JAMES M. WHITE, ETC., PETITIONER V. UNITED STATES OF AMERICA AND
JAMES M. SERLING

   No. 88-928

   In The Supreme Court Of The United States

   October Term, 1988

   On Writ of Certiorari to the United States Court of Appeals for the
Second Circuit

   Brief for the Respondents

                           TABLE OF CONTENTS

   Question Presented
   Opinions below
   Jurisdiction
   Statutory and regulatory provisions involved
   Statement
   Summary of argument
   Argument:
       The summonses were issued in furtherance of a legitimate
       tax investigation purpose and should have been enforced
       A. The district court erred in requiring, as a precondition
          to enforcement of the summonses, a prima facie showing
          that the summoned information likely will lead to an
          adjustment in the taxpayer's liability
       B. Administration expenses approved by a state trial court
          are not deductible for federal estate tax purposes if
          they are not allowable under a correct interpretation
          of state law
          1. Section 2053(a) of the Code and the relevant Treasury
             regulations provide that a local court's determination
             to approve administration expenses will not govern
             deductibility for federal estate tax purposes when that
             determination does not comply with state law
          2. This Court has recognized that federal estate tax
             consequences should not necessarily be governed by
             the decree of a state trial court
          3. Policy considerations counsel against a rule making
             a Surrogate's approval of attorney's fees binding
             on the federal courts in estate tax litigation
   Conclusion

                            OPINIONS BELOW

   The opinion of the court of appeals (J.A. A62-A85) is reported at
853 F.2d 107.  The opinion of the district court (J.A. A43-A61) is
reported at 650 F. Supp. 904.

                             JURISDICTION

   The judgment of the court of appeals was entered on August 2, 1988.
 A petition for rehearing was denied on October 6, 1988.  The petition
for a writ of certiorari was filed on December 3, 1988, and was
granted on February 27, 1989.  The jurisdiction of this Court is
invoked under 28 U.S.C. 1254(1).

             STATUTORY AND REGULATORY PROVISIONS INVOLVED

   Sections 2053 and 7602 of the Internal Revenue Code (26 U.S.C.) and
Section 20.2053-1 of the Treasury Regulations on Estate Tax (1954
Code) are set forth in pertinent part in a statutory appendix to this
brief (App., infra, 1a-4a).

                          QUESTION PRESENTED

   Whether the approval of an executor's commission and attorney's fee
by a state probate court precludes the enforcement of an Internal
Revenue Service summons seeking records relating to the administration
of the estate for the purpose of determining the allowability of
federal estate tax deductions claimed for that commission and fee.

                               STATEMENT

   1. Petitioner was named as the executor of the estate of Helen P.
Smith by her will, and he also chose to act as the estate's attorney.
For these services, he claimed an executor's commission of $17,548 and
an attorney's fee of $16,800, to be paid from the gross estate of
$455,000.  /1/ Petitioner sought from the New York State Surrogate's
Court of Monroe County a decree of judicial settlement of the estate,
including authorization of the claimed executor's commission and
attorney's fee.  This proceeding was not adversarial, and petitioner
did not submit to the Surrogate his time records or an affidavit
detailing his services as an attorney.  /2/ The Surrogate granted the
requested judicial settlement, which had the effect, inter alia, of
fixing and approving petitioner's fees as executor of, and attorney
for, the estate.  J.A. A45-A47.  Petitioner paid himself the
attorney's fee and executor's commission approved by the Surrogate and
distributed the balance of the funds to the residuary legatees. J.A.
A14.

   On the estate's federal tax return, petitioner deducted attorney's
fees of $16,530 and an executor's commission of $17,450.  J.A.
A66-A67.  /3/ Respondent Serling, an Internal Revenue Service (IRS)
estate tax attorney, was assigned to review the estate tax return.
J.A. A2.  He requested from petitioner certain records pertaining to
the justification for the legal fee, or, alternatively, an affidavit
from petitioner detailing the legal services performed and the time
spent on the services.  See J.A. A32-A34.  Petitioner responded that
the IRS was bound to accept a deduction in the amount approved by the
Surrogate;  he also forwarded to respondent Serling a letter obtained
from the Surrogate for use in the audit in which the Surrogate stated
that the attorney's fee conformed to the criteria of reasonableness
applicable under New York law and that he did not act arbitrarily in
approving it.  J.A. A35-A39.

   Thereafter, on May 1, 1985, respondent Serling issued an
administrative summons to petitioner, requesting records relating to
the administration of the estate (see J.A. A5-A6).  A second summons
was issued on February 3, 1986, requesting records relating to
petitioner's activities as attorney and executor (see J.A. A7-A8).
Petitioner responded by letter that he would not comply with the
summonses, relying on the Surrogate's prior approval of his attorney's
fee (see J.A. A29-A32).  The government then brought this action in
the United States District Court for the Western District of New York
to enforce the summonses (see J.A. A1-A4).  /4/

   2. The district court refused to enforce the summonses (J.A.
A45-A61).  The court held that "the IRS has not made the necessary
showing that the investigation will be conducted pursuant to a
legitimate purpose" (J.A. A50).  The court noted that the governing
statute, Section 2053(a) of the Internal Revenue Code, /5/ permits the
deduction of administration expenses "allowable" under state law, and
the court relied upon the statement in the relevant Treasury
regulation, 26 C.F.R. 20.2053-1(b)(2), that a local court's
determination to allow an administration expense "will ordinarily be
accepted (for federal estate tax purposes) if the court passes upon
the facts upon which deductibility depends." J.A. A50-A51.  The court
stated that the IRS therefore cannot disallow the expenses approved by
the Surrogate's Court, unless it makes a showing that the Surrogate
did not pass upon the factors upon which deductibility depends.  See
J.A.  A54 n.5, A59-A60.  It further stated that principles of comity
and federalism require deference to such a determination by a state
court on a matter of state administration.  J.A. A55-A58.  Based on
this analysis of the principles governing the merits of the claimed
deductions, the court concluded that it would not enforce a summons
issued to obtain information about the basis for expenses approved by
the Surrogate's Court unless the IRS makes "a prima facie showing that
the Surrogate's decision was motivated by factors other than those on
which deductibility depends, such as fraud, overreaching, or
excessiveness by the attorney or the Surrogate" (J.A. A59-A60).

   3. The court of appeals reversed (J.A A62-A85).  It emphasized that
the only issue before it concerned summons enforcement, noting that
"(t)he issue presented to us is whether the IRS may investigate
expenses claimed as a deduction on a federal estate tax return, and
obtain enforcement of summonses issued to carry out such an
investigation, where the subject expenses previously had been approved
under state law by a state trial court" (J.A. A69).  The court held
that the government had clearly met the requirements set forth in
United States v. Powell, 379 U.S. 48 (1964), for the enforcement of
summonses (J.A. A69-A73).  The court explained that "the primary issue
presented bya summons proceeding is not whether the IRS has
established, or is even likely to establish guilt or liability on the
taxpayer's part;  rather, the issue is whether the IRS had a valid tax
determination or collection purpose in issuing its summons" (J.A.
A71-A72).

   The court of appeals concluded that the IRS had carried its burden
of showing that the summons had been issued in good faith in
furtherance of a legitimate tax investigation.  The court emphatically
rejected the district court's imposition of the additional requirement
that the IRS make a prima facie showing that the Surrogate's decision
was motivated by impermissible factors such as fraud, finding that
this requirement was "virtually the same" as the proposition rejected
by this Court in Powell, namely, that the IRS must make an advance
showing of probable cause to suspect fraud in order to obtain
enforcement of a summons designed to investigate fraud (J.A. A81).
Because "the district court's requirement would be equally likely to
hamper the IRS in carrying out investigations it thinks are warranted,
and has already forced the IRS to litigate and prosecute an appeal on
the very subject it desires to investigate," the court of appeals
rejected the district court's additional requirement as "an invalid
restraint on the summons powers of the IRS" (ibid.).

   The court of appeals also rejected the district court's conclusion
that Section 2053(a) and Treas. Reg. Section 20.2053-1(b)(2) preclude
the IRS from questioning the claimed deductions for petitioner's fees
approved by the Surrogate and therefore that the summons cannot be
regarded as issued for a valid tax investigation purpose (J.A.
A73-A81).  The court declared that the statute requires the IRS to
apply state rules of law, but that the deductibility of expenses for
purposes of the federal estate law is not necessarily controlled by
the determination of a state trial court (J.A. A75).  And the court of
appeals found that this Court's decision in Commissioner v. Estate of
Bosch, 387 U.S. 456 (1967), in rejecting the taxpayer's contention
that a state trial court decree was binding on the IRS for federal
estate tax purposes, supported the conclusion that "the Surrogate's
decree is not conclusive and binding on the IRS" (J.A. A76).
Correspondingly, the court concluded that Treas. Reg. Section
20.2053-1(b)(2) "makes it clear that the IRS is entitled to make an
independent assessment of applicable state law as interpreted by the
state's highest court," and therefore it can "independently assess()
the deductibility of (petitioner's) fees under state law" (J.A.
A79-A80).

   Thus, the court held that "the mere fact that the Surrogate issued
a decree does not preclude the IRS from investigating the
deductibility of (petitioner's) fees under state law" (J.A. A76), and
therefore an inquiry into the basis for petitioner's claimed fees was
a legitimate purpose for the issuance of the summonses.  The court
emphasized that "the validity of the Surrogate decree is not at
issue." Rather, the court's discussion was "intended solely to
demonstrate that, contrary to (petitioner's) claim, the IRS may indeed
inquire under Section 2053 into the allowability of (petitoiner's)
fees under state law" (J.A.  A78).

   Finally, the court of appeals determined that, contrary to the
district court's suggestion, principles of federalism and comity do
not constitute "substantial countervailing policies" (United States v.
 Euge, 444 U.S. 707, 711 (1980)) that justify a special restriction
here on the IRS's broad summons power (J.A. A83-A84).  The court of
appeals noted that this case does "not implicate the eleventh
amendment, full faith and credit, principles of collateral estoppel,
or other doctrines arising from principles of federalism and comity *
* *" (J.A. A84).  The Court concluded (ibid., quoting United States v.
Arthur Young & Co., 465 U.S. 805, 816 (1984) (emphasis by the Court)):
 "Instead of substantial countervailing policies, we find in I.R.C.
Section 7602 'a congressional policy choice in favor of disclosure of
all information relevant to a legitimate IRS inquiry.'"

