- 12 -
The Government would have brought suit in the District Court
against the taxpayer for the amount of additional estate tax that
it claimed--$1,985,624. Assuming that the District Court found a
$1,700 per share value for the stock, as opposed to the $2,150
alleged by the Government, there would be a judgment that the
taxpayer owed no tax debt to the Government.11 As a result, the
Government would totally lose its claim as plaintiff. Once the
Government's claim for additional tax was shown to be meritless,
the purely defensive use of recoupment would not be available to
allow the taxpayer to recover any portion of the time-barred
overpayment of income tax. To allow recoupment in this situation
would go beyond its exclusively defensive nature and beyond the
District Court's jurisdiction.12
In the instant case, as in Bull v. United States, supra, the
Government's claim for additional tax is embodied in its
deficiency determination. However, as previously explained, when
the stock is valued at $1,700 per share, there is no additional
tax due. As a result, the Government does not have a valid claim
11The combination of increasing the taxable estate and
allowing the credit for prior transfers would produce the same
result that we arrive at here--petitioner has no additional
estate tax liability; rather, petitioner has overpaid its estate
tax and would be entitled to a refund.
12No suit or counterclaim can be brought against the United
States where the subject of the suit or counterclaim is barred by
the statute of limitations. This bar is jurisdictional in
nature. A narrow exception is the availability of recoupment as
a defense against an action brought by the United States. United
States v. Dalm, supra at 608.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011