the profit-sharing agreements.

The following schedules reflect certain information relevant to our consideration of the value of decedent's interest in Redding:

(1) Redding Record, Inc.

	Net Income Before Federal Income Taxes	Federal Income Taxes	Dividends Paid
1956	$ 95,545	$ 44,183	$ 18,000
1957	94,939	43,862	18,000
1958	98,571	45,707	18,000
1959	122,941	58,429	18,000
1960	136,391	65,424	18,000
1961	146,0 02	70,421	38,000
1962	148,292	71,551	48,000
1963	154,890	74,416	48,000
1964	230,570	106,124	60,000
1965	275,167	124,867	72,000
1966	267,672	117,126	72,000

(2) Redding Record-Searchlight & The Courier-Free Press

	Total Revenues	Net Operating Profit	Average Paid Daily Circulation	Total Pages Printed	Total Advertising Inches
1956	$ 593,964	$ 95,512	12,507	5,118	473,380
1957	642,613	94,987	13,131	5,272	481,716
1958	688,7 47	99,138	13,866	5,220	459,071
1959	779,797	126,527	14,795	5,372	494,788
1960	885,663	138,325	15,423	5,656	529,477
1961	936,798	147,448	16,159	5,676	510,540
1962	1,004,486	149,677	16,861	5,938	537,182
1963	1,093,888	153,908	18,057	6,260	553,938
1964	1,279,578	232,385	19,238	7,008	630,766
1965	1,425,348	272,466	20,150	7,394	665,616
1966	1,513,649	259,739	21,160	7,796	687,239

(3) Redding Record, Inc.
(a) For the Years 1961, 1962, and 1963
	1961	1962	1963
Circulation income	$207,685	$ 214,833	$ 223,983
Advertising income	711,331	772,807	855,229
Miscellaneous income (shopping news, circulars, commercial printing, etc.)	17,782	16,846	14,676
Interest income	837	899	1,392
Gain on sale of capital assets	-0-	227	2,322
Total Income	$937,635	$1,005,612	$1,097,602
Operating expense*	789,350	854,809	939,980
Interest expense	2,283	2,511	2,732
Operating income before federal income taxes	$146,002	$ 148,292	$ 154,890
Federal income taxes	70,421	71,551	74,416
Net profit after federal income taxes	$ 75,581	$ 76,741	$ 80,474
*Includes depreciation expense in the amounts of	$ 19,086	$ 20,220	$ 22,993
(b) For the Years 1964, 1965, and 1966
	1964	1965	1966
Circulation income	$ 254,750	$ 284,159	$ 299,927
Advertising income	1,009,243	1,111,572	1,178,428
Miscellaneous income (shopping news, circulars, commercial printing, etc.)	15,585	29,617	35,294
Interest income	1,138	6,100	11,754
Total Income	$1,280,716	$1,431,448	$1,525,403
Operating expense*	1,047,193	1,152,882	1,253,909
Interest expense	2,953	3,399	3,822
Operating income before federal income taxes	$ 230,570	$ 275,167	$ 267,672
Federal income taxes**	106,124	124,867	117,126
Net profit after federal income taxes	$ 124,446	$ 150,300	$ 150,546
*Includes depreciation expense in the amounts of	$ 23,354	$ 23,993	$ 26,631
**After reduction for investment credits in the amounts of	$ 2,161	$ 713	$ 4,856

