Nickerson v. Comm'r of Internal Revenue (In re Estate of Wilbanks)

• Decision Date: 06 March 1990
• Docket Number: Docket No. 6751-88.
• Citation: 94 T.C. No. 18,94 T.C. 306
• Parties: ESTATE OF KATE S. WILBANKS, DECEASED, VIRGINIA KATE NICKERSON, PERSONAL REPRESENTATIVE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: U.S. Tax Court

94 T.C. 306

94 T.C. No. 18

ESTATE OF KATE S. WILBANKS, DECEASED, VIRGINIA KATE NICKERSON, PERSONAL REPRESENTATIVE, Petitioner

v.COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 6751-88.

United States Tax Court

Filed March 6, 1990.

HELD: Petitioner's motion for summary judgment, as amended, will be denied. Respondent's cross motion for summary judgment will be granted in part, and denied in part. D. William Garrett, Jr., for the petitioner.

Larry D. Anderson, for the respondent.

OPINION

WHITAKER, JUDGE:

This case is before us on petitioner's motion for summary judgment, as amended, and respondent's cross motion for summary judgment. In his notice of deficiency, respondent determined an addition to petitioner's Federal estate tax under section 6651(a)(1) ¹ in the amount of $54,964.86. Both parties have moved for summary adjudication in their favor on the issue of whether petitioner is liable for the section 6651(a)(1) addition to tax. As a preliminary matter, however, we must decide: (1) whether respondent abused his discretion by not approving petitioner's application for an extension of time within which to file a Federal estate tax return, and (2) if so, whether good and sufficient cause existed for granting such extension.

Under Rule 121(b) summary judgment is appropriate only ‘if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law.‘ See Naftel v. Commissioner, 85 T.C. 527, 529 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982); Espinoza v. Commissioner, 78 T.C. 412, 416 (1982). Summary judgment is intended to expedite litigation by avoiding unnecessary and expensive trials of ‘phantom factual questions.‘ Cox v. American Fidelity and Casualty Co., 249 F.2d 616, 618 (9th Cir. 1957); Shiosaki v. Commissioner, 61 T.C. 861, 862 (1974). However, summary judgment is not a substitute for trial; disputed factual issues are not to be resolved in such proceedings. Espinoza v. Commissioner, supra; Shiosaki v. Commissioner, supra.

Section 6075(a) states that an estate tax return shall be filed within 9 months after the date of decedent's death. In this case the decedent, who was a resident of Georgia at the time of her death, died on March 6, 1984. Accordingly, decedent's estate tax return was required to be filed by petitioner on or before December 6, 1984.

Between May 9, 1984, and September 28, 1984, D. William Garrett, Jr., petitioner' s attorney, communicated on several occasions with Lynn D. Abernathy, manager of respondent's Estate and Gift Tax Group, in Atlanta, Georgia, regarding various matters pertaining to decedent's estate. On September 28, 1984, Mr. Garrett delivered an Application for Certificate Discharging Property Subject to Estate Tax Lien (Form 4422) to Mr. Abernathy. After reviewing such application, Mr. Abernathy provided Mr. Garrett with a Certificate Discharging Property Subject to Estate Tax Lien (Form 792).

An estate tax return showing net estate tax due in the amount of $241,479.81 was filed by petitioner on March 8, 1985, in the office of the Estate and Gift Tax Group in Atlanta, Georgia, by hand delivery to Mr. Abernathy. Accompanying the estate tax return was an Application for Extension of Time to File U.S. Estate Tax Return and/or Pay Estate Tax (Form 4768) pursuant to which petitioner applied for an extension of time to file under section 6081 and an extension of time to pay under section 6161. In both instances, the extension date requested by petitioner in such application was March 8, 1985. Also on the day the estate tax return was filed, Mr. Garrett wrote two letters to respondent. In one letter, Mr. Garrett requested approval of an extension of time for payment of the amount due after explaining that filing of the estate tax return had been delayed in hopes of selling certain real estate to realize sufficient funds to make such payment. In the other letter, Mr. Garrett offered further explanation of why the return was filed after the due date and requested a 1-year extension of time for payment of estate tax. ²

Thereafter, respondent sent petitioner a copy of Form 4768 showing that petitioner's application had been received on March 14, 1985, and completed by respondent on March 15, 1985. Neither the application for an extension of time to file nor the application for an extension of time to pay was approved. In both instances, the reason respondent gave for not approving the applications was because ‘due 12/6/84.‘ Mr. Garrett telephoned Mr. Abernathy, discussed the disapproval of petitioner's application for extensions, and followed up the telephone communication with a letter dated March 28, 1985.

