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For this liability to ripen, the personal representative must
have had actual or constructive knowledge of the debt owed the
United States. See New v. Commissioner, 48 T.C. 671, 676-677
(1967); Estate of Johnson v. Commissioner, T.C. Memo. 1999-284. A
personal representative is deemed to have knowledge of a debt if he
has “actual knowledge of such facts as would put a prudent person
on inquiry as to the existence of the claim”. United States v.
Vibradamp Corp., 257 F. Supp. 931, 935 (S.D. Cal. 1966). The
knowing disregard of the debt owed the United States imposes
liability on the fiduciary to the extent of the value of the assets
distributed after knowledge of the debt is obtained. See Leigh v.
Commissioner, 72 T.C. 1105, 1109-1110 (1979).
All three elements of 31 U.S.C. section 3713(b) have been
established herein. David is the statutory executor and fiduciary
of his father’s estate. He distributed the assets of his father's
estate to himself as sole heir without paying the debts of the
estate at a time he knew the estate owed estate and income taxes
5(...continued)
payments from an estate for which an executor may be held liable
under the insolvency statute, including “a distribution of funds
[from the estate] that is not, strictly speaking, the payment of
a debt.” Want v. Commissioner, 280 F.2d 777, 783 (2d Cir. 1960);
see sec. 20.2002-1, Estate Tax Regs.; see also United States v.
Coppola, 85 F.3d 1015 (2d Cir. 1996). Federal estate and income
tax liabilities constitute a debt due to the United States. See,
e.g., United States v. Moore, 423 U.S. 77 (1975).
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