Valuing a Favorite (Rich) Son

In the eight years since the death of Billionaire Howard Hughes, the state of Texas, where Hughes was born, has claimed him as a resident and dunned his estate for inheritance taxes and penalties of $100 million--despite the fact, acknowledged by Texas officials, that Hughes spent no more than 48 hours in the state after 1926. Disputing Texas' claim was California, where Hughes lived between 1925 and 1966, and where the inheritance-tax rate is 24% compared with Texas' 16%. California coveted a possible tax bite of $180 million.

After spending millions in legal fees and twice going to the Supreme Court, officials of both states last week announced they had joined with the estate to reach a compromise: Texas will receive $50 million; California, $44 million in cash plus a $75 million parcel of land near Los Angeles International Airport. Texas' Attorney General Jim Mattox boasted that the settlement would finance the state's annual cost of operating the agriculture department, the public utilities commission and the attorney general's office. Less ecstatic was Hughes' cousin William Lummis, who is administering the estate on behalf of 32 heirs. Said he: "I think they nicked us pretty good"