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HALPERN, J., concurring: The majority’s interpretation of
section 6663(a) leads to the conclusion that an executor who, in
anticipation of incurring future administration expenses, deducts
those expenses on the estate tax return, knowing full well that
such expenses are not deductible until incurred, will avoid any
section 6663(a) penalty with respect to his action even if the
Court finds that he acted with fraudulent intent, so long as the
expenses eventually are incurred. Cf. Summerill Tubing Co. v.
Commissioner, 36 B.T.A. 347 (1937) (fraud in corporate return on
account of fictitious purchases, which masked embezzlement;
statutory period of limitations extended on account of fraud; no
deficiency on which to base addition to tax for fraud because of
offsetting theft-loss deduction). As a matter of policy, I
question such result. Nonetheless, I think that it is compelled
because of the structure and historical development of the
section 6663(a) fraud penalty.
As a matter of arithmetic, section 6663(a) contains an
equation, in which the amount of the fraud penalty equals the
product of a multiplier (“75 percent”) and a multiplicand (“the
portion of the underpayment which is attributable to fraud”).
Section 6663(a) is ambiguous, however, as illustrated by the
debate between the majority and Judge Ruwe. The issue is whether
we are to determine one aspect of the multiplicand (the
underpayment) as of the time the return is filed or as ultimately
determined. Since the term “underpayment” is defined in section
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