Estate of Duilio Costanza - Page 6

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          agreed-upon monthly payment of $8,710.  He altered the dates he             
          had originally written on all three checks, to indicate that they           
          had been written on January 1, 1993, February 2, 1993, and March            
          1, 1993.  He also wrote memorandum lines on the checks to                   
          indicate the month for which the payment was intended.  Michael,            
          in his capacity as trustee of decedent’s trust, deposited all               
          three checks into decedent’s trust account on March 8, 1993.                
          After writing these three checks, Michael did not make any other            
          payments on the SCIN.                                                       
               Decedent underwent a second coronary bypass operation on May           
          11, 1993.  He died the next day "in the postoperative period                
          following his re-do coronary artery bypass grafting” having had             
          “a severe toxic reaction, presumably to the Protamine required to           
          reverse his heparinization”.                                                
               Decedent’s Federal estate tax return indicated that no tax             
          was due.  The return identified the SCIN and included a copy as             
          an exhibit.  The return indicated that the value of the SCIN was            
          zero.  It stated that "pursuant to the terms of the note the note           
          was cancelled upon the death of Duilio Costanza."                           
               Respondent issued a timely notice of deficiency proposing an           
          increase of $803,868 in decedent’s gross estate.  The notice                
          explained that the proposed increase reflected respondent’s                 
          conclusion that “[T]he sale between decedent’s trust and                    
          Michael’s trust (the decedent’s son) is not recognized because it           

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