Estate of Whitt v. Commissioner
| Decision Date | 12 May 1983 |
| Docket Number | Docket No. 13388-78,5422-79.,13389-78 |
| Citation | 46 TCM (CCH) 118,1983 TC Memo 262 |
| Parties | Estate of Audry J. Whitt, Loyd Whitt and Willard Whitt, Administrators, et al. v. Commissioner. |
| Court | U.S. Tax Court |
J. Gilmer Blackburn, P.O. Box 757, Decatur, Ala., for the petitioners. Frank Simmons, for the respondent.
Memorandum Findings of Fact and Opinion
Respondent determined deficiencies in Federal estate and gift tax and additions to tax against petitioners as follows:
Date of Addition
Petitioners Docket No. Death Deficiency to Tax
Estate of Audry J. Whitt, Loyd Whitt Sec. 6653(b)3
and Willard Whitt, Administrators .... 13388-782 2/26/70 $ 19,864.62 $21,966.31
Estate of Elbert B. Whitt, Loyd Whitt, Sec. 6653(b)
Executor ............................. 13389-78 6/14/69 154,437.76 99,627.88
Estate of Elbert B. Whitt, Loyd Whitt, Sec. 6651(a)
Executor ............................. 5422-79 1963 8,934.39 2,233.60
Sec. 6653(a)
466.72
1964 33,826.37 Sec. 6651(a)
8,456.59
Sec. 6653(a)
1,691.32
After concessions by petitioners and respondent, the issues remaining for our consideration are as follows:4
Docket No. 13389-78 (Estate Taxes). 1. Whether Elbert B. Whitt effectively transferred 18 parcels of real property5 during his lifetime so as to preclude their inclusion in his gross estate or, in the alternative, whether Elbert B. Whitt retained the use and possession of, or the right to the 18 parcels of real property, the ownership of which he had otherwise transferred during his lifetime, for a period that did not end prior to his death.
2. Whether Elbert B. Whitt owned at the time of his death, or during his lifetime retained the use and possession of farm equipment with a value of $8,4956 and cattle with a value of $9,003.41, the ownership of which he had otherwise transferred, for a period that did not end with his death.
3. Whether any part of the underpayment of estate taxes of the Estate of Elbert B. Whitt was due to fraud or, in the alternative, whether the Estate is subject to the addition to tax for failure to file an estate tax return under section 6651(a)(1).
4. Whether the Estate of Elbert B. Whitt is entitled to a deduction for attorney fees incurred in connection with the criminal investigation into the failure of Loyd Whitt, as executor, to file the estate tax return.
Docket No. 5422-79 (Gift Taxes). 5. Whether (as an alternative to respondent's position that Elbert B. Whitt did not effectively transfer during his lifetime 18 parcels of real property so as to preclude their inclusion in his gross estate) Elbert B. Whitt transferred during his lifetime real property or interests therein without full and adequate consideration to his children and the heir of his deceased child, which gifts were completed during 1963 and 1964.
6. Whether the value of the gifts completed during 1963 and 1964 was $77,616.61 and $170,431.67, respectively, as determined by the Commissioner.
7. Whether the Estate of Elbert B. Whitt is entitled to the $30,000 lifetime specific gift tax exemption as provided by section 2521 for the wife of the decedent.
8. Whether the Estate of Elbert B. Whitt is subject to the addition to tax for failure to file gift tax returns for 1963 and 1964 under section 6651(a)(1).
9. Whether the underpayments of gift tax for 1963 and 1964 were due to negligence or intentional disregard of rules and regulations within the meaning of section 6653(a).
Docket No. 13388-78 (Estate Taxes). 10. Whether the Estate of Audry J. Whitt understated the value of certain real property owned by the decedent at the time of his death by $21,900.
11. Whether the Estate of Audry J. Whitt is entitled to a deduction for attorney fees incurred in connection with the criminal failure to file charges brought against the co-administrators of the estate.
12. Whether any part of the underpayment of estate taxes of the Estate of Audry J. Whitt was due to fraud or, in the alternative, whether the Estate is subject to the addition to tax for failure to file an estate tax return under section 6651(a)(1).7
Elbert B. Whitt, a resident of Ardmore, Limestone County, Alabama, died on June 14, 1969, at the age of 82. His Will was probated in the Probate Court of Limestone County and his son, Loyd Whitt, who resides in Limestone County, was appointed executor of the Estate. The Estate of Elbert B. Whitt is the petitioner in docket Nos. 13389-78 and 5422-79. A Federal estate tax return for the Estate of Elbert B. Whitt was filed on September 16, 1975, with the Internal Revenue Service Center in Chamblee, Georgia.8 Elbert Whitt did not file Federal gift tax returns for the years 1963 and 1964.