                          SUMMARY OF ARGUMENT

   A. The issue in this case is the enforceability of two IRS
summonses.  It is undisputed that the summonses were not issued in bad
faith in pursuit of some improper purpose, such as harassment;
rather, they were issued to petitioner for the purpose of
investigating the federal tax liability of the estate for which he
acted as executor.  Accordingly, the summonses satisfied the criteria
for enforcement that have been well settled since United States v.
Powell, 379 U.S. 48 (1964).

   A summons enforcement proceeding does not encompass disputes over
the merits of the underlying tax liability.  Therefore, petitioner's
objection to the summonses on the ground that the Surrogate correctly
approved the claimed attorney's fee is premature and can provide no
basis for that fee.  Only if the Surrogate's determination were in all
circumstances binding on the federal authorities could it be argued
that the IRS had no right to investigate the basis for the fee.  It is
clear, however, that the Surrogate's determination has no such
conclusive effect.

   Treas. Reg. Section 20.2053-1(b)(2) provides that the decree of a
state trial court will ordinarily be accepted for purposes of
deducting administration expenses on an estate tax return "if the
court passes upon the facts upon which deductibility depends."
Whatever the precise scope of federal inquiry under I.R.C. Section
2053(a) and this regulation, the district court and petitioner agree
that, at a minimum, the IRS is not bound to follow a Surrogate's
decree if it was "motivated by factors other than those on which
deductibility depends, such as fraud, overreaching, or excessiveness
by the attorney or the Surrogate" (J.A. A59-A60;  see Pet. Br. 15,
45).  Thus, the IRS was entitled to investigate the basis of the
claimed fee at least to determine whether the Surrogate's approval was
motivated by such impermissible factors;  there was therefore a
legitimate tax investigation purpose for the summonses.

   It is well established that the IRS need not establish any
threshold of suspicion in order to justify the issuance of an
investigative summons.  The district court therefore plainly erred in
holding that the summonses could not be enforced unless the IRS first
made a prima facie showing of fraud or the like;  that prerequisite to
enforcement is virtually the same as the one rejected by this Court in
Powell.  Nor is it necessary for the IRS to allege that its
investigation is focused on the possibility of such illegitimate
factors.  A general investigation into the basis for the claimed fee
legitimately encompasses the possiblity of fraud, as well as other
possible explanations for a fee suspected of exceeding that allowable
under state law.  The IRS is able to make an informed judgment about
the deductibility of the fee only if it is permitted to conduct an
inquiry;  therefore, the summonses requesting material relevant to
that inquiry should have been enforced.

   B. Although it is not necessary to resolve the question in order to
decide this case, the court of appeals correctly stated that the scope
of the IRS investigation need not be limited to fraud or other
impermissible factors because the federal courts are not bound by a
state trial court decree that incorrectly applies state law.  Section
2053(a) allows the deduction of administration expenses "allowable by
the laws" of the state;  this language, and the statute's almost
identical formulations dating back to 1916, clearly contemplate that
the federal court should determine the correct application of state
law and not limit its inquiry to determining whether the expenses were
approved by a state trial court as a matter of historical fact.  That
interpretation is confirmed by the relevant Treasury regulation, which
has consistently provided since 1921 that a local court decree will
not be accepted if it is "at variance with the law of the State" (see
Treas. Reg. Section 20.2053-1(b)(2)), and by the line of judicial
decisions that has recognized that it is proper for a federal court to
depart for this purpose from a state court decree if that decree does
not correctly implement state law.

   Indeed, in Commissioner v. Estate of Bosch, 387 U.S. 456, 465
(1967), this Court explicitly held that, "when the application of a
federal statute is involved, the decision of a state trial court as to
an underlying issue of state law should * * * not be controlling." The
principles of Estate of Bosch are fully applicable here.  The state
law that is to be applied under Section 2053 is the law reflected in
the decisions of the state's highest court.  If there has been no
definitive determination by that court of the particular question
presented, the federal court must apply what it finds to be the state
law;  its conclusion will not necessarily accord with the holding of a
state trial court.  Here, where the Surrogate's fee awards are subject
to challenge and reduction by the New York appellate courts on grounds
of legal error, Estate of Bosch unmistakably teaches that the
Surrogate's decree is not entitled to conclusive effect in federal
estate tax litigation.

   A blind adherence to state trial court decrees, regardless of
whether they correctly implement state law, would "jeopardize the
federal revenue" (Commissioner v. Estate of Bosch, 387 U.S. at 464).
This danger is particularly acute in a situation like the one
presented here -- where the Surrogate's proceeding was uncontested,
where petitioner's service in a dual capacity raises the possibility
that the attorney's fee was impermissibly paid in part for services
that were the duty of the executor, and where the record before the
Surrogate did not detail the services for which the fee was claimed.
In these circumstances, the IRS's responsibility to the public fisc
would be undermined if it were not permitted even to investigate the
basis for the claimed fee.  Rather, Congress has chosen an appropriate
balance in Section 2053 that reflects a due regard for principles of
federalism and for the fair administration of the federal revenue
laws.  Administration expenses are deductible for federal estate tax
purposes if they are allowable under state law, but the federal courts
are authorized to make that determination according to the rules laid
down by the state's highest court (with proper regard for decisions by
lower courts);  the federal courts are not bound by an erroneous
determination of a state trial court.

                               ARGUMENT

   THE SUMMONSES WERE ISSUED IN FURTHERANCE OF A LEGITIMATE TAX
INVESTIGATION PURPOSE AND SHOULD HAVE BEEN ENFORCED

   The issue in this case is the enforceability of two IRS summonses.
In order to assist in the determination of the amount of the federal
estate tax due from the estate of which petitioner was the executor --
in particular, the correctness of the deductions claimed by the estate
for the executor's commission and attorney's fee -- the IRS issued
summonses to petitioner seeking certain records pertaining to the
administration of the estate.  It is undisputed that these summonses
were issued, not for a purpose that this Court has identified as
illegitimate -- such as to harass petitioner or to put pressure upon
him to resolve a collateral dispute (see United States v. Powell, 379
U.S. 48, 58 (1964)) -- but rather for the purpose of investigating the
estate's tax liability.  Under well established principles of summons
law, the summonses therefore should have been enforced to permit the
IRS to inquire into the correctness of the claimed deductions.
Accordingly, the court of appeals was correct in reversing the
district court's holding that the summonses could not be enforced
unless the IRS made a prima facie showing that there was fraud or
similar impermissible factors in the state court proceeding that
approved the claimed fees.

   Petitioner's objection to the summonses rests on the premise that
the IRS must invariably accept the amount of the fee approved by the
Surrogate as the amount deductible for purposes of the federal estate
tax.  From this premise, petitioner argues that the IRS's
investigation here is pointless because the claimed deductions will be
allowed regardless of what information is contained in the summoned
documents, and therefore petitioner aruges that the summonses have not
been issued for a legitimate investigative purpose.  Petitioner's
premise is erroneous.  Nothing in the Internal Revenue Code or the
relevant regulations requires that the federal estate tax deduction
for administration expenses be absolutely controlled by a state court
decree authorizing the payment of a certain amount as an attorney's
fee.  While the state court's determination is entitled to proper
regard in a federal court, the Code does not authorize a deduction for
the approved fee if the amount is not allowable under state law.
Moreover, as even the district court acknowledged, a state court
decree procured by fraud or overreaching cannot control the validity
of a federal estate tax deduction.  Hence, it is a legitimate subject
of government investigation for the IRS to inquire whether this case
presents circumstances that warrant denial of a deduction in the
amount approved by the Surrogate, and the summonses should have been
enforced to permit the IRS to obtain the information that would enable
it to make that determination.

   A. The District Court Erred In Requiring, As A Precondition To
Enforcement Of The Summonses, A Prima Facie Showing That The Summoned
Information Likely Will Lead To An Adjustment In The Taxpayer's
Liability

   1. Congress has conferred upon the Secretary of the Treasury the
responsibility to make accurate determinations of tax liability and
has given him broad authority to conduct investigations for that
purpose.  The Commissioner of Internal Revenue, as the Secretary's
delegate, is charged with the duty "to make inquiries, determinations,
and assessments of all taxes" imposed by the Code (I.R.C. Section
6201(a)).  The summons power is the investigative tool provided by
Congress to enable the Commissioner to discharge this responsibility.
Section 7602 of the Code authorizes the Commissioner, "(f)or the
purpose of ascertaining the correctness of any return, * * * (or)
determining the liability of any person for any internal revenue tax,
* * * (t)o examine any books, papers, records, or other data which may
be relevant or material to such inquiry" and to summon any person to
appear and produce such documents and to give relevant testimony.  If
the summoned party refuses to produce the requested documents, the IRS
must go to court to compel compliance with the summons (see I.R.C.
Sections 7402( b), 7604(a), and 7609(h)(1)).  The court's role,
however, is limited to determining whether the particular summons is a
legitimate exercise of the IRS's investigative authority;  the court
is not empowered to second-guess the wisdom of the IRS's investigative
decisions.

   Thus, in United States v. Powell, 379 U.S. 48 (1964), this Court
specifically held that the summons enforcement court should not
inquire into the strength of the Commissioner's reasons for believing
that the summoned material will contribute to a redetermination of tax
liability.  In Powell, the statute of limitations for the tax year in
question had already expired, and therefore the tax investigation
could be productive in terms of tax liability only if the Commissioner
could prove fraud (for which there is no statute of limitations).  The
taxpayer contended that the summons should not be enforced unless the
Commissioner could establish probable cause for suspecting fraud, but
this Court emphatically rejected that contention.  The Court explained
that there was no reason for believing that "Congress intended the
courts to oversee the Commissioner's determinations to investigate"
(id. at 56);  establishing a judicially-enforced standard, such as
probable cause, for those determinations, "might seriously hamper the
Commissioner in carrying out investigations he thinks warranted,
forcing him to litigate and prosecute appeals on the very subject
which he desires to investigate" (id. at 54).  Instead, the Court
analogized the summons power to the subpoena power of other government
agencies, noting that the inquiry is not "limited . . . by forecasts
of the probable result of investigation" and that the government "can
investigate merely on suspicion that the law is being violated, or
even just because it wants assurance that it is not" (id. at 57
(internal quotation marks omitted)).