(4) Redding Record, Inc.
(a) As of December 31, 1961 and 1962
Assets	12/31/61	12/31/62
Cash on hand and in banks	$ 77,548	$101,248
Securities at cost	29,578	29,578
Notes and accounts receivable - net	76,394	84,990
Inventories and supplies	40,569	36,226
Land, buildings and equipment - net	281,910	291,614
Goodwill - purchased	13,219	13,219
Deferred charges	3,671	4,217
Miscellaneous assets	11,155	5,115
Total Assets	$534,044	$566,207
Liabilities and Capital
Current liabilities	$ 85,875	$ 85,010
Notes payable-non-current	41,854	45,540
Prepaid subscriptions	4,404	4,581
Miscellaneous non-current liabilities	6,658	7,081
Reserve for liability under employee profit sharing agreements	125,000	125,000
Capital stock (200 shares)	2,000	2,000
Earned surplus	268,253	296,995
Total Liabilities and Capital	$534,044	$566,207
(b) As of December 31, 1963 and 1964
Assets	12/31/63	12/31/64
Cash on hand and in banks	$ 96,379	$172,238
Securities at cost	38,003	38,003
Notes and accounts receivable - net	96,173	112,560
Inventories and supplies	29,693	16,855
Land, buildings and equipment - net	331,586	339,476
Goodwill - purchased	13,219	13,219
Deferred charges	5,315	5,568
Miscellaneous assets	3,252	3,252
Total Assets	$613,620	$701,171
Liabilities and Capital
Current liabilities	$ 95,251	$109,219
Notes payable-non-current	49,215	56,650
Prepaid subscriptions	4,731	5,723
Miscellaneous non-current liabilities	7,954	8,665
Reserve for liability under employee profit sharing agreements	125,000	125,000
Capital stock (200 shares)	2,000	2,000
Earned surplus	329,469	393,914
Total Liabilities and Capital	$613,620	$701,171
(c) As of December 31, 1965 and June 30, 1966
Assets	12/31/65	6/30/66
Cash on hand and in banks	$110,945	$ 60,300
Securities at cost	38,003	38,003
Notes and accounts receivable - net	276,950	293,172
Inventories and supplies	21,590	21,272
Land, buildings and equipment - net	325,602	328,808
New press - installation in process	-0-	63,691
Goodwill - purchased	13,219	13,219
Deferred charges	9,257	15,554
Miscellaneous assets	19,761	100
Total Assets	$815,327	$834,119
Liabilities and Capital
Current liabilities	$137,479	$ 95,813
Notes payable-non-current	63,700	63,700
Prepaid subscriptions	5,836	6,626
Miscellaneous non-current liabilities	9,098	9,030
Reserve for liability under employee profit sharing agreements	200,000	200,000
Capital stock (200 shares	2,000	2,000
Earned surplus	397,214	456,950
Total Liabilities and Capital	$815,327	$834,119

(5) Securities owned by Redding Record, Inc. as of December 31, 1965 and June 30, 1966

Description	Cost
$10,000 U.S. Treasury bonds - 3 1/8% of 5/15/68	$ 10,000
30,000 U.S. Treasury bonds - 2 1/2% of 6/15/69	28,003
Total	$ 38,003

ULTIMATE FINDINGS OF FACT

As of June 26, 1966, the values per share of the stock owned by decedent and her husband were as follows:

Scripps	$5,400
Tulare	400
Watsonville	2,200
Redding	4,500

OPINION

VALUATION

We must first determine the value as of June 26, 1966, of shares of stock owned by decedent and her husband as community property at decedent's death. Petitioner reported certain values on the decedent's estate tax return, and the Commissioner determined a deficiency of $92,166.95 based on higher values. The Commissioner lowered that deficiency to $52,215.67, based on values computed by his expert witness. In an amended petition, petitioner modified his position in accordance with the values computed by his expert witness. The following chart summarizes these various values:

	Return	Amended Petition	Original Deficiency	Modified Deficiency
Scripps (per share)	$4,800	$4,394	$13,779	$9,500
Tulare (per share)	750	169	1,245	900
Watsonville (per share)	1,750	1,714	4,337	3,500
Redding (per share)	3,600	3,519	10,822	8,000

Petitioner and the Commissioner presented the reports and testimony of two expert witnesses, both of whom were highly qualified to give expert opinions.Each expert used sophisticated analyses to determine the value of the shares under consideration.

Petitioner's expert reviewed the financial data and the publishing facilities of each corporation and the market climate at the time of decedent's death. He examined valuation criteria and formulae proposed by various students of the newspaper industry. Of these formulae, he chose four which he believed representative and developed "Values of Total Enterprise by Principal Formulas" as follows:

	Krehbiel*	10 times 5-year mean net income	6-2/3 times excess of 5-year mean net income over 8% of net tangible assets, plus net tangible assets	13.1 times 1965 net income
Scripps	$1,772,279	$1,532,270	$1,197,865	$2,005,714
Per Share	11,076	9,577	7,486	12,535
Tulare	321,702	135,080	121,390	301,876
Per Share	1,608	675	607	1,509
Watsonville	581,235	496,180	397,699	901,608
Per Share	2,906	2,480	1,988	4,508
Redding	1,149,079	1,015,080	857,084	1,968,930
Per Share	5,745	5,075	4,285	9,845

Having indicated the values resulting from the application of these formulae, petitioner's expert examined data taken from the 1966 Moody's Manual concerning the Boston Herald-Traveler, Inc., the Cincinnati Enquirer, Inc., Dow Jones & Co., New York Times Co., and Times-Mirror Co. He concluded:

The one company whose business is confined to that of newspaper publishing only, and in one locality, is the Cincinnati Enquirer, and in our opinion offers the best single comparable with the companies under valuation. Applying the same ratios to the companies under valuation gives the following results:

