Estate of Walker v. Comm'r of Internal Revenue

• Decision Date: 11 February 1988
• Docket Number: Docket No. 703-86.
• Citation: 90 T.C. 253,90 T.C. No. 19
• Parties: ESTATE OF HENRY WALKER, BY MYRNA J. HARMS, PERSONAL REPRESENTATIVE , Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: U.S. Tax Court

90 T.C. 253

90 T.C. No. 19

ESTATE OF HENRY WALKER, BY MYRNA J. HARMS, PERSONAL REPRESENTATIVE , Petitioner

v.COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 703-86.

United States Tax Court

Filed February 11, 1988.

HELD: A notice of deficiency addressed to an estate mailed within three years of the date of the filing by decedent of his Federal income tax return is valid and timely absent a proper request for prompt assessment in accordance with the provisions of section 6501(d), Internal Revenue Code of 1954, even though the personal representative of the estate has been discharged and the assets of the estate have been distributed when the notice was mailed; HELD FURTHER, the ratification by the personal representative after her reappointment of the timely petition which was filed on behalf of the estate by an attorney cures any jurisdictional defects that may have existed by virtue Donald K. Robertson, for the petitioner.

Randall E. Heath, for the respondent.

OPINION

SCOTT, JUDGE:

Respondent determined a deficiency in the income tax of the Estate of Henry Walker for the taxable year 1982 in the amount of $33,025.

The issues for decision are whether a notice determining a deficiency in the income tax for the calendar year 1982 of Henry Walker, issued on October 4, 1985, to ‘Estate of Henry Walker, Deceased, Myrna J. Harms,‘ is a timely and valid notice of deficiency and, if it is, whether upon the filing of a petition from that notice of deficiency,we acquired jurisdiction to make a determination in this case.

All of the facts have been stipulated and are found accordingly:

Petitioner in this case is the Estate of Henry Walker by Myrna J. Harms, personal representative. Henry Walker was an individual who died in Portland, Oregon on March 14, 1984. Myrna J. Harms was appointed as the personal representative of the Estate of Henry Walker on April 2, 1984. Myrna J. Harms has been domiciled in Oregon at all times relevant to this case.

A notice of deficiency was issued to the Estate of Henry Walker, Deceased, Myrna J. Harms, on October 4, 1985. Henry Walker (decedent) filed an income tax return for the calendar year 1982, on or about April 15, 1983. No written request was made by the Estate of Henry Walker for a prompt assessment of taxes pursuant to Section 6501(d). ¹

During the taxable year 1982, decedent received interest from Western Savings and Loan Bank of $32,039, of which $30,184 was reported on his income tax return for that year. Also during the taxable year 1982 decedent received $11,724 of interest from the First Interstate Bank, of which $10,907 was reported on his return. On February 16 and 17, 1982, decedent redeemed 40 Treasury bonds. Decedent received interest on the 40 Treasury bonds in 1982 of $77,143, of which $3,968 was reported on his 1982 income tax return.

Myrna J. Harms, as personal representative of the Estate of Henry Walker, gave notice to creditors as provided by Oregon statute, directing all persons having claims against the estate to present their claims to the personal representative within 4 months of the notice. This notice was published three times as required by Oregon law, the last publication date being on April 18, 1984. The United States filed no claims based on decedent's 1982 income tax liability during the 4-month period specified by the notice to interested persons.

On December 12, 1984, the personal representative made distribution of the assets of the estate in accordance with the order of the court. The estate was closed and the personal representative discharged. Decedent failed to report on his 1982 Federal income tax return $75,847 in interest income which should have been reported on that return.

On January 9, 1986, a petition in this case was filed under the name Estate of Henry Walker, Deceased, Petitioner v. Commissioner of Internal Revenue, Respondent. The petition was signed by the attorney who represents petitioner herein. The allegations in the petition did not contest the merits of the deficiency determined by respondent, but alleged that the notice sent to the Estate of Henry Walker was not timely, since it was mailed after the final distribution of the estate was made, and the personal representative was discharged. ²

Respondent on February 28, 1986, filed his answer, in which most of the allegations of the petition were denied for lack of knowledge with a statement that the administrative file had not been received by counsel. Respondent affirmatively alleged that the determination of the deficiency was not barred by the statute of limitations.

When this case was called for trial at Portland, Oregon on January 20, 1987, counsel for respondent stated that the caption of the case should be amended to include Myrna J. Harms as personal representative of the estate. Counsel for the parties agreed to attempt to stipulate to a proper caption for the case. By order dated March 30, 1987, the caption of the case was amended to read as above shown.

On August 7, 1987, respondent filed a motion to dismiss this case for lack of jurisdiction reciting that at the date of the filing of the petition, there was no personal representative of the Estate of Henry Walker authorized to file a petition on behalf of the estate. Respondent alleged in the motion that Oregon law provided for reopening of the estate of a decedent for the purposes of performing any necessary act, and that counsel for respondent had requested counsel for petitioner to reopen the estate pursuant to this Oregon statute, but that to date the estate had not been reopened. Petitioner objected to the motion and asked for additional time to reopen the estate.

Based upon a petition of Myrna J. Harms, the Circuit Court of the State of Oregon for the county of Multnomah, in which the matter of the Estate of Henry Walker was pending, entered an order that the estate ‘be and it hereby is‘, reopened for the purpose of litigating claims of the Internal Revenue Service and that Myrna J. Harms is reappointed as personal representative, without bond.

After entry of the order reopening the estate and reappointing Myrna J. Harms, personal representative, respondent filed a notice with the court that he had no objection to the denial of his motion to dismiss for lack of jurisdiction, filed August 7, 1987, and on November 9, 1987, that motion was denied.

The record shows that October 4, 1985, the date of the mailing of the notice of deficiency to the Estate of Henry Walker, was well within the period of 3 years after decedent had filed his Federal income tax return for the calendar year 1982.

In Patz Trust v. Commissioner, 69 T.C. 497 (1977), we held that a notice of deficiency of income tax of a trust sent to trustees of the trust after all of the assets of the trust had been distributed and the trust terminated, was a valid notice, since the required notice under section 6903 of discharge of the trustee had not been sent to the Commissioner. In Estate of Sivyer v. Commissioner, 64 T.C. 581 (1975), we held that a notice of a deficiency in estate tax was properly sent to the estate even though the executor had been discharged under section 2204(a) from personal liability for estate tax imposed upon him in his capacity as executor. In that case we stated (at 583):

Shank, in his representative capacity, was the proper party unless prior to the mailing of the deficiency notice his fiduciary capacity as executor was terminated, and he gave respondent written notice of that termination in accordance with section 6903 and the regulations thereunder. * * *

Since the record in this case does not show that the personal representative of the Estate of Henry Walker gave respondent any notice of her discharge in accordance with the provisions of section 6903 the above discussed two cases would dispose of the issue in the instant case. However, in our view, the broader issue is whether, absent a proper request for prompt assessment under the provisions of section 6501(d), ³ the 3-year statute for assessment of income tax against...