   The Court in Powell proceeded to delineate the proper scope of the
district court's inquiry in a summons enforcement proceeding.  In
order to obtain enforcement, the Commissioner is required to "show
that the investigation will be conducted pursuant to a legitimate
purpose, that the inquiry may be relevant to that purpose, that the
information sought is not already within the Commissioner's
possession, and that the administrative steps required by the Code
have been followed" (379 U.S. at 57-58).  The Court added that this
does not mean that the district court cannot make any inquiry at all
into the underlying reasons for the summons, stating that "a court may
not permit its process to be abused" (id. at 58).  The Court explained
that "(s)uch an abuse would take place if the summons had been issued
for an improper purpose, such as to harass the taxpayer or to put
pressure on him to settle a collateral dispute, or for any other
purpose reflecting on the good faith of the particular investigation"
(ibid.).  Under the framework established in Powell, therefore, a
summons is to be enforced if the court concluded that it was issued in
"good faith," i.e., in furtherance of a legitimate purpose for which
the use of the summons authority has been authorized by Congress.  See
also, e.g., United States v. Stuart, 109 S. Ct. 1183, 1187-1188
(1989);  United States v.  Euge, 444 U.S. 707, 714-717 (1980);  United
States v. Bisceglia, 420 U.  S. 141, 145-146 (1975).  As long as those
criteria are met, the summons must be enforced, irrespective of the
likelihood that the investigation will prove to be fruitful.

   2. a. The summonses issued in this case satisified the Powell
criteria and therefore should have been enforced.  It cannot seriously
be doubted that the IRS made a prima facie case for enforcement under
the established standards.  The initial burden of proof on the
government in a summons enforcement proceeding is often described as
"slight" or "minimal";  the burden is carried by the submission of an
affidavit of an agent involved in the investigating stating that the
summons complies with each of the Powell requirements.  See, e.g.,
Alphin v. United States, 809 F.2d 236, 238 (4th Cir.), cert. denied,
480 U.S. 935 (1987);  Liberty Financial Services v. United States, 778
F.2d 1390, 1392 (9th Cir. 1985);  United States v. Balanced Financial
Management, Inc., 769 F.2d 1440, 1443 (10th Cir. 1985);  United States
v. Kis, 658 F.2d 526, 536 (7th Cir. 1981), cert. denied, 455 U.S. 1018
(1982).  This burden plainly was carried by the declaration of the
person who issued the summons, respondent Serling.  See J.A. A72-A73.
The declaration stated that he was an IRS estate tax attorney
conducting an examination to determine the correct estate tax
liability of the estate of Helen P. Smith, that he had learned that
petitioner had served as both attorney and executor for the estate and
was in possession of records relating to the estate's tax liability,
that the summoned books and records were necessary for the correct
determination of the estate's tax liability, that those records were
not already in the possession of the Internal Revenue Service, and
that the administrative steps required by the Internal Revenue Code
for the issuance of a summons had been taken.  J.A. A11.  /6/

   b. Once the IRS carries its initial burden, the summoned party has
the burden of rebutting the IRS's showing by demonstrating that the
summons was issued for an illegitimate purpose or that the Powell
criteria are not satisfied for some other reason.  See, e.g., United
States v. LaSalle Nat'l Bank, 437 U.S. 298, 316 (1978);  United States
v. Powell, 379 U.S. at 58.  Petitioner has not sought to rebut the
prima facie showing in this case by demonstrating that the summonses
were issued for an improper purpose of the kind described in Powell,
such as harassment.  Instead, he emphasizes (Br. 14-16) that the focus
of the IRS's investigation was upon the validity of the attorney's fee
deduction, and that the specific purpose of the summonses "was to make
a collateral review of the reasonable value of his services as an
attorney" (Br. 14).  Petitioner contends that this purpose is improper
because, he asserts, the IRS is powerless to disallow a claimed
deduction for fees approved by the Surrogate -- regardless of the
outcome of the investigation.  There is no force to this objection to
the enforceability of the summonses.

   At the outset, it is clear that it is inappropriate to litigate the
merits of a tax dispute in a summons enforcement proceeding.  These
proceedings are designed to be "summary" (United States v. Stuart, 109
S. Ct. at 1193;  Donaldson v. United States, 400 U.S. 517, 529
(1971)), limited to determining whether the summons was issued in good
faith for a legitimate investigative purpose.  As we have explained
(pp. 13-15, supra), an inquiry into the prospects of the investigation
is not relevant at the summons enforcement stage, and it is equally
true that there should be no inquiry into the merits of the underlying
tax dispute at that stage.  Thus, petitioner's objections in the
summons enforcement proceeding -- that the Surrogate's after-the-fact
letter defending his approval of petitioner's fee (see J.A. A38-A39)
should have resolved the question of deductibility (see C.A. App.
74-75) and that the IRS was going to apply an incorrect standard in
evaluating the fee (see C.A. App. 76-77) -- were premature in that
setting because they were addressed to the merits of the particular
tax dispute in this case.  Cf. FTC v. Standard Oil Co., 449 U.S. 232
(1980).  Those objections could not form the basis for denial of
enforcement of a summons.  See J.A. A81-A82.  And the determination of
the appropriate scope of the investigation "is one for the IRS -- not
(the taxpayer) -- to make" (Tiffany Fine Arts, Inc. v. United States,
469 U.S. 310, 323 (1985)).

   Accordingly, the only conceivable basis for arguing that
examination of the validity of an estate tax deduction for
administration expenses is not a legitimate purpose for issuing a
summons is to assert that in no circumstances is the IRS permitted to
disallow a deduction for those expenses that have been approved by the
Surrogate;  only on that premise would it be arguable that a summons
to investigate the basis for that expense, or for the Surrogate's
approval of it, is pointless and should not be enforced.  That
essential premise for the argument, however, is clearly mistaken.  As
the court of appeals held (J.A. A76), "the mere fact that the
Surrogate issued a decree does not preclude the IRS from investigating
the deductibility of (petitioner's) fees under state law" because it
is manifest that there are circumstances under which the IRS should
deny a deduction for administration expenses that have been approved
by the Surrogate, including an attorney's fee.  Treas. Reg. Section
20.2053-1(b)(2) provides that the decree of a local court will
ordinarily be accepted for purposes of deducting administration
expenses on an estate tax return "if the court passes upon the facts
upon which deductibility depends." The district court accepted this
limitation, explicitly stating that the IRS is not bound to follow a
Surrogate's decree if it was "motivated by factors other than those on
which deductibility depends, such as fraud, over-reaching, or
excessiveness by the attorney or the Surrogate" (J.A.  A59-A60), and
petitioner does not dispute that the IRS is entitled to disregard the
Surrogate's decree in such circumstances (see Br. 15, 45).  Thus,
there is simply no basis for petitioner's argument that the
deductibility of an attorney's fee that has been approved by the
Surrogate is not a legitimate subject of IRS investigation.

   As we have explained, it is well established that there is no
threshold of suspicion that must be demonstrated by the IRS in order
to justify the issuance of a summons for records relevant to a
legitimate area of investigation.  Therefore, the court of appeals was
plainly correct in reversing the district court's holding that the
summonses would not be enforced unless the IRS could make a prima
facie case of fraud or some other reason to believe that the Surrogate
had been motivated by factors other than those upon which
deductibility depends.  As the court of appeals noted (J.A. A81), the
precondition imposed by the district court is "virtually the same" as
that rejected by this court in Powell, "namely, that the IRS must make
an advance showing of probable cause to suspect fraud." The summons is
the IRS's principal investigatory tool through which it is enabled to
inform itself of such subjects as fraud;  the IRS is not required to
make a showing of the investigation's fruits before it is allowed to
conduct its inquiry. /7/

   Similarly, petitioner errs in stating (Br. 15) that the summonses
should not be enforced in the absence of an allegation that the
investigation would focus upon the possibility of fraud or
overreaching.  Although the IRS did not explicitly state in the
petition for enforcement that it suspected fraud, that does not
exclude fraud as one of the areas of investigation.  The IRS believed
that there was reason to question the amount that the estate sought to
deduct as an attorney's fee, and it sought to investigate that issue.
Until it can examine the relevant records, the IRS is not in a
position to judge whether the fee is excessive at all, much less to
judge whether there was fraud or simply a difference of opinion
between the IRS and the Surrogate as to the reasonableness of the fee.
 /8/ As the court of appeals explained (J.A. A81), "at (the) summons
enforcement stage, * * * the IRS seeks to inquire into the facts that
bear on the deductibility of (petitioner's) fees, and not to accuse
the Surrogate of error." Thus, there is certainly no reason to insist,
as a precondition to summons enforcement, that the IRS allege fraud or
overreaching before it has had an adequate opportunity to investigate.
 /9/

   The claimed deduction for the attorney's fee was a legitimate
subject for the IRS's investigation of the estate tax liability, and
the summonses issued in this case fell well within the IRS's broad
summons authority.  Section 7602 of the Code entitles the government
to summon all records that "may be relevant" to an inquiry into tax
liability.  As this Court explained in United States v. Arthur Young &
Co., 465 U.S. 805, 814 (1984):

         The language "may be" reflects Congress' express intention to
      allow the IRS to obtain items of even potential relevance to an
      ongoing investigation, without reference to its admissibility.
      The purpose of Congress is obvious:  the Service can hardly be
      expected to know whether such data will in fact be relevant
      until they are procured and scrutinized.

