1991 Tax Ct. Memo LEXIS 64 | Tax Ct. | 1991
1991 Tax Ct. Memo LEXIS 64" label="1991 Tax Ct. Memo LEXIS 64" no-link"="" number="1" pagescheme="<span class=">1991 Tax Ct. Memo LEXIS 64">*64
MEMORANDUM FINDINGS OF FACT AND OPINION
After resolving the underlying issues concerning petitioner's Federal estate tax, 1991 Tax Ct. Memo LEXIS 64" label="1991 Tax Ct. Memo LEXIS 64" no-link"="" number="2" pagescheme="<span class=">1991 Tax Ct. Memo LEXIS 64">*65 respondent issued a notice of deficiency determining an addition to tax under
FINDINGS OF FACT
In our two prior opinions in this case on motions for summary judgment and a motion for reconsideration,
The decedent, Kate S. Wilbanks, died on March 6, 1984. At the time of her death, decedent was a resident of the State of Georgia. The bulk of the decedent's estate consisted of unimproved real property. A Federal estate tax return was due to be filed 9 months after decedent's death on December 6, 1984. During the month prior to the due date, petitioner's representative, Ms. Nickerson, and petitioner's counsel, Mr. Garrett, discussed the fact that a return had to be filed, and they were aware of the approaching filing deadline. Mr. Garrett advised Ms. Nickerson that, because he was experiencing difficulty in valuing the estate, he would not file the return1991 Tax Ct. Memo LEXIS 64" label="1991 Tax Ct. Memo LEXIS 64" no-link"="" number="3" pagescheme="<span class=">1991 Tax Ct. Memo LEXIS 64">*66 on time. The return was not filed until March 8, 1985, some 3 months after it was due. Along with the return, Mr. Garrett sent to respondent an Application for Extension of Time to File U.S. Estate Tax Return and/or Pay Estate Tax. The extension date requested therein was the same day the request was filed -- March 8, 1985. The net estate tax shown to be due was $ 241,479.81.
On the same date Mr. Garrett wrote two letters to respondent, stating in one: We have delayed in filing the Estate Tax Return because we thought some of the property would be sold in time to pay the entire obligation at the time of filing. However, our efforts to sell certain property before filing have not produced any bona fide purchasers. Consequently, we have no idea how much more time is going to be required to consummate enough land sales to realize sufficient funds for the payment of the tax.
Respondent did not approve petitioner's extension application because the return was "due 12/6/84." After discussions between the parties, respondent sent petitioner a bill for estate tax due, interest, and a "penalty" in the amount of $ 50,260.32. The "penalty" consisted at least in part of the addition to tax under
Over the course of the next several months petitioner cooperated in respondent's audit of the estate tax return, and on June 26, 1987, respondent issued a report reflecting the revised tax and interest due. This report also asserted a
On January 6, 1988, respondent issued a statutory notice of deficiency to petitioner, wherein he determined an addition to petitioner's Federal estate tax under
OPINION
In our prior opinions in this case we denied petitioner's motions for summary judgment and for reconsideration, and granted respondent's motion for summary judgment in part, finding that (a) respondent did not abuse his discretion by not approving petitioner's application for an extension1991 Tax Ct. Memo LEXIS 64" label="1991 Tax Ct. Memo LEXIS 64" no-link"="" number="7" pagescheme="<span class=">1991 Tax Ct. Memo LEXIS 64">*70 of time,
Therefore, the sole issue before us is whether, for purposes of
First, petitioner contends that respondent's abatement of the addition to tax precluded its reinstatement because it could only have been so abated if there had been a finding by respondent that petitioner's late filing was reasonable. This presumption is incorrect. General Rule. -- The Secretary may, at any time within the period prescribed for assessment, make a supplemental assessment whenever it is ascertained that any assessment is imperfect or incomplete1991 Tax Ct. Memo LEXIS 64" label="1991 Tax Ct. Memo LEXIS 64" no-link"="" number="9" pagescheme="<span class=">1991 Tax Ct. Memo LEXIS 64">*72 in any material respect.
