Bell-Cahill v. v. Comm'r of Internal Revenue (In re Estate of Bell)
| Decision Date | 30 March 1989 |
| Docket Number | 11160-86.,Docket Nos. 11159-86 |
| Citation | 92 T.C. No. 40,92 T.C. 714 |
| Parties | ESTATE OF LAURA V. LARSEN BELL, DECEASED, LAUREL V. BELL-CAHILL, EXECUTRIX, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, RespondentLAUREL V. BELL-CAHILL, EXECUTRIX, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Ps elected, under section 6166, I.R.C. 1954, to pay a portion of their respective Federal estate tax liabilities on the installment basis. Ps erred in valuing the property with respect to which estate taxes were being paid on the installment basis, and thereby erred in determining their schedules of payment required by section 6166. By reason of such errors, the installment payments each P made exceeded the installment payments which properly should have been made by each. Also by reason of such errors, the total amount each P has paid exceeds their respective total Federal estate tax liabilities. Despite R's original determinations of deficiency with respect to each P, the parties now agree that there has been an overpayment by each P. The parties disagree, however, as to the amounts of such overpayments.
HELD, insofar as R's denial to Ps of the continued benefits of section 6166 impact upon the amounts of Ps' overpayments, we have jurisdiction to determine the propriety of R's denial thereof. Sec. 6512(b)(1). Cf. Estate of Meyer v. Commissioner, 84 T.C. 560 (1985); Estate of Sherrod v. Commissioner, 82 T.C. 523 (1984), revd. on other grounds774 F.2d 1057 (11th Cir. 1985). See also Estate of Heffley v. Commissioner, 89 T.C. 265, 275-276 (1987).
HELD FURTHER, the amount of each P's overpayment must be determined through an application of section 6403. John Gigounas and Edward B. Simpson, for the petitioners.
Margaret A. Martin, for the respondent.
Respondent determined a deficiency in Federal estate taxes for the Estate of Laura V. Larsen Bell in the amount of $1,143,839.00, and for the Estate of Charles C. Bell in the amount of $1,130,668.00.
These cases were consolidated for briefing and opinion and were submitted fully stipulated pursuant to Rule 122. 1 The stipulated facts and the exhibits attached thereto are incorporated herein by reference. After concessions, 2 the issue for decision is the amount by which each petitioner has overpaid its respective estate taxes and interest.
Laura V. Larsen Bell and Charles C. Bell (Mrs. Bell and Mr. Bell, respectively) resided in Sacramento, California, at the times of their deaths. Mrs. Bell died on February 18, 1982, approximately two months prior to Mr. Bell's death on April 21, 1982. Laurel V. Bell-Cahill (the Executrix), a resident of Sacramento, California, at the time the petitions in these cases were filed, is the executor of both the Estate of Laura V. Larsen Bell and the Estate of Charles C. Bell (Mrs. Bell's Estate and Mr. Bell's Estate, respectively, or ‘petitioners,‘ collectively).
Mrs. Bell's Estate timely filed a Federal estate tax return on February 22, 1983, as did Mr. Bell's Estate on April 21, 1983. Mr. and Mrs. Bell owned and operated, as principal stockholders, a closely-held California corporation known as Charles C. Bell, Inc. (Bell, Inc.). In its original estate tax return, as an amount includable in the gross estate, Mrs. Bell's Estate reported that its Bell, Inc. stock had a value of $2,497,881.00. Mr. Bell's Estate reported, in its original estate tax return, that the Bell, Inc. stock includable in its gross estate had a value of $2,492,279.00.
At the time of filing the estate tax returns for Mrs. and Mr. Bell's estates, the Executrix made a proper and timely election to defer payment of a portion of the estate tax liability reflected on such returns, pursuant to section 6166. In accordance with such election, petitioners were permitted to spread the payment of a portion of their taxes — i.e., that portion of their estate taxes attributable to a closely-held business — over a period of fourteen years. For the first four of such fourteen years, petitioners were required to pay only interest 3 on the taxes deferred. For the succeeding ten years, petitioners were then required to pay the taxes deferred, in ten equal installments, plus interest on the taxes remaining unpaid. The portion of estate tax liability which the Executrix elected to defer for each petitioner under section6166 was that portionattributable to the value of the stock each held in Bell, Inc.
Mrs. Bell's Estate originally reported an estate tax liability of $1,085,519.00. Mr. Bell's Estate originally reported an estate tax liability of $1,111,672.00. The portion of estate tax liability the Executrix elected to defer on each petitioner's behalf, and the installment payments of tax elected to be made by each petitioner, were as follows:
Each petitioner's election under section 6166, in the form such election was made on their respective estate tax returns, was accepted by respondent as permissible under that section.
In accordance with their estate tax returns and the section 6166 elections made thereon, the Executrix made payments of tax and interest to respondent on each petitioner's behalf, as of the time this case was submitted for decision, as follows:
On August 16 and August 14, 1985, respectively, Mrs. Bell's Estate and Mr. Bell's Estate filed with respondent claims for refunds of estate taxes. Petitioners' claims for refund were based upon, inter alia, an adjustment to the value of the Bell, Inc. stock allegedly includible in each of Mr. and Mrs. Bell's respective gross estates. Each such claimed adjustment was due to a second appraisal, which the Executrix caused to be performed, of...
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