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In the case of the Federal estate tax, the "amount of tax imposed
by this title" refers to the tax that "is hereby imposed on the
transfer of the taxable estate of every decedent who is a citizen
or resident of the United States." Sec. 2001(a). This tax is
determined based on the value of the taxable estate, sec. 2001,
which, in turn, is determined by reducing the value of the gross
estate by the amount of any deduction set forth in sections 2053
through 2056. Sec. 2051. Section 2053 allows a deduction for
certain expenses, indebtedness, and taxes. Section 2054 allows a
deduction for certain losses. Section 2055 allows a deduction
for certain transfers for public, charitable, or religious uses.
Section 2056 allows a deduction for certain bequests to a
surviving spouse.
Nowhere in the Code or regulations thereunder does it say
that an estate's underpayment is based solely on deductions that
appear on its estate tax return. Respondent reaches this result
by analogy to a line of cases which hold that a net operating
loss (NOL) carryback will not reduce the amount of an income tax
underpayment for purposes of computing a penalty or an addition
to tax. In this Court's seminal opinion of C.V.L. Corp. v.
Commissioner, 17 T.C. 812 (1951), we held that a delinquency
penalty applied to a year for which it was later determined that
no tax was due on account of an NOL carryback. In reaching this
result, we relied on Manning v. Seeley Tube & Box Co., 338 U.S.
561 (1950), and the Senate Finance Committee report accompanying
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Last modified: May 25, 2011