Documents in the record indicate that respondent had determined that it was premature to assess the addition to tax under
Petitioner also has attempted to make much of Mr. Garrett's contacts with respondent1991 Tax Ct. Memo LEXIS 64" label="1991 Tax Ct. Memo LEXIS 64" no-link"="" number="10" pagescheme="<span class=">1991 Tax Ct. Memo LEXIS 64">*73 to show that Mr. Garrett was treated unfairly, was misled, and that he behaved reasonably under the circumstances. With regard to the unfairness issue, for example, petitioner spends much of its post-trial brief arguing that abatement of the
Petitioner also has failed to meet its burden of proof on the facts. There is very little evidence in the record, other than Mr. Garrett's unproved allegations in his brief, that petitioner in fact experienced an inability to ascertain the value of the estate's assets during the relevant period. While there were a number of self-serving statements during trial by Mr. Garrett to1991 Tax Ct. Memo LEXIS 64" label="1991 Tax Ct. Memo LEXIS 64" no-link"="" number="11" pagescheme="<span class=">1991 Tax Ct. Memo LEXIS 64">*74 that effect, petitioner did not produce any documents, witnesses, or affidavits to demonstrate that any such difficulty actually existed. Mr. Garrett attempted to use the testimony of the Group Manager of respondent's Examination Division, who worked with Mr. Garrett during the estate's audit, to prove that he experienced difficulty in valuing the property and thus was justified in filing a late return. He used this testimony to show that the real estate market was changing rapidly. This alone, however, does not satisfy us that petitioner was unable to place a reasonable value on the property. We do not know if it was appraised prior to the December due date or, if it were, that such an appraisal did not reflect a reasonable value. While Mr. Garrett may have consulted a real estate agent prior to the due date, we do not know whether such a professional could place a value on the property because we do not have any testimony from such an individual. We do not even have in the record the benefit of live testimony or affidavits from Mr. Garrett concerning his attempts to place a value on the property. To the contrary, we note that, attached to the return as filed on March 8, 1985, 1991 Tax Ct. Memo LEXIS 64" label="1991 Tax Ct. Memo LEXIS 64" no-link"="" number="12" pagescheme="<span class=">1991 Tax Ct. Memo LEXIS 64">*75 were a series of comparable real estate sales used to support the values presented in the return. While the Court copies of these figures are for the most part illegible, we strongly suspect that these comparables were available prior to the due date and could have been used to make a reasonable evaluation.
Moreover, even if petitioner had convinced us that Mr. Garrett could not precisely value the property, petitioner has not demonstrated that Mr. Garrett's inability to secure values would constitute "reasonable cause." Petitioner was required to file a timely estate tax return based upon the "'best information available'" and then, if necessary, file an amended return.
Finally, we note that petitioner must bear the responsibility for Mr. Garrett's error in failing to file either a timely return or a timely motion for extension of time. The Supreme Court has made it clear that reliance upon an advisor to prepare and file a timely return does not constitute reasonable cause for purposes of
We sense that much of this entire proceeding, including petitioner's motion for summary judgment, its motion for reconsideration, and the trial on the merits, may have been an attempt on Mr. Garrett's part to compensate for his earlier mistake in missing an important filing deadline. We would direct his attention to section 6673(a)(1) and (2) in connection therewith for any further dealings he may have with the courts on tax matters, although we do not intend to impose any sanctions under that section at this time.
Footnotes
1. Unless otherwise noted, all section references are to the Internal Revenue Code of 1954, as amended and in effect as of the date of the decedent's death, and all Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. Mr. Garrett stated during trial that the filing deadline "slipped [his] mind completely." Apparently he believed that such an error would relieve him of responsibility for meeting filing deadlines. His statement is not evidence, but even if it were it would not help petitioner.↩
3. No one in this proceeding has contended that "willful neglect" was present. Therefore we will not address that issue.↩