- 50 -
The Courts of Appeals have lined up on both sides. In Boyle
v. United States, 355 F.2d 233 (3d Cir. 1965), revg. and
remanding 232 F. Supp. 543 (D.N.J. 1964), after the decedent died
leaving shares of preferred stock, dividend arrearages were added
to their value, and estate tax was paid accordingly. The
distributees, on receiving those dividends, listed them as
nontaxable for income tax purposes, and the Commissioner
determined income tax deficiencies. The distributees paid the
income tax deficiencies and brought a refund suit. The District
Court denied them equitable recoupment against the then time-
barred estate tax, holding that the single-transaction test of
Rothensies v. Electric Storage Battery Co. was not satisfied.
Boyle v. United States, 232 F. Supp. at 549-550. The Court of
Appeals reversed, Boyle v. United States, 355 F.2d at 236,
holding that there had been double taxation of a single item, the
same fund, which sufficed to satisfy the requirements of Bull v.
United States, and that treatment of the same fund as both corpus
and income provided the necessary inconsistency of treatment.
Id. at 235. The Court of Appeals distinguished Rothensies v.
Electric Storage Battery Co. on the ground that the lapse of so
much time there made it more distant from the case before the
14(...continued)
Day Equitable Recoupment and the “Two-Tax Effect”: Avoidance of
the Statutes of Limitation in Federal Tax Controversies, 28 Ariz.
L. Rev. 595, 630-650 (1986); Willis, Some Limits of Equitable
Recoupment, Tax Mitigation, and Res Judicata: Reflections
Prompted by Chertkof v. United States, 38 Tax Law. 625, 642-645
(1985).
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