- 22 -
immediately conceded by the taxpayer and by the taxpayer’s legal
representative, then the taxpayer should not have contested
either the resulting tax deficiency or the imposition of the
fraud penalty. A contest involving such a patently fraudulent
return would be frivolous.
Under the above approach, postaudit administrative hearings
and Tax Court litigation contesting an estate tax deficiency and
imposition of a fraud penalty ought to be regarded as unnecessary
and frivolous, and legal expenses relating thereto should be
disallowed under section 2053 and section 20.2053-3(a), Estate
Tax Regs., as unreasonable and as incurred not for the benefit of
the estate, but for the benefit of the beneficiaries (i.e., as
merely an attempt by the beneficiaries to postpone payment of the
proper estate tax and penalties due). See, for example, Hibernia
Bank, Admr. (Estate of Clark) v. United States, 581 F.2d 741, 746
(9th Cir. 1978); Estate of Dutcher v. Commissioner, 34 T.C. 918,
923 (1960); Estate of Bartberger v. Commissioner, T.C. Memo.
1988-21; and Estate of Pudim v. Commissioner, T.C. Memo. 1982-
606, affd. without published opinion 942 F.2d 1433 (2d Cir.
1983), each of which illustrates the disallowance, for estate tax
purposes, of legal and other fees and costs due to the fact that
the costs were not incurred in the good faith administration of
the estate but for the benefit of the beneficiaries.
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011