Estate of Emanuel Trompeter, Deceased, Robin Carol Trompeter Gonzalez and Janet Ilene Trompeter Polacheck, Co-Executors - Page 4

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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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