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After the estate repaid the employer, it claimed a deduction on
its Federal estate tax return, as well as a credit pursuant to
section 1341(a)(5) on its fiduciary income tax return. In the
Commissioner's view, because the decedent and his estate were
separate taxpayers, section 1341(a) relief was unavailable. See
Rev. Rul. 67-355, 1967-2 C.B. 296, revoked by Rev. Rul. 77-322,
1977-2 C.B. 314.
The District Court rejected the Commissioner's argument and
concluded that section 1341(a) relief was appropriate. The
District Court analyzed the estate and income tax consequences
that would have resulted had the decedent repaid the amount in
issue prior to his death. The District Court explained that the
gross estate would have been decreased by the amount repaid and
increased by the amount of the section 1341(a) credit to which
the estate was entitled. Estate of Good v. United States, supra
at 522. Since both parties acknowledged that the section 1341(a)
credit, if available, would increase the gross estate, the
District Court found that the Government would "not [be]
prejudiced in the collection of the estate tax by the estate's
claiming both an estate tax deduction and an income tax credit on
the same transaction." Id. at 523.
The District Court in Estate of Good reasoned that the
provisions of section 1341(a) should be available to an estate in
order to ensure the same income tax consequences regardless of
whether a taxpayer repays income prior to his death or the estate
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