Company	5-year P/E(14)	1965 P/E (12-1/2)	110% of gross	Div. Yield (5.5%)	Mean
Scripps	$13,407	$11,962	$18,456	$8,727	$ 13,138
Tulare	946	1,441	2,382	0	1,192
Watsonville	3,473	4,302	4,071	3,182	3,757
Redding	7,105	9,394	7,830	6,545	7,718

Having computed values which would have been appropriate if the companies had been transferred as complete enterprises and if the stock in the companies had been traded actively, petitioner's expert argued that the value of decedent's minority interests in closely held corporations was subject to a discount for lack of marketability. Using purchases by two investment companies in 1967 and 1968 of restricted shares of stock in corporations which also issued comparable publicly traded stock, he concluded that an appropriate discount "would certainly exceed 50 percent, and in our opinion would rise to 75 percent."

Petitioner's expert concludes with the following "Valuation Summary":

A purchaser of the shares of the Companies under valuation would acquire a highly unmarketable interest in Companies in which he had practically no influence upon management, and in which his expectancy could only be the dividend return, the value of which would be capitalizable at an appropriate discounted rate. In the case of two of the Companies (Watsonville Newspapers, Inc. and Redding Record, Inc.) the expectancy of increased dividends was high.In the case of one (Tulare Newspapers, Inc.) no dividend had been paid during the preceding decade; revenues and net income were gradually increasing, but the necessity of eventually modernizing the presses would tend to postpone that expectation. In the case of John P. Scripps Newspapers the dividend was doubled in 1960, but had remained unchanged since, and the fluctuations in net income in the 5-year period, 1961-1965 (between $115,710 and $175,642), with the highest net in the earliest year, did not offer a basis for anticipating an early increase in the dividend.

In the light of all the foregoing considerations it is our opinion that the shares of the instant Companies, on valuation date, if available and publicly marketable, would be appraised at the market at the mean of 10 times the five-year mean net profit and a capitalization of the dividend. In the case of the John P. Scripps Newspapers, the dividends, which have been secure and steady, would be capitalizable at 6 per cent, corresponding to the interest obtainable from time deposits in savings institutions. In the case of the Watsonville Newspapers, Inc. and Redding Record, Inc., an appropriate capitalization rate would be 4 per cent. In the case of Tulare Newspapers, Inc. , which paid no dividends, the dividend capitalization rate would be zero. The results may be summarized as follows:

	5-year P/E (19)	Dividend capitalized	Mean
Scripps	$9,576	$8,000 (6%)	$8,788
Tulare	675	0	338
Watsonville	2,481	4,375 (4%)	3,428
Redding	5,075	9,000 (4%)	7,037

These values, in our opinion, would be subject to a discount for nonmarketability of at least 50 percent, or more, and at 50 percent discount the indicated fair market values are as follows:

Scripps	$4,394
Tulare	169
Watsonville	1,714
Redding	3,519

The Commissioner's expert analysed the newspapers and balance sheets of each company. Using that analysis, he compared the stock owned by decedent to the stock of seven companies "primarily engaged in the newspaper industry": Boston Hearld-Traveler, Cincinnati Enquirer, Federated Publications, Globe-News Publishing Company, Maclean-Hunter Publications (Canadian), Stauffer Publications, and Toronto Star Limited (Canadian). Having determined relevant averages for those seven companies, he chose four of them as more nearly comparable to the companies the stock of which he was evaluating: Cincinnati Enquirer, Federated Publications, Maclean-Hunter Publications, and Stauffer Publications. Having determined average relevant ratios of those four companies, the Commissioner's expert examined the relevant ratios of the Cincinnati Enquirer, which he considered most similar to the companies the stock of which he was evaluating.

We have compiled the following chart summarizing the values determined by the Commissioner's expert:

	Scripps	Tulare	Watsonville	Redding
Price-Net Tamgible Asset Ratio Of 7 na (335%)	$ 9,075	$1,431 d
Of 4 b			$ 3,367-	$ 8,677-
			6,086 h	12,605 j
Cincinnati Enquirer (448.70%	12,155	2,140	3,303	6,897-
			4,580 i	10,002 k
Price-Earnings Ratio Latest Year Of 7 na (16.48%)		1,237-
		1,596 e
Of 4 b (14.45%)	10,545-	1,237-
	20,168 c	1,857 f	h	j
Cincinnati Enquirer (12.73%)	10,808	1,197	i	k
5 Year Average
Of 7 a (22.04%)		e
Of 4 b (21.58%)	c	f	h	j
Cincinnati Enquirer (16.24%)	12,635	1,283	i	k
Dividend Yield Latest Year Of 7 a (2.73%)		e
Of 4 b (3.04%)	c	f	h	j
Cincinnati Enquirer (5.22%)	9,195	720 g	i	k
5 Year Average Of 7 a (2.11%)		e
Of 4 b (2.38%)	c	f	h	j
Cincinnati Enquirer (4.33%)	11,085	730 g	i	k
Value determined by Commissioner's expert	9,500	900	3,500	8,000

