Siegel v. Comm'r of Internal Revenue (In re Estate of Rosen), 18844–04.
| Citation | 131 T.C. No. 8,131 T.C. 75 |
| Decision Date | 20 October 2008 |
| Docket Number | No. 18844–04.,18844–04. |
| Parties | ESTATE OF Leonard ROSEN, Deceased, Bernice Siegel, Special Administrator, Petitioner v. COMMISSIONER of INTERNAL REVENUE, Respondent. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
On June 4, 2001, D's estate (E) filed D's 2000 Federal income tax return and paid the liability reported on that return. On July 7, 2001, E filed D's Federal estate tax return and paid the liability reported on that return. On Aug. 13, 2001, R mistakenly assessed only part of the liability reported on the income tax return and refunded to E the portion of the income tax payment exceeding that assessment. On or about Aug. 24, 2001, E voided the refund check and returned the check to R with a letter stating that the refund was apparently made in error. On Sept. 3, 2001, R assessed the tax reported on the estate tax return and assessed as to that return additions to tax and interest; these assessments totaled more than the liability reported on the estate tax return. Later in Sept. 2001, after receiving the voided check, R recorded the tax reflected in the voided check as a payment of D's 2000 income tax, thus then showing in R's records that D had overpaid his 2000 income tax. In June 2002, R credited to D's unpaid assessed estate tax liability the income tax overpayment shown in R's records. Later, during this proceeding, R observed that R had not assessed some of the liability reported on D's income tax return and that this amount corresponded to the amount of the overpayment credited to D's estate tax. In Nov. 2005, after the 3–year period of limitations had expired as to D's 2000 income tax, R recharacterized as an income tax payment the amount of the overpayment credited in June 2002 to E's estate tax, thus decreasing E's estate tax payments by a similar amount.
Held: The disputed funds represent a payment of D's Federal estate tax and enter into the calculation of the overpayment of that tax. R was not entitled in Nov. 2005 to recharacterize the disputed funds as R did, given that the 3–year period of limitations for assessment as to D's 2000 Federal income tax had expired before the recharacterization.
Michael R. Morris, for petitioner.
Louis B. Jack, for respondent.
This case is before the Court for decision without trial. See Rule 122. 1 The Estate of Leonard Rosen, Deceased (estate), Bernice Siegel, Special Administrator, petitioned the Court to redetermine respondent's determination of a $39,956 deficiency in Federal estate tax and a $28,968 addition thereto under section 6651(f) (or alternatively section 6651(a)(1)). The parties agree that the estate is entitled to receive an overpayment of Federal estate tax and ask the Court to determine that overpayment. Petitioner asserts that the estate has overpaid its estate tax by $664,088 (without consideration of additional deductions for interest and legal fees which the parties have stipulated the estate may be entitled to, but the amounts of which require a computation under Rule 155). Respondent asserts that the estate has overpaid its estate tax by $396,543 (without consideration of the just-stated additional deductions for interest and legal fees).
Our determination of the amount of estate tax the estate overpaid requires that we decide a single issue. Specifically, we decide whether the estate in calculating its estate tax overpayment may treat as a payment of Federal estate tax, $499,757 that the estate initially tendered to respondent as a payment of the 2000 Federal income tax of Leonard Rosen (decedent). Upon receipt of those funds, respondent recorded the funds as a payment of decedent's 2000 income tax but subsequently applied the funds as an overpayment of decedent's 2000 income tax to the estate's Federal estate tax. Later, during this proceeding, after respondent observed that he had not assessed “interest” under section 1291(c)(1)(B) reported on decedent's 2000 income tax return, respondent unilaterally recharacterized the funds as a payment of decedent's 2000 income tax purportedly to carry out the original intent of the estate in tendering the funds to respondent that the funds be a payment of decedent's 2000 income tax. We hold that the funds now represent a payment of the estate's Federal estate tax and are taken into account in calculating the estate's overpayment of that tax.
Our recitations of fact are based upon the parties' stipulations of fact and the exhibits submitted therewith. We incorporate those stipulations herein by this reference. Decedent resided in California when he died on February 20, 2000. When the petition commencing this case was filed, the special administrator, Bernice Siegel, resided in California.
When he died, decedent's primary asset was a 100–percent interest in a Panamanian corporation named Lantana Corp., Ltd. (Lantana). Lantana owned two Bahamian bank accounts worth approximately $6.5 million. Lantana's address was a post office box in the Bahamas.
