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6664(a) without any temporal qualification, the focus is on the
phrase “of tax required to be shown on a return”, which modifies
the term “underpayment” in section 6663(a).1 I am persuaded that
the majority has reached the right result on the basis of both
the history of section 6663 and a textual analysis.
The relevant history concerns the evolution of the 1939 Code
into the 1954 Code. An adequate summary of that history is
provided in Judge Chabot's concurring op. pp. 16-19. The
important point is that, in 1954, Congress’ purpose was to
consolidate and revise many of the 1939 Code fraud provisions.
Under the 1939 Code, as described in the report of the Committee
on Finance, see Judge Chabot's concurring op. p. 18, there were
two models for imposition of a fraud addition. For all taxes,
there was a 50-percent addition in the case of fraud. The base
1 In pertinent part, the term “underpayment”, as defined
in sec. 6664(a), is the difference between “the tax imposed by
this title” and “the amount shown as the tax by the taxpayer on
his return”. Notwithstanding that the majority says that the
issue before the Court is whether the underpayment “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”, majority op. p. 2, the issue is plainly
whether sec. 6663(a) specifies a time (the time for filing the
return) for determining the minuend (i.e., the “the tax imposed
by this title”) in the sec. 6664(a) equation. With respect to
the question of statutory interpretation facing us, the
subtrahend (i.e., “the amount shown as the tax by the taxpayer on
his return”) is invariable. Thus, a taxpayer can reduce the
sec. 6663(a) fraud penalty by proving deductions available at the
time the return was filed but omitted therefrom. Cf. Summerill
Tubing Co. v. Commissioner, 36 B.T.A. 347 (1937) (discussed in
the text). The majority’s mischaracterization is of no
consequence in calculating the relevant difference.
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