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The estate paid the deficiency and then filed suit for refund in
District Court.
The District Court found that no more than one-half of the
value of property was includable in Edward's estate and that the
value in excess of that amount was included in error. See Estate
of Vitt v. United States, 536 F. Supp. 403, 407 (E.D. Mo. 1982),
affd. 706 F.2d 871 (8th Cir. 1983). Further, the District Court
found that although the taxes were imposed at different times,
the subject matter of the tax never changed. Therefore, "To hold
on these facts that there is no common taxable event or fund
would be to blindly follow a narrow, overly simplified definition
of what constitutes a single transaction or taxable event". See
id. at 408. Accordingly, the District Court found that Verlena's
estate was entitled under the doctrine of equitable recoupment to
a credit for the excess tax paid by Edward's estate.
In affirming, the Court of Appeals for the Eighth Circuit
considered the Government's argument that the single-transaction
requirement was not satisfied and found that, in addition to the
double taxation of the same property, the inclusion of the
property in both estates under section 2036 in essence resulted
from the same transaction--the Vitt's transfer of the real
property with retention of a life estate for their joint lives
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