The reports and testimony of the two expert witnesses have aided us in our consideration of the evidence. Both reports were carefully prepared and suggested analyses which we have used in our independent determination of the value of the stock owned by decedent and her husband. Both experts have given us insights into the financial history and future of each of the companies. The use by the Commissioner's expert of comparative companies to develop ratios and formulae was helpful, but we have considered the sizes and capital structures of those "comparatives" in our own determination. Similarly, we have considered the review by petitioner's expert of literature containing formulae for the valuation of newspapers. We have also studied his lists of stocks purchased at discounts in our consideration of appropriate discounts.

Cases of this kind would be better disposed of by the honest bargaining of the experts rather than by lengthy trials and conflicting testimony of those experts. Nevertheless, the parties in this case have come to us and have attempted to give us the knowledge of their experts. That the question of value is one of fact, to be decided after a consideration of all the pertinent evidence and an application thereto of the judgment and experience of the trier of the facts, needs the citation of no authority. We have carefully considered all the evidence which the parties have offered and have attempted to follow in our own poor way the "ancient precedent established by a man whose name has become synonymous with wisdom." Webster Investors, Inc. v. Commissioner, 291 F.2d 192, 194 (C.A. 2, 1961), affirming a Memorandum Opinion of this Court. We state our application of that precedent to the pertinent facts without dissecting the individual factors underlying our findings, and we hold that the values per share of decedent's stock on June 26, 1966, were as follows:

Scripps	$5,400
Tulare	400
Watsonville	2,200
Redding	4,500

Funeral Expenses

The second issue presented involves the deductibility of decedent's funeral expenses. The Commissioner determined that, under California law, the entire community property, including the interest therein of decedent's husband, was chargeable with decedent's funeral expenses and that, under section 2053(a), that portion of the funeral expenses chargeable to the husband's one-half interest in the community property could not be deducted from decedent's gross estate. The Commissioner relies on Pfeiffer v. United States, 310 F. Supp 392 (E.D. Cal. 1969), Estate of Mary V. Rowan, 54 T.C. 633, 641 (1970), Estate of Hugh C. Hutson 49 T.C. 495 (1968), and Rev. Rul. 70-156, 1970-1 C.B. 190. See also Estate of Henry James Davis, 51 T.C. 361, 369 (1968). ²

Petitioner argues that the amounts paid for funeral expenses may be fully deducted from decedent's gross estate. He contends that a husband's funeral expenses are chargeable to community property only because that property is included in his gross estate and that, when a wife predeceases her husband, only her half of the community property is subject to the debts of her estate, including her funeral expenses. Petitioner relies on section 202 of the California Probate Code, In Re Cornitius' Estate, 154 Cal. app. 2d 422, 316 P.2d 438 (1957), In Re Dennis' Estate, 110 Cal. app. 2d 667, 243 P.2d 579 (1952), and In Re Kurt's Estate, 83 Cal. app. 2d 681, 189 P.2d 528 (1948).

Petitioner asks us to reconsider our holding in Estate of Mary V. Rowan, supra, that a wife's funeral expenses were not fully deductible. He argues that, in that case, we considered section 951.1 of the California Probate Code and did not consider the relevance of California Probate Code section 202, which, petitioner contends, establishes a distinction between the funeral expenses of a husband and those of a wife.

We believe that our holding in Estate of Mary V. Rowan was correct. We need not analyze the complexities of the California statutes to determine whether the same sections establish the chargeability against the interests of both the husband and wife, for we find ample authority for the proposition that, in California, a husband's interest in community property must bear a portion of a wife's funeral expenses. In Odone v. Marzocchi, 34 Cal. 2d 431, 211 P.2d 297, 301-2 (1949), rehearing denied 212 P.2d 233 (1949), the Supreme Court of California held that funeral expenses of a wife were chargeable against community property:

