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examination of decedent's estate tax return, respondent
determined that the amounts allowable as deductions for
decedent's Federal and Colorado income tax liabilities were
$3,680,038 and $639,826, respectively. Respondent issued a
notice of deficiency on November 8, 1994. Petitioner does not
contest these adjustments, having conceded all issues raised in
the notice of deficiency.
In January 1996, the parties in the case of Estate of
Donn D. McMorris v. Commissioner, docket No. 5952-94, reached a
basis for settlement that provided for an increase in the value
of the NW stock included in Mr. McMorris' estate to $2,500,000
per share. The increase in the value of the NW stock created a
deficiency in the estate taxes for Mr. McMorris' estate. The
increase in value of the NW stock also increased decedent's basis
in the NW stock, thereby eliminating the income attributable to
the redemptions of the NW stock.
A protective claim for refund relating to the fiduciary
income tax return of Mr. McMorris' estate for the fiscal year
ended March 31, 1991, had been filed on September 12, 1994. On
or about January 30, 1996, an amended fiduciary income tax return
was filed. On January 30, 1996, an amended 1991 Federal income
tax return was filed for decedent, claiming a refund of
$3,332,443. In settling the case of Estate of Donn D. McMorris
v. Commissioner, supra, the parties and petitioner agreed that
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