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overpayment of income tax made by the Bessie I. Mueller
Administration Trust (the Administration Trust). This income tax
overpayment was attributable to the overstated gain the
Administration Trust reported on the sale of the shares because
it failed to take into account the step-up in basis resulting
from respondent’s estate tax determination, as modified by our
holding in Mueller I, and then failed to file a timely refund
claim. It thus remained for us to decide whether to apply
equitable recoupment in this case.
When decedent, Bessie I. Mueller, died on March 24, 1986,
her gross estate included 8,924 shares of common stock of Mueller
Co. (the shares).2 Petitioner’s Federal estate tax return,
timely filed on December 23, 1986, reported the date-of-death
fair market value of the shares as $13,430,620, or $1,505 per
share. The total value of decedent’s gross estate reported on
the estate tax return was $14,623,510.
By statutory notice of deficiency issued on November 24,
1989, respondent determined that the date-of-death fair market
value of the shares was $19,186,600, or $2,150 per share. As a
result of this increase in value and other adjustments not in
issue, including respondent's allowance of a credit for tax on
prior transfers, in the amount of $1,152,649, that had not been
2See majority op. p.3 note 1 for a summary of the places of
residence of decedent and her personal representatives and the
trustees of the Administration Trust.
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