Estate of Evelyn M. McMorris - Page 10




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          decision is reached.  See Broadhead Trust v. Commissioner, T.C.             
          Memo. 1972-196.                                                             
               In the instant case, petitioner filed an amended Federal               
          income tax return requesting a refund.  The request stemmed from            
          the agreement of the parties as to the increased value of the NW            
          stock included in Mr. McMorris' estate, which value became the              
          basis of the NW stock redeemed from decedent.  Because the amount           
          of income tax was challenged in that fashion, it is appropriate             
          that we consider postdeath events when determining the deduction            
          for estate tax purposes.                                                    
               Respondent has approved petitioner's refund request.  That             
          portion of the Federal income tax liability that is to be                   
          refunded is no longer a valid and enforceable claim against the             
          estate.  Accordingly, we hold that the amount of the deduction              
          for petitioner's Federal income tax liability is reduced by the             
          amount of the refund.  Cf. Estate of Shedd v. Commissioner, 37              
          T.C. 394 (1961), affd. 320 F.2d 638 (9th Cir. 1963) (deduction              
          for transferee liability reduced by amount recovered from                   
          transferor husband's estate upon receipt of refund); sec.                   
          20.2053-6(f), Estate Tax Regs.                                              
               Deduction for Colorado Income Tax Liability                            
               An individual's liability for Colorado income tax is based             
          on Federal taxable income with certain adjustments.  See Colo.              
          Rev. Stat. sec. 39-22-104(1) (1998); see id. sec. 39-22-601(6)(a)           





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