T.C. Memo. 1996-426

UNITED STATES TAX COURT

ESTATE OF HELEN G. WILLIAMSON, DECEASED,

DOUGLAS F. WOODS, EXECUTOR, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 20857-94. Filed September 19, 1996.

Richard J. Sideman and Wendy Abkin, for petitioner.

Elizabeth L. Groenewegen and Rebecca T. Hill, for

respondent. 

MEMORANDUM OPINION

KÖRNER, Judge: This case is before the Court on

petitioner's motion for partial summary judgment under Rule 121.

All statutory references are to the Internal Revenue Code in

effect as of the date of decedent's death, and all Rule
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references are to the Tax Court Rules of Practice and Procedure,

except as otherwise noted.

Harry and Helen Williamson (decedent) were married in

California in 1947, and resided in California until decedent's

death on June 30, 1987. Real estate constituted the majority of

the spouses' community property assets, while a lesser amount of

their community assets consisted of personal property. At all

times during the marriage of decedent and Harry Williamson, Harry

exercised dominion, management, and control over all the couple's

community assets, and legal title to the community real estate

stood solely in Harry's name.

Under decedent's will, she confirmed to Harry his one-half

interest in their community property and intended to dispose of

her one-half interest. After decedent's death, decedent's

executor in September 1987 made demand upon Harry Williamson for

identification and transfer of decedent's one-half interest in

the community assets. A dispute then arose between decedent's

executor and Harry concerning the identification and transfer of

decedent's one-half interest in the community assets. As a

result, decedent's executor brought an action in the California

State courts to establish the claim of decedent's estate to the

community assets, seeking an order directing a transfer of the

property to decedent's estate. Both decedent's estate and Harry

Williamson were represented by counsel in this action. The
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action by decedent's executor against Harry Williamson was begun

on January 21, 1988.

Because decedent died on June 30, 1987, the Form 706, United

States Estate Tax Return, was originally due to be filed on or

before March 30, 1988. Given the dispute between decedent's

estate and her surviving husband and the pending litigation

regarding decedent's assets, decedent's estate, petitioner

herein, filed a request for extension of time (Form 4768) in

which to file its Federal estate tax return on January 29, 1988. 

A statement was attached to the request for extension of time,

which explained that because of the pending dispute between

decedent's estate and Harry Williamson, the executor had been

unable to identify, inventory, or marshal the assets of

decedent's estate. The extension of time requested was until

September 30, 1988, and this request was granted by respondent. 

The Federal estate tax return was duly filed timely by

petitioner on September 30, 1988. To that return were attached,

inter alia, a copy of decedent's last will and testament; a copy

of the California probate court order appointing the executor of

decedent's estate; and a copy of the Form 4768, which was

petitioner's request for an extension of time to file a Federal

estate tax return, and which included an explanation on that

extension request form--that because of the ongoing dispute

between decedent's estate and Harry Williamson, it was impossible

at the time to identify or value the assets that were returnable
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1 An affirmative defense, the statute of limitations issue

was properly raised in the petition under Rule 39.

as part of decedent's taxable estate. The estate tax return

itself accordingly did not disclose any such information with

respect to these items.

Harry Williamson died on September 11, 1990. Thereafter,

petitioner and Mr. Williamson's estate agreed to a settlement of

petitioner's community property claim, and the probate court

order approving the settlement was entered on January 14, 1991. 

Pursuant to that settlement, petitioner received from Harry

Williamson's estate cash and real property valued at $3,604,750. 

A final inventory showing the property and valuation thereof was

received September 16, 1991.