And the Court has noted that the IRS can issue a summons to
investigate "'merely on suspicion that the law is being violated, or
even just because it wants assurance that it is not.'" United States
v. Powell, 379 U.S. at 57 (quoting United States v. Morton Salt Co.,
338 U.S. 632, 642 (1950)).  Under the statutory framework, the
summoned records were clearly relevant to the determination of the
estate's tax liability -- including resolution of the possibility that
the Surrogate's approval of petitioner's attorney's fee should not be
accepted because of fraud or some other reason.  Just as this Court
held that the summons in Powell was enforceable because the
Commissioner had determined that examination of the taxpayer's records
was necessary "in order to determine the existence or nonexistence of
fraud in the taxpayer's returns" (379 U.S. at 53), so too the
summonses here were enforceable in order to allow the IRS to determine
the existence or nonexistence of fraud or overreaching in the
Surrogate's approval of petitioner's claimed fee.  /10/

   B. Administration Expenses Approved By A State Trial Court Are Not
Deductible For Federal Estate Tax Purposes If They Are Not Allowable
Under A Correct Interpretation Of State Law

   As we have explained in Point A, the summonses in this case should
have been enforced in order to permit the IRS to investigate the
possibility that the claimed deduction for the approved executor's
commission and attorney's fee should be disallowed on the ground that
the Surrogate did not pass upon the facts upon which deductibility
depends -- because of fraud or some other reason.  The existence of
that legitimate avenue of IRS investigation is sufficient to require
affirmance of the decision below and enforcement of the summonses.
The court of appeals also stated that the IRS's investigation need not
be confined to the question of fraud because the IRS is not required
to allow a deduction for fees approved by the Surrogate in every
instance where he has passed on the facts upon which deductibility
depends;  if the Surrogate's determination is incorrect and the
approved fees are not allowable under a correct interpretation of
state law, they are not deductible for purposes of the federal estate
tax.  While we do not believe that decision of this issue --
concerning a premature question of the merits of the claimed deduction
-- is necessary to a resolution of this case, this statement by the
court of appeals is correct.

   1. Section 2053(a) of the Code and the Relevant Treasury
Regulations Provide that a Local Court's Determination to Approve
Administration Expenses Will Not Govern Deductibility for Federal
Estate Tax Purposes when that Determination Does Not Comply with State
Law

   The statutory provision permitting deduction of administration
expenses from a decedent's gross estate (now codified in Section 2053(
a)) is one of long standing, and its text has consistently manifested
Congress's intent that such expenses not be deductible unless they are
allowable under the relevant state law, regardless of whether they
have been approved by a state trial court.  Section 203(a)(1) of the
Revenue Act of 1916, ch. 463, 39 Stat. 778, permitted deduction of
"(s)uch amounts for funeral expenses, administration expenses, (and)
claims against the estate * * * as are allowed by the laws of the
jurisdiction * * * under which the estate is being administered."
Section 812(b) of the Internal Revenue Code of 1939, ch. 2, 53 Stat.
123, contained essentially identical language.  These statutory
provisions clearly did not make deductibility of administration
expenses and claims against the estate turn exclusively on a
historical fact -- namely, whether a trial court has approved a
particular claim or expense.  Rather, in couching the test in terms of
"the laws of the jurisdiction," these provisions contemplated a legal
inquiry into the correct application of those laws.  State trial
courts sometimes err and approve administration expenses that are not
in fact allowable under state law.  The plain import of the statutory
language of these early versions of Section 2053(a) is that, in those
situations, the expenses are not deductible because they are not
"allowable by the laws of the jurisdiction."

   The current version of the statute even more clearly reflects this
congressional intent.  When the Internal Revenue Code of 1954 was
adopted, many provisions were recodified, including the estate tax
deduction for administration expenses.  The 1954 version, which is
currently in effect, permits the deduction of such administration
expenses and claims against the estate "as are allowable by the laws
of the jurisdiction" (I.R.C. Section 2053(a) (emphasis added)).  As
petitioner notes (Br. 26), Congress did not intend that this
reformulation would change existing law;  Congress intended to make
only one specific change in the provision governing deductibility of
administration expenses -- a change that is not relevant here.  See H.
 R. Rep. No. 1337, 83d Cong., 2d Sess. 91, A317 (1954);  S. Rep. No.
1622, 83d Cong., 2d Sess. 124, 473-474 (1954).  Thus, the minor
textual change from "allowed" to "allowable" was made not for
substantive purposes, but for clarification.  The current version even
more clearly states the rule that administration expenses and claims
against the estate are deductible when they are authorized by the laws
of the jurisdiction, whether or not approved by a local court.
Section 2053 cannot reasonably be read to direct a court to examine
only the historical fact of approval by a court;  the text of the
statute does not permit the deduction of expenses or claims that are
not allowable under a correct interpretation of state law, even if
they have been approved by a state trial court.

   The plain meaning of the statute is confirmed by the
contemporaneous and consistent interpretation of the agency
responsible for its administration.  In 1921, the Treasury promulgated
regulations regarding the administration expenses deduction.  Article
41 of Treasury Regulations 37 (1921 ed.) provided that attorney's fees
were a permissible deduction on the estate tax return even though they
had not been approved by the local court (and thus "allowed" as a
historical fact).  By the same token, Article 39 provided that, where
a local court had approved an administration expense, that decision
was not binding for federal tax purposes under all circumstances:

         Effect of court decree.  -- The decision of a local court as
      to the amount of a claim or administration expense will
      ordinarily be accepted where the court passes upon the fact upon
      which deductibility depends.  Where the court does not pass upon
      such fact its decree will, of course, not be followed.  * * *
      Nor will the decree necessarily be accepted even where it
      purports to decide the fact upon which deductibility depends.
      It must appear that the court actually passed upon the merits of
      the case.  This will be presumed in all cases where there is an
      active and genuine contest.  Where the decree was rendered by
      consent, it will be accepted, provided the consent was a bona
      fide recognition of the validity of the claim -- not a mere
      cloak for a gift -- and was accepted by the court as
      satisfactory evidence upon the merits.  It will be presumed that
      the consent was of this character, and was so accepted, where it
      is made by all parties having an interest adverse to the claim,
      when all aspects of the matter, including its effect upon
      taxation, are considered.  The decree will not be accepted where
      it appears to be at variance with the law of the State;  as, for
      example, if an allowance is made to an executor in excess of the
      rate prescribed by statute.

These regulations were continued virtually without change under
several subsequent Revenue Acts.  See Treas. Reg. 63, arts. 33, 37
(1922 ed.);  Treas. Reg. 70, arts. 30, 34 (1926 ed.);  Treas. Reg. 70,
arts. 30, 34 (1929 ed.);  Treas. Reg. 80, arts. 30, 34 (1934, 1937
eds.);  Treas.  Reg. 105, Sections 81.30, 81.34 (1939 ed.).

   The current regulations under Section 2053 are almost identical to
those promulgated under prior revenue acts dating back to 1921. Treas.
 Reg. Section 20.2053-3(a) provides that administration expenses
include attorney's fees, and Treas. Reg. Section 20.2053-3(c)(1)
provides that an estate tax deduction may be taken for attorney's fees
that have actually been paid or that, at the time of filing, may
reasonably be expected to be paid.  These regulations must be read in
conjunction with Treas. Reg. Section 20.2053-1(b)(2), the successor of
Article 39 of the 1921 Regulations.  That regulation provides that a
local court decree "will ordinarily be accepted if the court passes
upon the facts upon which deductibility depends" (emphasis added).
Even if the court does pass on the relevant facts, the regulation
explicitly states that "(t)he decree will not be accepted if it is at
variance with the law of the State."

   Thus, the current regulation, like its predecessors, clearly
contemplates that there will be cases in which a lower court decree is
not followed because it does not correctly implement state law.  This
longstanding regulation is entitled to considerable deference and is a
strong indicator of Congress's intent.  See, e.g., National Muffler
Dealers Ass'n v. United States, 440 U.S. 472, 476-477 (1979);  United
States v. Correll, 389 U.S. 299, 305-306 (1967) (quoting Helvering v.
Winmill, 305 U.S. 79, 83 (1938) ("Treasury regulations and
interpretations long continued without substantial change, applying to
unamended or substantially reenacted statutes, are deemed to have
received congressional approval and have the effect of law.")).  In
sum, petitioner's assertion (Br. 20) that "Congress clearly sought to
preclude a threat of inconsistent determinations by state and federal
authorities" is belied by both the plain meaning of Section 2053 and
the Treasury regulations dating back to 1921.  While it established
that state law would provide the standard for evaluating the
deductibility of administration expenses, Congress plainly did not
provide that the federal courts, in determining an issue of federal
tax liability, would invariably be bound by the the decree of a state
trial court, no matter how erroneous as a matter of law.  /11/

   The acceptance of Treas. Reg. Section 20.2053-1(b)(2) is reflected
in numerous court decisions, which have almost uniformly recognized
that Section 2053(a) permits a federal court considering the validity
of a claimed estate tax deduction to depart from a state court decree
on the ground that it does not accord with state law.  In
First-Mechanics Nat'l Bank v. Commissioner, 117 F.2d 127 (3d Cir.
1940), the court disallowed an estate tax deduction sought under
Section 2053 for a claim against the estate that had been allowed by
the state probate court.  The court declared that the Treasury
regulation correctly implemented the congressional intent establishing
as a prerequisite to deductibility "that the claim be established as a
valid charge against the decedent's estate under the laws of the
state" (117 F.2d at 129-130).  It noted that the regulation provided
that a state court decree was ordinarily determinative of the validity
of a claim against the estate, but explained that "that is so only
because the state court has passed upon the merits of the claim and
has adjudicated its validity according to the laws of the state" (id.
at 129).  The court then held that "Congress did not intend that a
claim which could not be established on its merits as a valid
liability of a decedent's estate should be accorded deduction for
federal tax purposes merely because a state court approved, pro forma,
the executors' payment of the claim, no sui juris interested party
objecting" (id. at 130).  The court of appeals in Kasishke v. United
States, 426 F.2d 429, 435 (10th Cir. 1970), also rejected a claimed
deduction for a claim against the estate that had been approved by the
local court, explaining that "(t)he mere fact that the claim has been
allowed by the executor and approved pro forma by the probate court
will not establish deductibility if the validity of the claim on the
merits cannot be otherwise established." /12/

   The cases relied upon by petitioner are not to the contrary.  In
Goodwin's Estate v. Commissioner, 201 F.2d 576 (6th Cir. 1953) (see
Pet. Br. 25-26), the court affirmed the validity of the Treasury
regulation, noting that "the Regulations follow the authority of the
statute in declaring that payment of claims out of the estate must be
'authorized by the laws of the jurisdiction'" (201 F.2d at 580
(quoting Treas. Reg. 105, Section 81.30 (1939 ed.)).  The court upheld
the claimed deduction in that case because it found that the probate
court decree had been entered after a hearing at which the court had
heard testimony and accepted the consent of the adversely affected
parties "as satisfactory evidence upon the merits" within the meaning
of the regulation (201 F.2d at 580).  The court added that the
presumption of the validity of the claim was not rebutted (ibid.);  it
did not suggest that the decree would have been followed even if it
had been shown to be contrary to state law.

