- 45 -
67 days thereafter), they were imposed on the same item (the same
shares of stock), in the sense that the date-of-death value of
the shares was a necessary element in determining the amount of
the liability for both taxes. Whether they were imposed on the
same “transaction” can be debated, and is addressed below.
In the absence of any decision by the Supreme Court on the
subject since Rothensies v. Electric Storage Battery Co., supra,
the interpretation and application of the single-transaction
requirement has largely been left to the lower courts, resulting
in two lines of conflicting authority.
The two cases on which petitioner largely relies are United
States v. Bowcut, 287 F.2d 654 (9th Cir. 1961) and United States
v. Herring, 240 F.2d 225 (4th Cir. 1957). Both these cases, like
the case at hand, concerned the estate tax and the income tax,
and the two taxes had not been imposed on the same taxable event.
Nevertheless, in both cases the single-transaction requirement of
equitable recoupment was held to be satisfied, and equitable
recoupment was applied in the taxpayers’ favor. In each case,
after a death, estate tax was paid and thereafter the Government
sought additional income tax from the estate for income not
reported during the decedent's lifetime. After paying the income
tax, the estate sued for refund of income tax on the ground that
it was entitled to equitable recoupment of the overpayment of
then time-barred estate tax resulting from the estate's failure
to claim the increased income tax liability as a debt in
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