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States, 766 F.2d 1038 (7th Cir. 1985), revg. 582 F. Supp. 203
(C.D. Ill. 1984); Estate of Vitt v. United States, 706 F.2d 871
(8th Cir. 1983); United States v. Herring, 240 F.2d 225 (4th Cir.
1957); and United States v. Bowcut, 287 F.2d 654 (9th Cir. 1961).
In Boyle v. United States, supra, the decedent died in 1953
owning preferred stock with more than 20 years of accumulated
undeclared dividends (the arrearages). The decedent's assets
were transferred to his estate, including the value of the
arrearages, and the estate tax was paid accordingly. In 1954,
the executors distributed the preferred stock among the four
beneficiaries under the will.
Later, the beneficiaries, on receiving those arrearages,
declared their receipt and listed them as nontaxable income on
their tax returns. In 1958, after the period of limitations had
expired to claim a refund of the estate taxes, the Government
determined deficiencies in the beneficiaries' income tax because
of their reporting position with respect to the dividends. The
beneficiaries paid the income tax deficiencies and brought a suit
for refund. The District Court denied them equitable recoupment
against the time-barred estate tax, holding that the single-
transaction test of Rothensies v. Electric Storage Battery Co.,
supra, was not satisfied. See Boyle v. United States, 232 F.
Supp. at 549-550. The Court of Appeals for the Third Circuit
reversed, finding that there was "double taxation of the single
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