   Similarly, the other cases relied upon by petitioner (Br. 27-28)
and amici (Br. 16) do not purport to hold that a state trial court
decree is binding for federal estate tax purposes if the expense is
not allowable under a correct interpretation of state law.  In Dulles
v.  Johnson, 273 F.2d 362, 369 (2d Cir. 1959), cert. denied, 364 U.S.
834 (1960), the court of appeals concluded that it was "clear that
these amounts were allowed by the Surrogate's Court in accordance with
the law of New York." In Estate of Jenner v. Commissioner, 577 F.2d
1100, 1106-1107 (7th Cir. 1978), the court found that there was "ample
evidence in the record to support the state probate court's implicit
finding" that the claimed administration expenses were allowable under
state law.  Indeed, the court of appeals' subsequent statement (id. at
1107) that it was therefore unnecessary to remand the case to the Tax
Court to consider that issue evidences the court's recognition that
the probate court's allowance of the expenses would not have been
conclusive if it had been contrary to state law.  In Estate of Park v.
 Commissioner, 475 F.2d 673, 676 (6th Cir. 1973), the court did not
rely upon the fact of probate court approval, but rather based its
decision on the fact that the claimed expenses were "admittedly
allowable under Michigan law." And in Ballance v. United States, 347
F.2d 419, 423 (7th Cir. 1965), the court of appeals examined the
merits and found the claimed expense deductible because "the
expenditure for such post-death interest is, under Illinois law, an
allowable expense of administration";  it did not hold that the
probate court's decision was binding.  Thus, the judicial decisions in
this area confirm the validity of Treas. Reg. Section 20.2053-1(b)(1)
and the authority of federal courts to deny a federal estate tax
deduction for administration expenses on the ground that they are not
allowable under state law, even if the expenses have been approved by
a state trial court.

   2. This Court Has Recognized that Federal Estate Tax Consequences
Should Not Necessarily Be Governed by the Decree of a State Trial
Court

   In a closely analogous context, this Court has already resolved the
question whether a state trial court decree has a binding effect in
federal estate tax litigation.  In Commissioner v. Estate of Bosch,
387 U.S. 456 (1967), this Court rejected the taxpayers' claim that a
federal court is bound to accept, for purposes of estate tax
litigation, a state trial court's determination of property rights,
even though state law formed the basis of decision for the federal
court litigation.  The Court explicitly held that, "when the
application of a federal statute is involved, the decision of a state
trial court as to an underlying issue of state law should * * * not be
controlling." Id. at 465.  Noting that the issue in the federal
proceeding was the computation of the federal estate tax, the Court
observed that, "(i)f the Congress had intended state trial court
determinations to have (conclusive) effect on the federal actions, it
certainly would have said so -- which it did not do" (id. at 464).
The Court explained that "the State's highest court is the best
authority on its own law" (id. at 465), and therefore its decisions
must be followed.  But if there is no decision on the question in
issue by the state's highest court, then the "federal authorities must
apply what they find to be the state law after giving 'proper regard'
to relevant rulings of other courts of the State;" in effect, the
federal court "sit(s) as a state court." Ibid.  The Court equated this
inquiry with that conducted by a federal court exercising diversity
jurisdiction (ibid.) -- an "independent examination of the state law
as determined by the highest court of the State" (id. at 463).

   Although petitioner is correct in noting that the issue in Estate
of Bosch concerned the allowable marital deduction under Section 2056
of the Code, rather than the administration expenses deduction of
Section 2053 involved here, the principles of Estate of Bosch are
equally applicable to the state court decree in this case.  /13/ In
both cases, it is clear that state law provides the rule of decision,
but Congress did not indicate that a state trial court decree should
be dispositive.  Moreover, the Court's conclusion that the best way of
determining state law is for the federal court to inquire into that
law "sitting as a state court" (387 U.S. at 465) is equally applicable
in the Section 2053 context.  And in both cases, a policy of blind
adherence to state trial court decrees, regardless of whether they are
adversarial or correctly implement state law, "might jeopardize the
federal revenue" (387 U.S. at 464).  See also id. at 478 (Harlan, J.,
dissenting).  /14/

   Petitioner's primary objection to the relevance of Estate of Bosch
is his assertion (Br. 31-34) that the decision is limited to cases
involving "a search for the applicable rule of law" (Br. 33).  Hence,
petitioner argues that the rule of that case applies only where the
estate tax issue turns upon a pure question of state law not passed
upon by the highest court of the state.  If the federal case turns
upon an application to a particular set of facts of legal principles
that have been settled by the highest court of the state, however,
petitioner maintains that Estate of Bosch is inapplicable, and the
federal court must treat the state court decree as binding for estate
tax purposes.  That distinction is unsound.  The Surrogate's
determination to approve an attorney's fee may be factbound and
involve an element of discretion, but, for purposes of the federal
estate tax provisions, it still must be regarded as a legal judgment
as to the reasonableness of the fee under principles of New York law.
Otherwise, the limitation of Section 2053 that the administration
expense must be "allowable by the laws of the jurisdiction" would not
come into play at all.  /15/ When an issue of state law must be
determined for estate tax purposes, Estate of Bosch teaches that the
federal court should make an inquiry into what the highest court in
the state would have held, not blindly accept a trial court's
determination;  that approach should apply whether the question of law
is abstract or factbound.

   Petitioner's proffered distinction finds no support in the Estate
of Bosch decision itself.  There was no indication in either of the
court of appeals' decisions in the two estate tax cases decided by
this Court in Estate of Bosch, or in this Court's opinion, that the
highest state court had not decided the applicable rule of law in
those cases.  See Commissioner v. Estate of Bosch, 363 F.2d 1009 (2d
Cir. 1966), rev'd, 387 U.S. 456 (1967) (validity of release of general
power of appointment);  Second Nat'l Bank v. United States, 351 F.2d
489 (2d Cir. 1965), aff'd, 387 U.S. 456 (1967) (whether decedent's
will negated the application of the state proration statute).  Indeed,
the issue in Second Nat'l Bank -- whether the testator intended to
negate proration -- was inherently factual, and the court of appeals'
detailed discussion of the issue indicates that the trial court's
decision was quite factbound, not an exposition of an abstract rule of
law.  See 351 F.2d at 492-494.  Thus, the factual context of Estate of
Bosch itself indicates that its rule is applicable to trial court
decrees that apply settled law to a particular set of facts, as well
as to trial court decisions that purport to state a general legal
principle that has not been adopted by the state's highest court.
/16/ And that understanding of Estate of Bosch is reflected in the
lower courts, which have applied it in cases where the state trial
court's decision simply applies settled law to a particular fact
situation.  See., e.g., Estate of Kraus v. Commissioner, No. 88-2365
(7th Cir. May 22, 1989), slip op.  6-8 (whether facts demonstrated
"mistake" that would justify reformation of trust);  Magavern v.
United States, 550 F.2d 797, 801-802 (2d Cir.) (construction of trust
instrument), cert. denied, 434 U.S. 826 (1977).  The process of
applying a legal principle to various factual circumstances is, under
our common law tradition of case-by-case adjudication, the process of
delineating and refining that legal principle itself.

   Petitioner also suggests (Br. 35-38) that, in any event, Estate of
Bosch should not apply to attorney's fee awards by the New York
Surrogate's Court because the highest court of the state, the New York
Court of Appeals, does not review such awards.  This suggestion is
misguided.  It is clear that fees awarded by the Surrogate are subject
to appellate review.  The New York intermediate appellate court -- the
Appellate Division -- routinely reviews fees awarded by the Surrogate.
 See, e.g., In re Freeman, 34 N.Y.2d 1, 311 N.E.2d 480, 355 N.Y.S.2d
336 (1974), aff'g 40 A.D. 2d 397, 398, 341 N.Y.S.2d, 511, 513-514 (4th
Dep't 1973);  In re Brehm, 37 A.D.2d 95, 97, 322 N.Y.S.2d 287, 290
(4th Dep't 1973) (rejecting Surrogate's reduction of claimed fee).
And it is not uncommon for the Appellate Division to find that the fee
awarded by the Surrogate is excessive and, accordingly, order its
reduction.  See, e.g., In re Cohen, 120 A.D. 2d 585, 501 (N.Y.S.2d
1015 (2d Dep't 1986);  In re Gil, 67 A.D. 2d 779, 780, 412 N.Y.S.2d
682, 684 (3d Dep't 1979);  In re Estate of Roth, 29 A.D. 2d 941, 289
N.Y.S.2d 575 (1st Dep't 1968);  In re Gasco, 27 A.D. 2d 557, 275
N.Y.S.2d 871 (2d Dep't 1966).  Thus, it is clear that a Surrogate's
award of attorney's fees is not necessarily "the best available
authority on whether particular expenses are 'allowable' under New
York law" (Pet. Br. 38), and it does not represent a conclusive
declaration of state law that would be binding on a federal court
under Estate of Bosch.  /17/

   3. Policy Considerations Counsel Against a Rule Making a
Surrogate's Approval of Attorney's Fees Binding on the Federal Courts
in Estate Tax Litigation

   a. Acceptance of petitioner's contention that a Surrogate's Court
decree is conclusive of the deductibility of claimed administration
expenses under Section 2053(a) of the Code would have deleterious
effects on the federal revenue and on the fair administration of the
estate tax.  The drawbacks of blind adherence to state trial court
decrees that are not the product of adversarial litigation were well
stated by Justice Harlan in his dissent in Estate of Bosch (387 U.S.
at 478):

         It can scarcely be doubted that if conclusiveness for federal
      tax purposes were attributed to any lower state court decree,
      whether the product of genuinely adversary litigation or not,
      there would be many occasions on which taxpayers might readily
      obtain favorable, but entirely inaccurate, determinations of
      state law from unsuspecting state courts.  One need not, to
      envision this hazard, assume either fraud by the parties or any
      lack of competence or disinterestedness among state judges;  no
      more would be needed than a complex issue of law, a crowded
      calendar, and the presentation to a busy judge of but
      essentially a single viewpoint.  The consequences of any such
      occurrence would be an explication of state law that would not
      necessarily be either a reasoned adjudication of the issues or a
      consistent application of the rules adopted by the State's
      appellate courts.