Respondent issued a notice of deficiency to petitioner on

account of decedent's Federal estate tax dated September 21,

1994. In that statutory notice, respondent correctly determined

that the value of decedent's gross estate exceeded in amount 25

percent of the gross estate stated in decedent's estate tax

return, which was $30,231.81. Petitioner thereafter duly brought

the present action in this Court, challenging respondent's

determination on the merits and also alleging that respondent's

determination was invalid because it was not issued within 3

years from the time the estate tax return herein was filed.1

Respondent's answer herein asserts that the assets omitted from

the gross estate in the estate tax return filed by petitioner are
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in excess of 25 percent of the gross estate that the estate tax

return reported, and that respondent's notice of deficiency was

issued prior to 6 years from the time the estate tax return

herein was filed.

Petitioner now brings this motion for partial summary

judgment, on the ground that the effective statute of limitations

herein for the determination of an estate tax deficiency was 3

years, under the general rule of section 6501(a). Since

petitioner's motion, if granted, would dispose of the instant

case entirely, we shall treat petitioner's motion as one for

complete summary judgment.

Under Rule 121(b), the Court may consider and dispose of a

motion for summary judgment if the facts "show that there is no

genuine issue as to any material fact and that a decision may be

rendered as a matter of law * * * ". In deciding a motion for

summary judgment, however, a Court "must resolve all ambiguities

and draw all reasonable inferences in favor of the party against

whom summary judgment is sought * * * with the burden on the

moving party to demonstrate the absence of any material factual

issue genuinely in dispute". Heyman v. Commerce & Indus. Ins.

Co., 524 F.2d 1317, 1320 (2d Cir. 1975); United States v.

Augspurger, 452 F. Supp. 659, 664 (W.D.N.Y. 1978). See also

Estate of Ashenhurst v. Commissioner, T.C. Memo. 1982-102. 

In making the findings of fact which we have recited above,

we have relied solely upon the facts as stipulated by the
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parties. We conclude accordingly that there is no dispute as to

any material fact and that we may proceed to dispose of this case

as a matter of law. 

The general period of limitations in both income and estate

and gift tax cases is 3 years, measured from the date the return

is filed until respondent issues the appropriate statutory notice

of deficiency. Sec. 6501(a). Various exceptions to the general

3-year rule are provided by the statute, for such things as the

filing of fraudulent returns, the failure to file a return, an

agreement between the parties extending the time, etc. Of

particular interest to us in this case are the provisions of

section 6501(e), which provide in relevant part as follows:

(e) Substantial Omission of Items.--except as otherwise

provided * * *

(1) Income Taxes.--In the case of any tax imposed by

subtitle A-- 

(A) General Rule.--If the taxpayer omits from

gross income an amount properly includable therein

which is in excess of 25 percent of the amount of gross

income stated in the return, the tax may be assessed,

or a proceeding in court for the collection of such tax

may be begun without assessment, at any time within 6

years after the return was filed. For purposes of this

subparagraph--

* * * * * * *

(ii) In determining the amount omitted from

gross income, there shall not be taken into

account any amount which is omitted from gross

income stated in the return if such amount is

disclosed in the return, or in a statement

attached to the return, in a manner adequate to

apprise the Secretary of the nature and amount of

such item.
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2 Only two gift tax cases have been found: Daniels v.

Commissioner, T.C. Memo. 1994-591 (involving facts not relevant

here), and Estate of Robinson v. Commissioner, 101 T.C. 499, 516

(1993), where the Court emphasized that the 6-year statute of

limitations would not be applied when the return was sufficient

to apprise the service of the nature and amount of the omitted

item.

* * * * * * *

(2) Estate and Gift Taxes.--In the case of a return of

estate tax under chapter 11 or return of gift tax under

chapter 12, if the taxpayer omits from the gross estate or

from the total amount of the gifts made during the period

for which the return was filed items includible in such

gross estate or such total gifts, as the case may be, as

exceed in amount 25 percent of the gross estate stated in

the return or the total amount of gifts stated in the

return, the tax may be assessed, or a proceeding in court

for the collection of such tax may be begun without

assessment, at any time within 6 years after the return was

filed. In determining the items omitted from the gross

estate or the total gifts, there shall not be taken into

account any item which is omitted from the gross estate or

from the total gifts stated in the return if such item is

disclosed in the return, or in a statement attached to the

return, in a manner adequate to apprise the Secretary of the

nature and amount of such item.

