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respondent's concession in the notice of deficiency of the credit
for tax on prior transfers that petitioner had failed to claim on
the estate tax return with (2) the valuation of the shares at an
amount that resulted in an overpayment rather than a deficiency.
The relevant circumstances may be briefly summarized. For
estate tax purposes, the estate valued the shares in issue at
$1,505 each. Shortly after decedent's death, the Administration
Trust sold those shares for $2,150 each, computing the gain
realized on the sale using a basis of $1,500 per share, which was
approximately the value claimed for estate tax purposes.
Respondent determined that each share was worth $2,150. In
Estate of Mueller v. Commissioner, T.C. Memo. 1992-284, we found
the value of each share to be $1,700 for estate tax purposes.
Accordingly, the estate underpaid its estate tax by $957,099 as a
result of the undervaluation. However, because the Trust used
$1,500 as the basis of the shares to compute the gain on the
sale, the Trust paid $265,999 more in income tax on the sale of
the shares than it would have if the proper basis of $1,700 per
share had been used. The period of limitations for claiming a
refund of that overpayment of income tax had expired. In the
notice, respondent allowed the estate a $1,152,649 credit for tax
on prior transfers to which it was entitled but had not claimed
on its estate tax return. The credit was completely unrelated to
the issue of the valuation of the shares. If we had sustained
respondent's valuation of the shares, a deficiency would have
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