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Respondent contends that no statutory deficiency exists,
given that the deficiency procedures and the parties’ settlement
resulted in an overassessment. The estate contends otherwise.
The estate’s argument is essentially that, but for the
“fortuitous accrual of interest”, the taxable estate would have
increased by $333,91911 as a result of the deficiency procedures
and the parties’ settlement. The estate treats the tax
attributable to this figure as the deficiency, ignoring the
interest expense deduction in this context on grounds that the
interest accrual occurred “independent of the deficiency
process”.
The estate’s argument as to the existence of a deficiency
must be rejected as it ignores the statutory definition. Section
6211(a) defines a deficiency as:
the amount by which the tax imposed * * * exceeds the
excess of–
(1) the sum of
(A) the amount shown as tax by the taxpayer
upon his return * * * plus
(B) the amounts previously assessed * * * as
a deficiency, over–
(2) the amount of rebates * * * made.
This case involves no rebates. Furthermore, respondent has not
previously assessed any amounts as a deficiency. Accordingly,
11 The $333,919 figure ignores an increase of $1,567 in
deductions claimed by the estate on the estate tax return that
was allowed by respondent in the notice of deficiency. The
proper figure therefore should be $332,352.
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