The corresponding regulations are of like import. See sec.

301.6501(e)-1(a) and (b), Proced. & Admin. Regs.

Although no estate tax cases have been found interpreting

section 6501(e)(2) of the code,2 an examination of section

6501(e)(1) and (2) shows that the two are in pari materia in

dealing with the same subject--the application of the statute of

limitations--and, accordingly, we may give due consideration to

income tax cases in deciding estate tax cases on this same

subject.
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In The Colony, Inc. v. Commissioner, 357 U.S. 28, 36 (1958)

(an income tax case), the Supreme Court, interpreting the meaning

of this statutory language, said:

We think that in enacting section 275(c) [the

predecessor of section 6501] Congress manifested no broader

purpose than to give the Commissioner an additional 2 [now

3] years to investigate tax returns in cases where, because

of a taxpayer's omission to report some taxable item, the

Commissioner is at a special disadvantage in detecting

errors. In such instances the return on its face provides

no clue to the existence of the omitted item. On the other

hand, when, as here, the understatement of a tax arises from

an error in reporting an item disclosed on the face of the

return, the Commissioner is at no such disadvantage * * *.

This Court has interpreted the Supreme Court's "clue"

standard to mean not "a detailed revelation of each and every

underlying fact", but also that it "does not simply mean a 'clue'

which would be sufficient to intrigue a Sherlock Holmes." Quick

Trust v. Commissioner, 54 T.C. 1336, 1347 (1970), affd. 444 F.2d

90 (8th Cir. 1971). Furthermore, in interpreting this statutory

language (common to both income and estate tax provisions) in

section 6501(e), relating to the omission as "disclosed in the

return, or in a statement attached to the return, in a manner

adequate to apprise the Secretary of the nature and amount of

such item", we have held that disclosure of the omitted material

is adequate, even without disclosing exact dollar amounts. Quick

Trust v. Commissioner, supra; University Country Club, Inc. v.

Commissioner, 64 T.C. 460, 470 (1975); Morris v. Commissioner,

T.C. Memo. 1966-245. The disclosure statement however must be

sufficiently detailed so that a decision whether to select the
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return for audit may be a reasonably informed one. Estate of

Frane v. Commissioner, 98 T.C. 341, 355 (1992), affd. in part and

revd. in part 998 F.2d 567 (8th Cir. 1993).

In this case, the application for extension of time to file

the estate tax return included a written statement as to the

reasons for requesting the delay: that because of a dispute

between decedent's estate and her surviving husband, the estate

was unable to list and value the items of the estate that should

be returned. When the Federal estate tax return of decedent was

filed on September 30, 1988, those facts were still unknown, but

that extension of time form, with its explanatory statement, was

attached to the return. We think this extension of time (with

explanation), which was adhered to by petitioner, was a

"statement attached to the return" and thus falls within the

language of section 6501(e)(2). It gave adequate notification to

respondent of petitioner's failure to itemize and value specific

items of decedent's gross estate that concededly should be

returned for estate tax purposes, and the reasons therefor. The

estate tax return itself said nothing to the contrary. In fact,

as the stipulated facts show, petitioner did not find out the

items of the gross estate, and their value, which properly formed

part of decedent's gross estate, until September 19, 1991. 

Under these circumstances, we agree with petitioner that the

general 3-year statute of limitations applies in this case rather

than the 6-year statute of limitations provided by section
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6501(e)(2). Accordingly, since the parties have stipulated that

the statutory notice of deficiency herein was issued more than 3

years after the estate tax return was filed, such notice of

deficiency was barred by the statute of limitations. 

Petitioner's motion for partial summary judgment will be granted.

An order granting petitioner's

motion for partial summary judgment

and a decision for petitioner will 

be entered.