And, as Justice Harlan proceeded to explain, these problems are not
outweighed by any countervailing considerations (id. at 478-479):

         It is difficult to suppose that adherence by federal courts
      to such judgments would contribute materially to the uniformity
      of the administration of state law, or that the taxpayer would
      be unfairly treated if he were obliged to act, for purposes of
      federal taxation, as if he were governed by a more accurate
      statement of the requirements of state law.  Certainly it would
      contribute nothing to the uniformity or accuracy of the
      administration of the federal revenue statutes if federal courts
      were compelled to adhere in all cases to such judgments.

   The subject of the IRS investigation in this case well illustrates
the drawbacks of a rule requiring the federal courts invariably to
accept the determination of a state trial court to allow particular
administration expenses.  The IRS's concern over the claimed deduction
in this case was triggered in part by the dual role played by
petitioner as attorney and executor.  This practice has been the
subject of considerable recent criticism, in part because it presents
the opportunity for the attorney to collect twice for the same
services.  /18/ And service as both attorney and executor has been
subjected to particular media scrutiny recently in Monroe County, New
York, where the instant case arose, because of concern that some
estate attorneys' fees in that locality have been excessive.  /19/

   While service as both attorney and executor is legal in New York,
double recovery of fees for the same work is not.  Under New York law,
an attorney's fee should be compensation for legal services.  An
attorney is not entitled to compensation for activities that are
executorial in nature.  See In re Gates, 120 A.D. 2d 890, 892, 503
N.Y.  S.2d 161, 163 (3d Dep't 1986);  In re Hallock, 214 A.D. 323,
324, 212 N.Y.S. 82, 86 (3d Dep't 1925).  /20/ Thus, fees claimed by an
attorney for services that he performed in his capacity as executor
(and for which he was also compensated) are not "allowable" under New
York law and should not be approved.  See In re Estate of Stalbe, 130
Misc. 2d 725, 497 N.Y.S.2d 237 (Surr. Ct. Queens County 1985);  In re
Estate of Breunig, N.Y.L.J., June 17, 1986, at 15, col. 2 (Surr. Ct.
Suffolk County 1986);  In re Estate of Orza, N.Y.L.J., Sept. 18, 1981,
at 6, col. 5 (Surr. Ct. New York County 1981);  see also In re Estate
of Hertz, 128 A.D. 2d 780, 512 N.Y.S.2d 1015 (2d Dep't 1987) (where
attorney performed executorial services, fee to be paid by executor
out of his own commission).

   The possibility that an individual who serves as both attorney and
executor is impermissibly claiming attorney's fees for executorial
services can be eliminated by appropriate scrutiny of a fee request --
specifically, of the services for which the fee is claimed. But there
is no evidence of such scrutiny here.  The fee request was
uncontested, and the Surrogate had only the executor's final
accounting and the estate tax returns before him in passing on the
fee;  petitioner did not furnish a statement of the services covered
by the fee.  /21/

   Moreover, in contrast to some other jurisdictions that have imposed
rules that assure greater scrutiny of individuals serving in a dual
capacity, /22/ the practice in Monroe County generally has been not to
engage in close scrutiny of such fee applications.  The chairman of
the New York Bar Association's Trust and Estate Laws Section has been
quoted as recognizing that "(t)he practice in Monroe County is a
little more liberal than, say, in other parts of the state."
Dougherty, Double Trouble in Staid World of Estate Lawyers, Rochester
Democrat and Chron., Aug. 9, 1987, at 1A, col. 4.  And the Monroe
County Surrogate who approved petitioner's fee noted that he has not
ordinarily required an accounting of fees by attorney-executors
because he's "confronted with manpower problems in Rochester."
Dougherty, Lawyers and IRS Square Off over Payments from Estates,
Rochester Democrat and Chron., Oct. 4, 1987, at 15A, col. 2.  The
Surrogate also acknowledged that uncontested fee applications are not
carefully examined (ibid.):  "I'll tell you quite frankly, we don't go
over those with a fine-tooth comb. So that if it doesn't stick out
like a real punch in the face, we do not get after them." See also
Stinson, Monroe Estate Handling Faulted, Rochester Democrat and
Chron., Apr. 7, 1988, at 1B, col. 2 (Monroe County fees are higher
because administration is overburdened).  /23/

   In these circumstances, it is manifest that the IRS's
responsibility to the public fisc would be undermined if it were not
permitted even to investigate the basis for fees claimed as an
administration expense deduction on a federal estate tax return.  The
IRS has a duty to collect the estate tax that is properly due, and the
federal courts have a duty not to allow deductions that are not
permitted by the Code.  These duties cannot appropriately be
discharged if a federal court -- and hence the IRS -- is invariably
required to accept as binding the approval of a claimed fee by a
Surrogate Court.  Given that the New York appellate courts sometimes
reduce fees that have been approved by the Surrogate after an
adversary proceeding (see pp. 35-36, supra), it follows a fortiori
that the IRS must be permitted to inquire into the basis for a fee
entered in an uncontested proceeding on a record that does not
disclose the services for which the fee is claimed.

   b. Petitioner contends (Br. 18-24) that policy considerations
support a rule that accords conclusive effect to the Surrogate's
approval of an attorney's fee.  The thrust of petitioner's argument is
that any inquiry by the federal courts into the correct rule of state
law "would irresistibly tempt the IRS to substitute its own uniform
standard(,) * * * a de facto federal rule of attorneys' fees" (Pet.
Br.  19).  This objection is baseless.  As petitioner necessarily
acknowledges (see Br. 17), the federal courts are frequently called
upon to resort to state law for the governing rule of decision, and
they can do so in this context as well.  The IRS surely should not be
prevented from even investigating the grounds for a claimed deduction
on the basis of an assumption that the federal courts and the IRS will
not apply Section 2053 according to its terms.  /24/

   Petitioner also mistakenly asserts (Br. 21-24) that the IRS and the
federal courts are incapable of applying New York law, stating that
some of the relevant factors are intangible and that there is, as a
result, no single "correct" attorney's fee.  That there is a range of
fees that would meet New York standards of reasonableness in a given
case, and hence be "allowable" under New York law, should not disable
the IRS and the federal courts from investigating the basis for the
claimed fee.  It remains within the competence of a federal court to
determine whether the fee falls within that permissible range or,
alternatively, whether the fee cannot possibly be justified regardless
of the peculiarities of local practice with which the local probate
judge is more intimately familiar.  /25/ Petitioner's assertion (Br.
24) that "Congress could not have intended" that the validity of an
estate tax deduction would be determined by a federal court cannot be
squared with either the terms of the statute or with the fundamental
policies underlying enforcement of the federal tax laws.

   Finally, there is no merit to petitioner's contention (Br. 40-44)
that a failure to give conclusive effect to the Surrogate's approval
of an attorney's fee "violat(es) principles of federalism." The IRS's
investigation and the possible review by a federal court of the basis
for petitioner's fee are directed solely at the determination of the
estate's federal tax liability.  Those federal proceedings have no
effect on the administration of estates under the state probate
system, and, even if the federal court were to determine that the fee
was not allowable under state law, that would not affect the
Surrogate's order.

   Petitioner cites Younger v. Harris, 401 U.S. 37 (1971), and
subsequent abstention cases to support his contention that the federal
courts should treat the Surrogate's approval of attorneys' fees as
binding for federal estate tax purposes.  Plainly, the abstention
doctrine has no bearing here.  This case does not even involve
concurrent state and federal proceedings addressed to the same issue;
moreover, it bears no resemblance to the special situations in which
abstention has been regarded as appropriate (see, e.g., Colorado River
Water Conservation Dist. v. United States, 424 U.S. 800, 814-817
(1976)).  Contrary to petitioner's suggestion, however, the principles
of comity and federalism reflected in abstention doctrine are fully
vindicated by the approach of the court of appeals.  Section 2053 of
the Code, in associating the deductibility of administration expenses
with their allowability under state law, and Treas. Reg. Section
20.2053-1(b)(2), in stating that a state trial court's decree "will
ordinarily be accepted if the court passes upon the facts upon which
deductibility depends," both demonstrate "sensitivity to the
legitimate interests of both State and National Governments" (Younger
v. Harris, 401 U.S. at 44).  But that sensitivity does not require
federal authorities to forgo their responsibilities to collect federal
tax revenues, in favor of blind adherence in federal tax proceedings
to the determination of a state trial court, no matter how misguided.
Rather, the rule adopted by Congress in Section 2053 -- requiring the
federal courts to apply state law with proper regard for state trial
court determinations -- is appropriately designed to "be fair to the
taxpayer and protect the federal revenue as well" (Commissioner v.
Estate of Bosch, 387 U.S. at 465).

                              CONCLUSION

   The judgment of the court of appeals should be affirmed.

   Respectfully submitted.

