Opinion ID: 776467
Heading Depth: 2
Heading Rank: 2

Heading: Omitted Assets

Text: 12 Trompeter was a nationally-recognized collector of rare coins. Trompeter also had other valuable collections including art, artifacts, firearms, gems, jewelry, and music recordings. There is considerable dispute, and much ambiguity in the record, about the exact nature and valuation of those holdings, but the Estate concedes that it failed to report approximately $1 million in assets. Among other things, the Estate did not report the gun collection (valued at $10,000), the music collection (valued at $10,000) and some of the gems (valued at $500,000). 13 The IRS determined that the Estate failed to report $14 million in assets, principally art, artifacts, diamonds, jewelry, and the like. This figure was based on the estimate made by the son of one of Trompeter's acquaintances, Joe Pasko, who filed a claim against the Estate for a $1.4 million commission, alleging that Trompeter had retained him to sell assets worth at least $14 million. 14 Although it rejected the Estate's argument that Trompeter had gifted some of the omitted assets to the co-executors, the Tax Court did not accept the Commissioner's determination, because, among other things, the record did not disclose all of the unreported assets, nor was Pasko conversant with the full extent of Trompeter's holdings. The court did, however, conclude that there were unreported assets: 15 Following our detailed review of the record, we find that the estate failed to report $4.5 million of assets (inclusive of the approximately $1 million amount conceded by the estate). 16 Trompeter, 75 T.C.M. at 1665 (emphasis added). 17 The difficulty with this finding is that it is so conclusory as to make it unreviewable. The Tax Court did not specify which portions of the trial record it referenced, detail the methodology it used to arrive at its conclusion, list the omitted assets, or even offer a description of the items. 18 We can understand and review the basis for rejecting the $14 million figure. Unfortunately, it is the alternative finding that leaves us hanging. The convenient shorthand reference to a detailed review of the record only tells us, based on the length of the record, that the court spent considerable time scrutinizing it. We do not doubt the court's sincerity or diligent review. Rather, we simply do not have any factual findings that can be adequately reviewed for clear error. How did the Tax Court arrive at the $3.5 million figure? What items comprise the $3.5 million in omitted assets? 19 In declining to detail the assets with some reasonable specificity, the Tax Court places us in the untenable position of either abdicating our reviewing role or sifting through a voluminous record to construct a plausible account of the missing assets. Although the latter exercise may be theoretically possible, it is not an exercise to be performed by the court of appeals. See, e.g., Estate of Mitchell, 250 F.3d at 704 ([T]he Commissioner offers us a multitude of avenues through which one might arrive at a 35 percent combined discount. This strained effort, in and of itself, is the most telling evidence of the inadequacy of the Tax Court's explanation.); see also Akers v. Comm'r, 798 F.2d 894, 897 (6th Cir.1986) (Unlike the original judgment of Solomon, the true rationale of which has been readily apparent to generations of disinterested observers — if not, at first blush, to both of the maternal litigants — the judgment appealed from here has no discernible logic. We are not prepared to permit the Tax Court, whenever it disagrees with the valuations offered by both sides, simply to shut its eyes and pick at random any number that happens to lie somewhere between the Commissioner's valuation and the taxpayer's.). 20 It is, therefore, not sufficient to say that the value of various unspecified collections of art, artifacts, gems, etc., is $3.5 million. Consequently, consistent with our holding in Leonard Pipeline, we instruct the Tax Court on remand to provide sufficiently detailed findings regarding the assets (including their valuation) that were omitted from the Estate's federal estate tax return.