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share value)8 was included in both petitioner's corpus in
determining the value of the gross estate and in income.9
Therefore, the estate tax and the income tax were imposed on the
same item.
Furthermore, under the facts of the case before us, this
item cannot properly be both corpus and income to the estate.
The income tax paid by the residuary legatee on that identical
item is money which the Government is not justly entitled to
retain. See id. at 261 ("While here the money was taken through
mistake without any element of fraud, the unjust retention is
immoral and amounts in law to a fraud on the taxpayer's
rights.").
In holding that equitable recoupment was available for the
taxpayer to credit the estate tax paid on the same item subjected
8Petitioner reported the date-of-death fair market value of
the Savings shares at $181.50 per share and used that amount as
the basis in calculating the gain on the shares later sold. We
have determined that the date-of-death fair market value of each
Savings share is $276. Thus, $94.50 ($276 minus $181.50) of
share value for each share of Savings stock was included in both
corpus and income. Similarly, $141 ($626 minus $485) of share
value for each share of Willits stock was included in both corpus
and income.
9Petitioner sold the shares and calculated the amount of
income (capital gain) realized from the sale. The income passed
through the estate to March, who reported it on her return and
paid the income tax due. Thus, although March recognized the
income, it was realized by petitioner.
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