On June 4, 2001, the estate filed decedent's 2000 (final) Form 1040, U.S. Individual Income Tax Return (decedent's final income tax return), with respondent's service center in Fresno, California (Fresno Service Center). That return reported that decedent had received an excess distribution during 2000. 2 The estate included as part of decedent's final income tax return a Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualifying Electing Fund, reporting that decedent owed section 1291 tax of $562,633 and section 1291 interest of $498,386.3 The estate also included with decedent's final income tax return a check in the amount of $1,073,654, reportedly as payment of the following items:
+-------------------------------------------------------------+
¦Items ¦Amount ¦
+---------------------------------------------------+---------¦
¦Sec. 1291 tax ¦$562,633 ¦
+---------------------------------------------------+---------¦
¦Sec. 1291 interest ¦498,386 ¦
+---------------------------------------------------+---------¦
¦Failure to pay estimated income tax addition to tax¦44 ¦
+---------------------------------------------------+---------¦
¦Failure to pay timely addition to tax ¦5,620 ¦
+---------------------------------------------------+---------¦
¦Sec. 6601 interest ¦7,564 ¦
+---------------------------------------------------+---------¦
¦Credit for the elderly ¦(593) ¦
+---------------------------------------------------+---------¦
¦Total ¦1,073,654¦
+-------------------------------------------------------------+
Decedent's final income tax return reported the $562,633 as section 1291 tax and included that amount in the $562,040 reported as decedent's total tax for 2000 (i.e., the $562,633 less the $593 credit for the elderly). Decedent reported the section 1291 interest of $498,386 at the bottom of page 1 by typing thereat: “SECT 1291 INTEREST $498,386”.4 On the bottom of page 2, beneath the block stating that it is to be completed by paid preparers only, was the following information:
* * INTEREST NOT INCLUDED 7,564.
* * PENALTY NOT INCLUDED 5,620.
* * * * TOTAL DUE 1,073,654.
Decedent's final income tax return was never audited.
The estate's estate tax return was filed with respondent on July 7, 2001. As part of that return, the estate claimed a deduction of $1,067,990 for taxes paid on decedent's final income tax return (check amount of $1,073,654 less the sum of the additions to tax of $44 and $5,620). Respondent did not disallow any part of that deduction as part of the notice of deficiency. The estate reported on its estate tax return that its estate tax liability totaled $2,068,548 (estate tax of $1,963,261 plus interest of $105,287) and included with the return a check for $2,068,548.
On August 13, 2001, the Fresno Service Center processed the $1,073,654 payment made with decedent's final income tax return. In connection therewith, the Fresno Service Center assessed the reported total income tax of $562,040, the reported failure to pay estimated income tax addition to tax of $44, the reported failure to pay timely addition to tax of $5,620, and section 6601 interest of $6,193 (reflecting a total assessment of $573,897), and refunded the $499,757 balance 5 as an overpayment of decedent's 2000 income tax (plus interest of $1,316) to the estate through a check payable in the amount of $501,073. On August 17, 2001, after the estate had received the refund check, an accountant for the estate notified respondent that the estate believed that respondent in issuing the check had mistakenly not taken into account the section 1291 interest. Approximately 1 week later, the estate voided the refund check and sent it back to respondent with a letter stating that the funds reflected in that check were apparently attributable to section 1291 interest connected with decedent's final income tax return.6
On September 3, 2001, respondent assessed the $1,963,261 shown as tax on the estate tax return and assessed as to that return additions to tax totaling $520,264 and interest of $138,757. Later in September 2001, after receiving the voided check, the Fresno Service Center recorded $499,757 of the funds (i.e., the total amount of the check less the interest of $1,316) as an August 13, 2001, payment of decedent's 2000 Federal income tax, thus showing in respondent's records that decedent had overpaid his 2000 income tax by a similar amount.7 In June 2002, the Fresno Service Center applied the just-referenced $499,757 overpayment as a payment made on June 4, 2001, with respect to the estate's estate tax liability. Beforehand, respondent's records showed an estate tax liability greater than $499,757; the amount showed as owing consisted of...
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Marcy v. Comm'r
...jurisdiction to decide a matter whenever our jurisdiction over that matter is subject to reasonable doubt, see Estate of Rosen v. Commissioner, 131 T.C. 75, 81 (2008). The Court, sua sponte, can question jurisdiction at any time. See Raymond v. Commissioner, 119 T.C. 191, 193 (2002). We alw......
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Estate of Rosen v. Commissioner of Internal Revenue, 131 T.C. No. 8 (U.S.T.C. 10/20/2008), 18844-04.
...131 T.C. No. 8 ... ESTATE OF LEONARD ROSEN, DECEASED, BERNICE SIEGEL, SPECIAL ADMINISTRATOR, Petitioner ... COMMISSIONER OF INTERNAL REVENUE, Respondent ... No ... ...