Section 202 of the Probate Code provides in part that "Community property passing from the control of the husband, either by reason of his death or by virtue of testamentary disposition by the wife, is subject to his debts and to administration and disposal under the provisions of Division III of this code; * * *." The husband is liable for the necessaries of life furnished to the wife while the parties are living together. Civ. Code, sec. 174. [Now Civil Code 5130, added by Stats. 1969, c. 1608, p. 3343, sec. 8, operative January 1, 1970.] Medical expenses incurred during the last illness, and the funeral expenses, are such necessaries. * * * In Re Estate of Coffee, 19 Cal. 2d 248, 252, 120 P.2d 661, 664, this Court, in construing section 202, Probate Code, said that "* * * the portion of the community property which belongs to the wife is the one-half which remains after the payment of the husband's debts and the expenses of administration * * *." * * * In the Coffee case, the husband predeceased the wife so the reverse situation is presented. This would, however, seem to make no difference in the result to be reached.

This liability for a wife's funeral expenses does not seem to have been affected by either In Re Dennis' Estate, supra or the passage of section 951.1 of the California Probate Code. See Knego v. Grover, 208 Cal. App. 2d 134, 25 Cal Reporter 158, 165 (1962) and "Deductibility of Funeral Expenses - Time for a Change in California," August 1969 L.A.B. Bull. 426.

Since California courts have held that community property is chargeable for the funeral expenses of a wife as well as a husband, we follow Pfeiffer v. United States, supra, and Estate of Hugh C. Hutson, supra, and hold that a portion of decedent's funeral expenses is not deductible from decedent's gross estate. In short, on this issue, we agree with the Commissioner's determination.

Decision will be entered under Rule 155.

---

Footnotes

• *. Pursuant to a notice of reassignment sent to counsel for all parties, and to which no objections were filed, this case was reassigned by the Chief Judge on July 5, 1973 from Judge Austin Hoyt to Judge Norman O. Tietjens for disposition.

• 1. In June 1970, the Commissioner secured an appraisal which suggested values lower than those originally determined for the shares of stock the values of which are in dispute. Accordingly, the Commissioner has made certain concessions and now asserts a deficiency of $52,215.67.

• *. Converted from twice weekly to three times weekly, April 1, 1963.

  ** Converted from three times weekly to daily and Sunday, June 1,1964.

• *. Mean of (a) gross income x 117% (use 120%); (b) population x $19.34 (use $20); (c) paid circulation x $39.30 (use $40); (d) after tax earnings x 12. The Krehbiel formula values dailies at the price computed after certain adjustments to that mean for strengths and weaknesses of the town, field, plant, economy, and general operation of the paper.

• d. Apparently, the Commissioner's expert used an asset ratio of 300% rather than 355%.

• b. The four companies are Cincinnati Enquirer, Federated Publications, Maclean-Hunter Publications, and Stauffer Publications.

• h. The Commissioner's expert states that, based on average yields, asset ratio, and P/E ratios of the four comparatives, "indicated value of Watsonville stock ranges from $3,367 per share to $6,086 per share. The low side of the range is attributed to the price net tangible asset ratio and the high side is attributable to five year average earnings and dividends."

• j. The Commissioner's expert gives only a range, $8,677 to $12,605, of Redding values derived from the four comparables.

• i. The Commissioner's expert gives only a range, $3,303 to $4,580, of Watsonville values derived from Cincinnati.

• k. The Commissioner's expert gives only a range, $8,677 to $12,605, of Redding values derived from Cincinnati.

• e. The Commissioner's expert gives only a range, $1,237 to $1,596, of values of Tulare stock derived from average P/E ratios and yields of the seven comparatives.

• c. In his report, having set forth the P/E ratios and yields, the Commissioner's expert states, "The average ratios of the four comparatives produce indicated values for Scripps ranging from $10,545 per share to $20,168 per share." We assume that those figures represent utilization of the yields as well as the P/E ratios.

• f. The Commissioner's expert gives only a range, $1,237 to $1,857, of values of Tulare stock derived from P/E ratios and yields of the four comparatives.

• a. The seven companies are Boston Herald-Traveler, Cincinnati Enquirer, Federated Publications, Globe-News Publishing Company, Maclean-Hunter Publications, Stauffer Publications, and Toranto Star Limited.

• g. In his computations of the value of Tulare stock, the Commissioner's expert "assumed a dividend potential equivalent to a 40 percent pay out of earnings, this amounts to a dividend of $37.60 per share for 1966 and a five year average dividend of $31.60 per share."

• 2. The Comissioner notes that amounts paid after June 17, 1970, the effective date of an amendment to California Probate Code section 951.1 are fully deductible. See Rev. Rul. 71-168, 1971-1 C.B. 271.