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representative, the accountant who prepared its estate tax
return. On September 16, 1996, respondent sent the estate’s
accountant a discussion draft of a proposed Form 1273, Report of
Estate Tax Examination Changes, reflecting a $472,143 increase in
estate tax.
The estate hired Attorney Dennis G. Harkavy to represent it
and to address the discussion draft received from respondent.
Mr. Harkavy’s engagement to represent the estate was reduced to
writing in the form of a letter dated October 25, 1996.
Respondent issued a 30-day letter on October 1, 1997, proposing
to increase the estate tax from the $68,894 reported to $415,868.
On October 9, 1997, respondent received Mr. Harkavy’s letter
seeking to protest the findings of the 30-day letter and
requesting a conference with Appeals. A decision was made by
Appeals not to extend a conference to the estate, and the matter
was referred for issuance of a notice of deficiency. Notices of
deficiency were issued to the estate for estate tax and gift tax.
The estate tax deficiency was based upon the determination
that transfers totaling $930,350 from decedent to her daughter
(Mrs. Peterson), son-in-law (Mr. Peterson), and Peterson
Properties (partnership) were taxable gifts. Respondent also
disallowed a $200,000 claimed reduction from the gross estate for
the $200,000 unsecured note to the partnership. Harkavy executed
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