- 29 -
paid and if they are ascertainable with reasonable certainty.
Thus, section 20.2053-1(b)(3), Estate Tax Regs., provides:
An item may be entered on the return for deduction
though its exact amount is not then known, provided it
is ascertainable with reasonable certainty, and will be
paid. No deduction may be taken upon the basis of a
vague or uncertain estimate. If the amount of a
liability was not ascertainable at the time of final
audit of the return by the district director and, as a
consequence, it was not allowed as a deduction in the
audit, and subsequently the amount of the liability is
ascertained, relief may be sought by a petition to the
Tax Court or a claim for refund as provided by sections
6213(a) and 6511, respectively. [Emphasis added.]
While postreturn expenses can reduce the taxable estate, if they
are not ascertainable at the time the return is filed, such
expenses cannot be deducted on the estate tax return. See Estate
of Bailly v. Commissioner, 81 T.C. 246, supplemented by 81 T.C.
949 (1983).
The amount of tax required to be shown on a return can only
be computed based on the facts and circumstances in existence
when the return is filed. Expenses for petitioner's subsequent
contest of the deficiency and fraud penalty had not been incurred
and could not have been ascertained at the time the return was
filed. Likewise, interest on the fraudulent underpayment had not
yet been incurred nor was it ascertainable. Petitioner's
postreturn expenses could not have been deducted on its estate
tax return, and hence, these expenses do not reduce the tax
liability that was required to be shown on the return. The
ability to adjust a tax liability after the return is due does
not relieve a taxpayer of the obligation to report the tax in
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011