At the time of his death in 1969, Elbert B. Whitt was a widower. His wife, Nellie Myrtle Whitt, died in June of 1966. Elbert had suffered a stroke in December 1968 but recovered to some extent prior to his death 6 months later. Mr. Whitt had six surviving children as of the date of his death: Willard Whitt, Alton Whitt, Mary Whitt Richardson, Audry J. Whitt, Mahlon Whitt and Loyd Whitt. Another son, Thomas Melvin Whitt, predeceased Elbert B. Whitt and left one surviving child, Margaret Ann Whitt.
The following schedule represents joint bank accounts and certificates of deposit, including accrued interest, of Elbert B. Whitt as reported on his estate tax return, and as agreed by the parties that he owned at the time of his death:
Second Name As Agreed
on Account Reported Amount
First Federal Savings & Loan of Decatur, C.D. #7349 ....... Loyd $ 10,000.00 $ 10,000.00
First Federal Savings & Loan of Decatur, C.D. #7074 ....... .... 10,000.00 10,000.00
First Federal Savings & Loan of Decatur, C.D. #7806 ....... Audry 10,000.00 10,000.00
First Federal Savings & Loan of Decatur, C.D. #7072 ....... Loyd 10,000.00 10,000.00
First Federal Savings & Loan of Decatur, C.D. #7073 ....... Ann 10,000.00 10,000.00
First National Bank, Ardmore, Tennessee, C.D. #1532 ....... Mahlon 3,900.00 3,900.00
First National Bank, Ardmore, Tennessee, C.D. #1531 ....... Ann 10,000.00 10,000.00
Security Federal Savings, Huntsville, AL, C.D. #788 ....... Mary 10,153.00 10,153.00
Security Federal Savings, Huntsville, AL, C.D. #214 ....... Alton 10,125.00 10,125.00
First Federal Savings & Loan of Huntsville, C.D. #B-325 ... Alton 10,000.00 10,000.00
First Federal Savings & Loan of Huntsville, C.D. #B-326 ... Audry 10,000.00 10,000.00
First Federal Savings & Loan of Huntsville, C.D. #B-327 ... Mary 10,000.00 10,000.00
First Federal Savings & Loan of Huntsville, C.D. #B-328 ... Willard 10,000.00 10,000.00
First Federal Savings & Loan of Huntsville, C.D. #B-329 ... Mahlon 10,000.00 10,000.00
First Federal Savings & Loan of Huntsville, C.D. #B-704 ... Williard 10,000.00 10,000.00
First National Bank of Pulaski, Tennessee, Passbook Savings
Account .................................................. Alton 10,000.00 10,000.00
State National Central Bank of Alabama, C.D. #511 ......... Audry 10,000.00 10,000.00
State National Central Bank of Alabama, C.D. #510 ......... Mahlon 10,000.00 10,000.00
State National Bank of Alabama, C.D. #193 ................. Loyd 3,716.00 1,858.00
State National Bank of Alabama, C.D. #194 ................. Loyd 6,283.00 3,141.50
State National Bank of Alabama, C.D. #541 ................. Ann 10,000.00 10,000.00
C.D. #1687 ................................................ .... 15,762.00 15,762.00
First National Bank of Pulaski, Ardmore, Alabama, Branch .. .... 12,159.00 7,350.04
First Federal Savings & Loan of Decatur, C.D. #57804 ...... .... —0— 10,000.00
Accrued Interest on Bank Accounts ......................... .... —0— 2,298.74
___________ ___________
Total .................................................. $222,098.00 $224,588.28
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After the death of Elbert B. Whitt, Catherine Riethmaier, the mother and legal guardian of Margaret Ann Whitt, granddaughter of Elbert B. Whitt, received three certificates of deposit in the amount of $10,000 each, issued in the names of "Elbert B. Whitt and/or Ann Whitt." She also received on Ann's behalf $400 in interest which had accrued on one of the certificates of deposit during 1969.
The following schedule represents the notes receivable, including accrued interest, of Elbert B. Whitt as reported on his estate tax return, and as agreed by the parties that he owned at the time of his...
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