   KENNETH W. STARR

      Solicitor General

   SHIRLEY D. PETERSON

      Assistant Attorney General

   LAWRENCE G. WALLACE

      Deputy Solicitor General

   ALAN I. HOROWITZ

      Assistant to the Solicitor General

   CHARLES E. BROOKHART

   JOAN I. OPPENHEIMER

      Attorneys

   JUNE 1989

   /1/ New York law provides that the executor's commission is
determined by a formula based on the value of the gross estate.  An
allowable attorney's fee is compensation that is "just and
reasonable." N.Y. Surr. Ct. Proc. Act Section 2307 (McKinney 1967 &
Supp. 1989). The New York Court of Appeals in In re Freeman, 34 N.Y.2d
1, 9, 311 N.E.2d 480, 484, 355 N.Y.S. 2d 336, 341 (1974), listed the
factors that are relevant in determining whether a claimed fee is
"just and reasonable" as follows:

         time and labor required, the difficulty of the questions
      involved, and the skill required to handle the problems
      presented;  the lawyer's experience, ability and reputation;
      the amount involved and benefit resulting to the client from the
      service;  the customary fee charged by the Bar for similar
      services;  the contingency or certainty of compensation;  the
      results obtained;  and the responsibility involved * * *.

   /2/ Had the proceeding been adversarial, court rules would have
required petitioner to file an affidavit detailing his services.  See
J.A. A46 n.3.

   /3/ The record does not clearly indicate why the amounts claimed as
deductions on the estate tax return were slightly smaller than the
amounts awarded by the Surrogate.  It appears that petitioner
originally claimed the entire amount of the executor's commission as
an estate tax deduction, but, after a conference with the IRS auditor,
later filed an amended return reducing the claimed deduction because
he recognized that a portion of the Surrogate's award was not
deductible for purposes of the federal estate tax.  See J.A. A14, A17.
 Subsequently, the IRS determined that the allowable executor's
commission should be further reduced, and petitioner did not contest
this additional reduction.  See J.A. A49.  It is not apparent why the
full attorney's fee was not claimed as a deductible administrative
expense.  See J.A. A30.

   /4/ In light of petitioner's refusal to comply with the summonses
and the approaching expiration of the three-year statute of
limitations on assessments (I.R.C. Section 6502), the IRS issued a
notice of deficiency to the estate, in which it disallowed the claimed
attorney's fee and reduced the claimed deduction for the executor's
commission from $17,450 to $16,804.  Petitioner did not contest the
reduction in the executor's commission.  After paying the deficiency,
however, he sought a refund, contesting the disallowance of the
attorney's fee deduction.  That separate refund suit is pending in
district court, and this case does not involve the refund claim.  J.A.
A67-A68.

   /5/ Unless otherwise noted, all statutory references are to the
Internal Revenue Code of 1954 (26 U.S.C.), as amended (the Code or
I.R.  C.).

   /6/ While petitioner briefly asserts (Br. 13-14) that the petition
for enforcement and respondent Serling's affidavit did not carry the
Commissioner's initial burden of proof, petitioner does not explain
why the Commissioner's showing should be regarded as insufficient.
The affidavit plainly stated that the records were sought in
connection with an investigation into the tax liability of the estate;
 that is a legitimate purpose for the issuance of a summons and the
requested records undoubtedly could be relevant to such an
investigation.  Petitioner cites no authority suggesting that an
affidavit of the sort filed in this case is inadequate to establish a
prima facie case for the enforcement of a summons.

   /7/ In fact, the summonses in this case were not issued in a
vacuum;  the IRS had reason to suspect that the fee approved by the
Surrogate might exceed that allowable under state law.  Petitioner had
served as both attorney and executor of the estate, a practice that
has been criticized because of the possibility that an individual will
collect an attorney's fee for services for which he is also
compensated by the executor's commission.  The IRS was aware that the
Surrogate's decree had been entered in an uncontested proceeding in
which the record did not establish the services for which the attorney
was being paid -- and therefore did not indicate whether any part of
the fee was claimed for services that are the executor's
responsibility.  Moreover, the district court itself commented on the
size of the fee (J.A. A70).  See generally pp. 37-41, infra.  And, as
the court of appeals noted (J.A.  A81), "no record evidence, as such,
had been presented to the district court that would have enabled it to
decide whether the Surrogate passed on the facts upon which
deductibility depends.  The post hoc letter from the Surrogate
justifying its decision is not sufficient to eliminate inquiry into
whether the Surrogate actually considered the appropriate facts."

   /8/ This was the import of the IRS's attorney's statement at the
district court hearing that "I'm not here to attack the Monroe County
Surrogate in any sense" (C.A. App. 83), which petitioner
mischaracterizes as "disclaim(ing) any * * * concern" about fraud (Br.
 15).  As the IRS's attorney continued (C.A. App. 84):  "It may be in
this case that (petitioner's) fee is more than justified, but until
the IRS is given the data to support that claimed deduction, they do
not have to allow it and they are entitled to get that information
under the summons." The IRS's position in the summons enforcement
proeeding was simply that it is entitled to examine the relevant
records in order to be able to make a determination as to the basis
for the attorney's fee award and whether the full amount should be
allowed as an estate tax deduction.  Without such an examination, it
was in no position to allege fraud or any other specific basis for
disallowing the claimed deduction.

   /9/ To be sure, the IRS's determination to inquire into the
validity of the fee deduction was not based solely on the possibility
of fraud or overreaching.  The government has consistently maintained
throughout this litigation that, even if there is no fraud or
overreaching and the Surrogate has passed on the relevant facts, the
IRS can disallow a claimed deduction for fees that have been approved
by the Surrogate if those fees are not "allowable under state law"
(I.R.C. Section 2053).  See Point B, infra.  But the critical point
here is that, even if the government's contention in this regard is
incorrect, the summonses in this case are still enforceable because
the summoned documents are relevant to an inquiry into whether the
Surrogate's decree was procured by fraud or overreaching, which
concededly would furnish a basis for disallowing the claimed
deduction.

   /10/ Amici object to the summonses on a ground never raised by
petitioner -- namely, that the summonses were "overbroad" (Br. 13).
Amici appear to confuse a summons that merely requests more material
than may ultimately be necessary for the tax determination, as the
summonses in this case arguably did, with one that does not advise the
summoned party what is required of him with sufficient specificity.
See, e.g., United States v. Wyatt, 637 F.2d 293, 300-302 (5th Cir.
1981).  The latter summons may be rejected as "overbroad," i.e., as an
unreasonable search in violation of the Fourth Amendment, but the
summonses here plainly identified the materials sought with sufficient
specificity and hence they were not defective as "overbroad." A
summons that merely requests more material than may ultimately prove
necessary to the tax determination is not invalid so long as such
material "may be relevant" to that inquiry.  See, e.g., United States
v. Berney, 713 F.2d 568, 571-572 (10th Cir. 1983);  United States v.
Davis, 636 F.2d 1028 (5th Cir.), cert. denied, 454 U.S. 862 (1981);
see generally Tiffany Fine Arts, Inc. v. United States, 469 U.S. at
323.  At any rate, petitioner did not complain about the scope of the
summonses and made no effort to negotiate with respondent Serling to
narrow the request.  Indeed, the objection to the scope of the
summonses is particularly misguided given that respondent Serling had
informed petitioner at the outset that he could submit an affidavit
detailing his services in lieu of the requested records.  See J.A.
A33.

   /11/ The question of the authority that must be accorded to a state
trial court decree is purely one of interpretation of congressional
intent in the Internal Revenue Code.  There can be no claim that the
state court decree has any collateral estoppel or res judicata effect
with respect to the estate's federal tax liability.  The United States
was not a party to the state court proceedings.  Nor would it be
practical for the government to seek to assert its tax contentions in
the state proceedings, which often occur prior to the very claim of a
tax deduction that is at issue -- let alone prior to the conduct of
the IRS's investigation.

   /12/ See also Estate of Smith v. Commissioner, 510 F.2d 479, 482
(2d Cir.), cert. denied, 423 U.S. 827 (1975);  Wolfsen v. Smyth, 223
F.2d 111 (9th Cir. 1955);  Jones v. United States, 424 F. Supp. 236,
239 (E.  D. Ill. 1976);  First National Bank v. United States, 301 F.
Supp. 667, 672-675 (N.D. Tex. 1969) (attorney's fee);  Estate of Lewis
v.  Commissioner, 49 T.C. 684, 688 (1968);  Estate of Nesselrodt v.
Commissioner, 51 T.C.M. (CCH) 1406 (1986);  Estate of Bath v.
Commissioner, 34 T.C.M. (CCH) 493 (1975);  Estate of Nilson v.
Commissioner, 31 T.C.M. (CCH) 708 (1972).  Contra Bank of Nevada v.
United States, 80-2 U.S. Tax Cas. (CCH) Paragraph 13,361 (D. Nev.
1980);  First National Bank v. United States, 77-2 U.S. Tax Cas. (CCH)
Paragraph 13,207 (D. Nev. 1977).

   /13/ Indeed, even under the approach of two of the three dissenters
in Estate of Bosch, the Surrogate's decree here is not binding for
federal estate tax purposes.  Justice Harlan, joined by Justice
Fortas, dissented on the ground that the majority's position
"require(d) federal intervention into the administration of state law
far more frequently than the federal interests here demand" (387 U.S.
at 480).  Justices Harlan and Fortas also rejected the taxpayers'
position that a state court decree should bind the federal court,
however, stating that this approach "would create excessive risks that
federal taxation will be evaded through the acquisition of
inadequately considered judgments from lower state courts" (ibid.).
The rule proposed by these dissenting Justices was that "federal
courts must attribute conclusiveness to the judgment of a state court,
of whatever level in the state procedural system, unless the
litigation from which the judgment resulted does not bear the indicia
of a genuinely adversary proceeding" (id. at 481).  See also id. at
483-484 (Fortas, J., dissenting).  Thus, although the district court
relied upon Justice Harlan's opinion in Estate of Bosch (see J.A.
A57), it is apparent that the Surrogate's approval of petitioner's
attorney's fee, entered in an uncontested proceeding without
presentation of any record of the services provided, would not have
been regarded by Justices Harlan and Fortas as entitled to conclusive
effect in federal court.

