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Irene Scott Carroll, for respondent.
SUPPLEMENTAL OPINION
LARO, Judge: The dispute herein involves the Rule 155
computation mandated by the Court's Memorandum Opinion filed as
Estate of Trompeter v. Commissioner, T.C. Memo. 1998-35. The
issue before the Court is one of first impression; namely,
whether an estate's underpayment for purposes of computing the
fraud penalty is determined based solely on expenses which are
included on the Federal estate tax return, or based on all
deductible expenses including deficiency interest and
professional fees which arise after the filing of the return.
We hold that the underpayment is determined by taking into
account all expenses. Unless otherwise stated, section
references are to the applicable provisions of the Internal
Revenue Code. Rule references are to the Tax Court Rules of
Practice and Procedure. Estate references are to the Estate of
Emanuel Trompeter. Mr. Trompeter (the decedent) resided in
Thousand Oaks, California, when he died on March 18, 1992. The
estate's coexecutors, Robin Carol Trompeter Gonzalez and Janet
Ilene Trompeter Polachek, resided in Florida and California,
respectively, when the petition was filed.
In Estate of Trompeter v. Commissioner, supra, we held that
the estate was subject to the fraud penalty under section
6663(a). The estate computes the amount of this penalty based on
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