Burford v. Comm'r of Internal Revenue , Docket No. 8330-80.

• Court: United States Tax Court
• Writing for the Court: OPINION OF THE SPECIAL TRIAL JUDGE
• Citation: 76 T.C. 96
• Parties: S. FRANKLIN BURFORD, PETITIONER v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT
• Docket Number: Docket No. 8330-80.
• Decision Date: 19 January 1981

76 T.C. 96

S. FRANKLIN BURFORD, PETITIONER
v.
COMMISSIONER of INTERNAL REVENUE, RESPONDENT

Docket No. 8330-80.

United States Tax Court

Filed January 19, 1981.

Respondent issued a notice of deficiency for gift tax for the tax year which ended Dec. 31, 1976. The proper taxable period was the calendar quarter which ended Dec. 31, 1976. Held the notice of deficiency is not invalid because of a typographical error where the deficiency notice sent fully encompassed the proper taxable period, and the petitioner is not misled as to the period covered.

[76 T.C. 96]

S. Franklin Burford pro se.

Barry Lederman for the respondent.

OPINION

[76 T.C. 97]

OPINION OF THE SPECIAL TRIAL JUDGE Cantrel, Special Trial Judge

This case is presently before the Court on petitioner's motion to dismiss for lack of jurisdiction filed on June 2, 1980.

Respondent, in his notice of deficiency issued to petitioner on March 27, 1980, determined a deficiency of $73,326.20 in petitioner's gift tax for the tax year ended December 31, 1976. Petitioner timely filed his petition on June 2, 1980, and on the same day, he filed a motion to dismiss for lack of jurisdiction. Petitioner contends not only that the determination set forth in the notice of deficiency is incorrect but also that he made an overpayment of tax for the calendar quarter ended December 31, 1976, in the amount of $54,240.84. The basis for the motion to dismiss is that the notice of deficiency was issued for the tax year ended on December 31, 1976, but that the statute provides for the imposition of gift tax in calendar quarter periods.

Petitioner resided at Four Stemwinder Townhouse, Snowshoe, W. Va., on the date he filed his petition. He filed a gift tax return with the Internal Revenue Service at Memphis, Tenn., for the calendar quarter ended December 31, 1976. In the top right-hand corner of the cover letter to the notice of deficiency, the standard form reads “Tax Year Ended and Deficiency,” and it is followed by typewriting which reads “December 31, 1976, $73,326.20.” On Form 3615, which is attached to the cover letter and which sets forth the computation in explanation of the increase in tax, the standard form provides “Calendar Periods” under which is typed “12/31/76.” On the form which provides for “Explanation of Items,” Form 886-A, also attached to the notice of deficiency, the standard heading provides “Year/ Period Ended,” under which is typed “12/31/76.”

Respondent's determination of the gift tax deficiency was made on these grounds:

(a) It is determined that your forgiveness of a debt in the amount of $117,199.07 (the remaining unpaid principal on a note given to you by your former wife, Elizabeth Burford, and payable to you) constitutes a taxable gift in this amount pursuant to the provisions of Section 2511 of the Internal Revenue Code. As you did not report this gift, taxable gifts are increased by $117,199.07.

(b) Due to the gift in Item (a) above an additional exclusion of $3,000.00 is allowable.

(c) In December 1976 you transferred $600,000 into an irrevocable trust established by you. Under the terms of the trust agreement your wife Fern

[76 T.C. 98]

Burford was to receive the net income derived from the trust estate during her lifetime and so much of the principal of the trust estate as the trustee might “from time to time determine to be in her best interests.” The remainder interest was to be divided among your lineal descendents upon her death. That interest transferred in trust for the benefit of your wife, valued at $486,786.00, is ineligible for the split gift provisions of Section 2513(a)(1) of the Internal Revenue Code. It is therefore determined that the following gifts are eligible for the split gift provision:

+---------------------------------------------+
                ¦1. Remainder interest in trust ¦$113,214.00¦
                +---------------------------------+-----------¦
                ¦2. Valley Industries—7,000 shares¦49,382.90 ¦
                +---------------------------------+-----------¦
                ¦3. Forgiveness of note ¦117,199.07 ¦
                +---------------------------------+-----------¦
                ¦Total split gifts ¦279,795.97 ¦
                +---------------------------------+-----------¦
                ¦Less 50% ¦139,897.99 ¦
                +---------------------------------+-----------¦
                ¦Split gifts as determined ¦139,897.98 ¦
                +---------------------------------+-----------¦
                ¦Split gifts per return ¦324,691.45 ¦
                +---------------------------------+-----------¦
                ¦Increase taxable gifts ¦184,793.46 ¦
                +---------------------------------------------+
                

With respect to the determined deficiency, petitioner in his petition alleges:

4. The determination of tax set forth in said notice of deficiency and...