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Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . 27
Discussion . . . . . . . . . . . . . . . . . . . . . . . . 37
1. Refund Time-Barred . . . . . . . . . . . . . . . . . . 39
2. Single Transaction . . . . . . . . . . . . . . . . . . 42
3. Inconsistent Treatment . . . . . . . . . . . . . . . . 60
4. Identity of Interest . . . . . . . . . . . . . . . . . 63
5. Statutory Mitigation . . . . . . . . . . . . . . . . . 65
6. Other Equitable Considerations . . . . . . . . . . . . 68
7. Overpayment Status . . . . . . . . . . . . . . . . . . 69
i. Code sections are no obstacle
to recoupment . . . . . . . . . . . . . . .. . 71
ii. Recoupment's defensive nature and
the unrelated overpayment don't
bar recoupment . . . . . . . . . . . . . . . . 72
iii. Barring recoupment would be inconsistent
with tax precedent . . . . . . . . . . . . . . 84
iv. Barring recoupment would be inconsistent
with other precedent . . . . . . . . . . . . . 88
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . 98
Background
In Estate of Mueller v. Commissioner, T.C. Memo. 1992-284
(Mueller I), we redetermined the increased value of shares of the
Mueller Co. included in the gross estate of Bessie I. Mueller
(decedent). In Estate of Mueller v. Commissioner, 101 T.C. 551
(1993) (Mueller II), we held that this Court is authorized to
apply equitable recoupment and therefore denied respondent’s
motion to dismiss for lack of jurisdiction those paragraphs of
petitioner’s amended petition asserting its right to equitable
recoupment. Petitioner’s claim for equitable recoupment would
reduce the additional estate tax arising from an increase in the
estate tax value of the shares by the amount of a time-barred
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