   /14/ Petitioner notes (Br. 30-31) that the Court in Estate of Bosch
relied in part on the legislative history of Section 2056, which
stated that Congress intended that "'proper regard,' not finality," be
given to state court determinations.  387 U.S at 464 (quoting S. Rep.
No.  1013, 80th Cong., 2d Sess. Pt. 2, at 4 (1948)).  But there is no
reason to think that Congress intended a different standard under
Section 2053, where the language of the statute directs an inquiry
into state law.  Indeed, the longstanding regulations under Section
2053 essentially establish a "proper regard" standard for state court
decrees in that they provide that such a decree "will ordinarily be
accepted if the court passes upon the facts upon which deductibility
depends" and they establish a presumption that the court actually
passed on the merits "in all cases of an active and genuine contest"
(Treas. Reg. Section 20.2053-1(b)(2)).

   /15/ Section 2053 in no way suggests that the government (and,
consequently, the federal court) should be bound by factual
determinations in a state proceeding in which it was not a party,
contrary to normal principles of collateral estoppel.

   /16/ Indeed, Justice Harlan, in his dissent in Estate of Bosch,
understood the Court's decision "to require federal courts to examine
for themselves, absent a judgment by the State's highest court, the
content in each case of the pertinent state law" (387 U.S. at 479
(emphasis added)).  See also id. at 480.

   /17/ In fact, petitioner's assertion (Br. 35-36) that "the
Surrogate's discretionary fee allowance can never be reviewed by the
New York Court of Appeals" is not correct.  See N.Y. Const. art. VI,
Section 3(b)(1).  Even if it were correct, however, the most that
could be argued is that in applying Estate of Bosch to attorney's fee
awards in New York, the Appellate Division should be regarded as the
"highest court of the state" for those limited purposes.  But that
argument has no relevance here.  Whether the Surrogate Court's
decision is reviewable on appeal only by the Appellate Division, or
also by the New York Court of Appeals, it is clear that its decree is
that of a state trial court subject to appellate review, which is not
binding on a federal court.

   /18/ See Groppe, The "New" Putnam Rule:  Problems Facing the
Attorney/Legatee/Fiduciary, 61 N.Y.St. B.J. 18, 24-27 (1989);
deFuria, A Matter of Ethics Ignored:  The Attorney-Draftsman as
Testamentary Fiduciary, 36 U. Kan. L. Rev. 275, 304-308 (1988);
Gentle, Lawyers as Executors and Trustees:  Snakes and Ladders, 36
Ala. Law. 94 (Mar.  1987);  Johnston, An Ethical Analysis of Common
Estate Planning Practices -- Is Good Business Bad Ethics?, 45 Ohio St.
L.J. 57 (1984);  Fanning, Fee-busting, Forbes, Sept. 7, 1987, at 64.
Indeed, Judge Michael Telesca, the federal district judge who decided
this case and who formerly served as Monroe County Surrogate, has
recommended to the New York State Law Revision Commission that New
York law be amended to prohibit one person from serving as both
attorney and executor for an estate.  See Dougherty, Double-Dipping:
Legal but Unjust, Rochester Democrat and Chron., Oct. 4, 1987, at 15A,
col. 1.

   /19/ See Stinson, Monroe Estate Handling Faulted, Rochester
Democrat and Chron., Apr. 7, 1988, at 1B, col. 2;  Dougherty, Court
Publicly Rebukes Rochester Lawyer, Rochester Democrat and Chron., Mar.
5, 1988, at 6B, col. 1;  Dougherty, Double-dipping:  Legal but Unjust,
Rochester Democrat and Chron., Oct. 4, 1987, at 15A, col. 1;
Dougherty, Double Trouble in Staid World of Estate Lawyers, Rochester
Democrat and Chron., Aug. 9, 1987, at 1A, col. 4.

   /20/ See also In re Lieberman's Estate, 151 N.Y.S.2d 166 (Surr. Ct.
 Westchester County 1956);  In re Free's Will, 4 Misc. 2d 463, 148
N.Y.  S.2d 884 (Surr. Ct. Westchester County 1956);  In re Scher's
Estate, 147 Misc. 791, 264 N.Y.S. 579 (Surr. Ct. Westchester County
1933);  In re Owen's Estate, 144 Misc. 688, 259 N.Y.S. 892 (Surr. Ct.
Richmond County 1932).

   /21/ Approval of the fee on such a sparse record would not be
permitted today in New York.  Section 207.45(a) of the Uniform Rules
for New York State Surrogate's Courts now provides that, in any
proceeding for the determination of an attorney's compensation, there
shall be filed an affidavit of services stating in detail the services
rendered, the time spent, and the method or basis by which the
requested compensation was determined.  See also Section 207.59
(requiring accounting).

   /22/ The New York State Surrogate's Court located in Queens County
adopted a rule requiring a fiduciary who is also an attorney to file
an accounting within one year of his appointment.  The Surrogate there
noted that this rule "was prompted by the numerous complaints over the
years involving the nomination and performance after appointment of
attorneys as fiduciaries of estates." In re Estate of Stalbe, 130
Misc.  2d at 726, 497 N.Y.S.2d at 239.  The Surrogate further stated
(ibid.):  "In the experience of this Court, the vast majority of
estates are settled informally by Receipt and Release with no judicial
review of the fairness of the fees charged.  In this fashion, the
carefully crafted statutory safeguards are, practically speaking(,)
ignored." See also Groppe, The "New" Putnam Rule:  Problems Facing the
Attorney/ Legatee/Fiduciary, 61 N.Y. St. B.J. 18, 27 (1989);  In re
Moore, 139 Misc. 2d 26, 28, 526 N.Y.S.2d 377, 379 (Surr. Ct. Bronx
County 1988).

   /23/ The amount of the attorney's fee in this case also gave rise
to some concern that the Surrogate had not determined that it was
based entirely on services not the responsibility of the executor.  As
an example of the "liberal(ity)" of practice in Monroe County, the
chairman of the New York Bar Association's Trust and Estate Laws
Section noted his impression that, "in Monroe County, they (judges)
will go pretty much up to what an executor (fee) will be." Dougherty,
Double Trouble in Staid World of Estate Lawyers, Rochester Democrat
and Chron., Aug. 9, 1987, at 1A, col. 7.  New York law, of course,
requires that an attorney's fee be based on the services rendered, not
computed as a percentage of the value of the estate like the
executor's commission.  Here, the approved executor's commission,
computed on a percentage basis, was $17,548.  The approved attorney's
fee was $16,800, and the Surrogate stated, without explanation, that
he would have approved up to $17,500 (see J.A. A38).

   /24/ Petitioner (see Br. 6, 14, 19) repeatedly accuses the IRS of
seeking to apply a uniform federal standard of reasonableness to the
deductibility of attorney's fees.  There is no basis for this
accusation.  First, this is merely a summons enforcement proceeding,
which presents no occasion for consideration of the standard of review
to be applied with respect to the merits of the deduction.  In any
event, the government in the court of appeals explicitly eschewed any
intention to apply a uniform federal standard (see, e.g., C.A. Reply
Br. 12).  Indeed, from the beginning of this controversy, respondent
Serling's requests for information from petitioner cited the New York
Court of Appeals decision in In re Freeman, supra, as the framework
for IRS investigation of the validity of the deduction.  See J.A.
A32-A33.

   Most of the authority cited by petitioner (Br. 27-28) and amici
(Br.  14-16) on this point pertains to Treas. Reg. Section
20.2053-3(a), which provides that "administration expenses" under the
statute must be for the benefit of the estate, rather than the benefit
of the beneficiaries.  This regulation, which arguably establishes a
federal standard for determining what types of expenses are
encompassed by Section 2053, is addressed to a question not implicated
here -- viz., whether the expenses in question are, in fact, expenses
of administering the estate.  See Estate of Smith v. Commissioner, 510
F.  2d at 482-483;  see also Pitner v. United States, 388 F.2d 651,
659 (5th Cir. 1967) (suggesting possibility of federal standard where
state law "fails in adequately representing the interest of the
federal government").

   By the same token, there is no merit to petitioner's charge (Br.
19) that the IRS intends to apply a "timesheet-and-hourly-rate
approach to attorneys' fees" in defiance of state law.  It is true, of
course, that time records were among the records requested by the
summons, but those records are manifestly relevant under state law to
consideration of the reasonableness of a claimed fee.  The first of
the factors listed in In re Freeman is "time and labor required." See
34 N.Y. 2d at 9, 311 N.E.  2d at 484, 355 N.Y.S.2d at 341.

   /25/ Nor is there any reason to believe that it will be
"commonplace" (see Pet. Br. 21) for federal courts to second-guess
Surrogate's fee awards to the detriment of the estate, thus leading to
"an explosion of penny-ante litigation" (Pet. Br. 43).  As long as it
appears that the Surrogate has duly considered the relevant facts and
not committed some egregious error, there is no reason to expect that
federal district courts would often conclude -- or would often be
asked by the IRS to conclude -- that the fee awarded by the Surrogate
is not allowable under state law.  Indeed, although some additional
docketed cases are presently pending, we are aware of only three
reported cases in which the IRS has challenged a claimed deduction for
administration expenses on the ground that the attorney's fee was
excessive.  See Estate of DeWitt v. Commissioner, 54 T.C.M. (CCH) 759
(1987);  Bank of Nevada v. United States, supra;  First National Bank
v. United States, supra.

   Petitioner's citation of his own refund action in this connection
is unpersuasive since that litigation is a direct consequence of
petitioner's refusal to comply with the summonses.  Because the IRS
was unable to investigate the basis for petitioner's fee before the
expiration of the three-year statute of limitations on assessments (I.
 R.C. Section 6501), it was forced to issue a notice of deficiency on
incomplete information disallowing the entire claimed attorney's fee;
petitioner then challenged that determination by filing a refund suit
in district court.  Had petitioner instead complied with the summons,
the IRS's investigation might have resulted in a determination of no
deficiency.

   APPENDIX