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$182,500 from the sale of the Willits shares.7 Petitioner,
however, did not pay any tax on these gains; instead, it reported
a net long-term capital gain distribution of $610,274 to March on
Schedule K-1, Beneficiary's Share of Income, Deductions, Credits,
Etc., which it attached to the Form 1041.
March and her husband, Charles March, filed their 1992 Form
1040, U.S. Individual Income Tax Return, using the status of
"Married filing joint return", on or about April 15, 1993, and
paid the tax due. March reported the $610,274 gain on line 13 of
Schedule D, which was attached to the Form 1040, as "Net long-
term gain or (loss) from partnerships, S corporations, and
fiduciaries".
E. Petitioner's Claim for Deductions
After filing the Form 706, petitioner paid $21,226 of
attorney's fees, $8,830 of accountant's fees, and $12,396 of
appraisal costs to defend its reporting position in an audit by
the Internal Revenue Service. Petitioner filed Form 843, Claim
for Refund and Request for Abatement, to claim a refund of the
estate tax paid on these amounts. In addition, petitioner filed
a protective claim for refund of estate tax for additional
7Petitioner also reported $6,955 of long-term capital gain
from the sale of 2,000 shares of PG&E stock and a $738 net long-
term capital loss carryover from 1991. The value of the PG&E
shares and the loss carryover are not at issue in this case.
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