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On March 31, 1998, the estate paid $646,325.76, comprised of
a portion of the estate tax deficiency and an estimate of
underpayment interest.2 On April 10, 1998, the estate filed a
timely notice of appeal with the Court of Appeals for the Fifth
Circuit. The estate did not, however, file bond, as generally
required to stay assessment or collection of the deficiency
during appellate review. See sec. 7485(a). Consequently, on May
12, 1998, respondent assessed an estate tax deficiency of
$564,429.87 plus underpayment interest of $410,848.76.
Respondent gave the estate credit for the March 31, 1998, payment
of $646,325.76 and also gave the estate credit for a 1992 income
tax overpayment of $63,052. After taking these credits into
account, the estate had a balance due of $265,900.87. Collection
of this balance due, however, was administratively stayed during
the pendency of the estate’s appeal.
On December 15, 1999, the Court of Appeals for the Fifth
Circuit reversed, vacated, and remanded our original decision for
further proceedings with respect to the estate tax deficiency.
See Estate of Smith v. Commissioner, 198 F.3d 515 (1999).
2 Respondent’s Appeals Office estimated the amount of
interest on the then “underpayment” of estate tax. In
conjunction with this estimate, respondent allowed a deduction
from the gross estate for estimated interest which would be due
on the deficiency, determined as of a hypothetical payment date
of Mar. 31, 1998.
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