Pursuant to a ‘Correction Notice -- Amount Due IRS‘ (Form 4428) dated May 6, 1985, respondent billed petitioner $311,254.25 for estate tax in the amount of $245,172.29, penalty ³ in the amount of $50,260.32, and interest in the amount of $15,821.64. Subsequently, Mr. Garrett and Mr. Abernathy communicated with each other regarding assessment of the addition and interest. In a memorandum dated May 17, 1985, Mr. Abernathy notified the Centralized Service Branch, Closing Unit, that pending an Examination Division determination no addition should have been assessed. Mr. Abernathy also indicated therein that petitioner had been assured that no addition would be determined until all facts surrounding the delinquency were discussed with an estate tax attorney. For those reasons, Mr. Abernathy requested abatement of the addition so that petitioner's ‘present bill only reflects tax and interest.‘ By letter dated June 3, 1985, respondent informed Mr. Garrett that such abatement had been made, and provided him with a ‘payoff‘ figure of $268,435.33. That figure included estate tax in the amount of $245,172.29 and interest through August 31, 1985, in the amount of $23,263.04. Pursuant to a ‘Statement of Adjustment To Your Account‘ (Form 4188A) dated July 1, 1985, respondent notified petitioner that as of that date the amount due after adjustment for abatement of the addition was $263,546.31.

On August 5, 1985, Mr. Garrett presented Mr. Abernathy another Application for Certificate Discharging Property Subject to Estate Tax Lien (Form 4422). Such application was made pursuant to a contract for the sale of realty by petitioner. Mr. Abernathy approved the application and delivered a Certificate Discharging Property Subject to Estate Tax Lien (Form 792), dated August 14, 1985, to Mr. Garrett.

On August 15, 1985, petitioner issued a check in the amount of $267,144.27 to the Internal Revenue Service as payment for the net estate tax due as reported on the estate tax return and the interest accrued thereon to that date. By letter dated February 4, 1986, respondent informed petitioner that the estate tax return had been selected for examination. Over a year later, the parties reached an agreement regarding the value of certain real property which necessitated an increase in decedent's estate tax. Petitioner subsequently received a copy of a Report of Estate Tax Examination Changes (Form 1273), dated June 26, 1987, which reflected a net estate tax increase in the amount of $29,652.03 and a section 6651(a)(1) addition in the amount of $54,964.86.

By letter dated July 24, 1987, Mr. Garrett confirmed petitioner's agreement with the increase in estate tax but denied petitioner's liability for the addition. In his letter, Mr. Garrett requested reconsideration of the addition and enclosed certain documents regarding petitioner's position with respect thereto. A copy of a Report of Estate Tax Examination Changes (Form 1273), dated August 19, 1987, which reflected only the net estate tax increase in the amount of $29,652.03 and not the section 6651(a)(1) addition, was filed with the State of Georgia Income Tax Unit, Trust and Estate Section. Petitioner subsequently obtained a copy of such report.

On August 20, 1987, Mr. Garrett wrote a letter to respondent with which he enclosed petitioner's payment of all remaining estate tax due and the interest accrued thereon. Mr. Garrett repeated in such letter his request for reconsideration of the addition to tax, and further requested prompt issuance of a notice of deficiency if such reconsideration was not to be forthcoming. On December 22, 1987, Mr. Garrett wrote a letter to respondent's District Director in Atlanta, Georgia, regarding the section 6651(a)(1) addition. The District Director responded to Mr. Garrett by letter dated January 20, 1988.

On January 6, 1988, respondent issued a notice of deficiency pursuant to which he determined an addition to petitioner's Federal estate tax under section 6651(a)(1) in the amount of $54,964.86. Petitioner filed a timely petition with this Court. On September 16, 1988, petitioner paid the addition and accrued interest thereon ($81,361.22), but informed respondent that petitioner's liability for such addition remained in dispute.

In support of its motion for summary judgment, petitioner argues, in effect, that respondent abused his discretion by not approving petitioner's application for an extension of time to file. In that connection, petitioner alleges that respondent disapproved its application for an extension without considering the grounds upon which such application was based. Petitioner further alleges that respondent disapproved such application because it was made after what otherwise was the due date of decedent's estate tax return. Respondent, on the other hand, argues that he did not abuse his discretion by not approving petitioner's application for an extension of time to file, since such application was made over 3 months after the ordinary due date of decedent's estate tax return.

Whether respondent abused his discretion by not approving petitioner's application for an...