                            133 T.C. No. 7



                     UNITED STATES TAX COURT



ESTATE OF NOORDIN M. CHARANIA, DECEASED, FARHANA CHARANIA, MEHRAN
 CHARANIA AND ROSHANKHANU DHANANI, ADMINISTRATORS, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16367-07.                Filed September 14, 2009.



          Decedent (D) and his wife were born and married in
     Uganda and were citizens of the United Kingdom. In
     1972, they were exiled from Uganda and moved to
     Belgium. D and his wife did not formally change their
     marital regime under the procedures prescribed by the
     Belgian Civil Code. At the time of his death in 2002,
     250,000 shares of Citigroup stock were held in D’s
     name. The estate contends that the shares were
     community property under Belgian law and that only one-
     half of the value of the shares is included in the
     value of the gross estate.

           The estate tax return was not timely filed. The
     estate asserts reasonable cause as a defense to a sec.
     6651(a), I.R.C., addition to tax and asserts that prior
     abatement of a similar addition to tax is a concession
     by R.
                               - 2 -

          1. Held: The shares were not community property,
     because Belgian conflict of laws rules would apply
     English law to the marital regime. Under English law,
     the shares were property of D.

          2. Held, further, the estate has not established
     reasonable cause for late filing of the return.



     Diane Currier Ryan, William F. Sheehan, and Laura Rees

Acosta, for petitioners.

     Mary P. Hamilton, for respondent.



                              OPINION


     COHEN, Judge:   Respondent determined a deficiency in the

Federal estate tax of the Estate of Noordin M. Charania (the

estate) in the amount of $2,070,000.01 and an addition to tax

under section 6651(a)(1) for the late filing of the estate tax

return.   The issues for decision are:   (1) Whether the value of

the gross estate includes the value of all of the shares of a

U.S. corporation registered in the name of Noordin M. Charania

(decedent), a nonresident alien, at his date of death and (2)

whether the estate is liable for the section 6651(a)(1) addition

to tax.

     Unless otherwise indicated, all section references are to

sections of the Internal Revenue Code in effect for the date of

decedent’s death, and all Rule references are to the Tax Court

Rules of Practice and Procedure.
                               - 3 -

                            Background

     This case was submitted fully stipulated under Rule 122, and

the stipulations of the parties are incorporated herein by this

reference.   Decedent, a resident of Belgium, died on January 31,

2002.   As the sole beneficiaries of the estate, Roshankhanu

Dhanani (Mrs. Dhanani), Farhana Charania (Ms. Charania), and

Mehran Charania (Mr. Charania) are the administrators of the

estate under Belgian law.   At the time the petition in this case

was filed, Mrs. Dhanani was a resident of Belgium, and Ms.

Charania and Mr. Charania were residents of England.   For

purposes of this Opinion, in describing the arguments made the

estate and the administrators are referred to as petitioners.

     Decedent was born in 1930 in Uganda and was a citizen of the

United Kingdom.   Mrs. Dhanani was born in Uganda and is a citizen

of the United Kingdom.   On October 9, 1962, Uganda, a former

British protectorate, became independent from Britain.

     Decedent and Mrs. Dhanani were married on February 18, 1967,

in Uganda.   Decedent and Mrs. Dhanani did not sign a marriage

contract at any time before or after their marriage.   While

living in Uganda, decedent worked as the sole proprietor of a

company called Transit Congo, which acted as an agent for CMB, a

Belgian shipping company.

     In 1972, Idi Amin, President of Uganda, ordered the

expulsion of Ugandans of Asian descent, providing a 3-month
                                - 4 -

deadline for them to leave.   Accordingly, decedent and his family

left Uganda permanently in October 1972 and moved to Belgium.

When decedent and Mrs. Dhanani left Uganda, all of their assets

within Uganda were seized by the Government, they did not own any

securities or other assets outside of Uganda, and they left

Uganda with only a few items of personal property.   Decedent and

Mrs. Dhanani did not intend to return to Uganda and intended to

stay in Belgium indefinitely.

     While living in Belgium, decedent continued to be self-

employed as an agent for the Belgian shipping company CMB.     Mrs.

Dhanani was not employed in Belgium.

     Decedent and Mrs. Dhanani resided in Belgium from the time

they were forced to leave Uganda in 1972 through the time of

decedent’s death on January 31, 2002.    Decedent and Mrs. Dhanani

remained citizens of the United Kingdom at all times.

     Belgian law permits married couples to modify or change the

matrimonial regime defining their property rights during marriage

and specifies procedures for doing so.   See Code Civil art. 1394

(Codes Larcier, Vol. I, Droit Civil et Judiciaire 2008) (Belg.).

Decedent and Mrs. Dhanani did not execute any documents in

Belgium requesting that their marital property regime be changed

to a community property regime.   On June 17, 1985, decedent

executed a will, leaving his property one-third each to Mrs.

Dhanani, Ms. Charania, and Mr. Charania.
                               - 5 -

     In August 1997, decedent purchased 50,000 shares of Citicorp

stock that were held in safekeeping in an account in the name of

“Mr. Noordin M. W. Charania” at a branch of a Belgian bank in

Hong Kong that later became Fortis Bank Asia HK (Fortis account).

On or about October 21, 1998, these Citicorp shares were

converted into 125,000 shares of Citigroup, Inc. (Citigroup)

stock.   As of July 16, 1999, decedent owned 187,500 shares of

Citigroup, consisting of decedent’s purchased shares plus a stock

dividend of 62,500 shares.   In 2000, a stock split resulted in

decedent’s acquiring 62,500 additional Citigroup shares.   At the

time of decedent’s death, these 250,000 shares of Citigroup were

registered in decedent’s name and remained in safekeeping in the

Fortis account.

     On January 31, 2002, the value of 250,000 shares of

Citigroup common stock was $47.16 per share, or $11,790,000.     On

July 31, 2002, the value of the 250,000 shares of Citigroup

common stock was $33.25 per share, or $8,312,500.

     On October 31, 2002, a Form 4768, Application for Extension

of Time to File a Return and/or Pay U.S. Estate (and Generation-

Skipping Transfer) Taxes, was sent to the Internal Revenue

Service (IRS) on behalf of the estate by petitioners’ former

counsel.   The estate applied for an extension of time to file an

estate tax return until April 30, 2003, and an extension of the

time to pay the estate tax until October 31, 2003.   The IRS
                               - 6 -

approved the extension to file until April 30, 2003, but took no

action regarding the extension to pay the estate tax.   On

November 13, 2002, the estate paid tax of $1,150,732.33.

     On December 18, 2003, Mrs. Dhanani, as decedent’s surviving

spouse, executed the Charania Qualified Domestic Trust Agreement

between Roshankanu Dhanani, as settlor, and Farhana Charania,

Mehran Charania, and Gregory D. Testerman, as trustees.

     On April 29, 2004, the estate mailed to the IRS a Form 706-

NA, United States Estate (and Generation-Skipping Transfer) Tax

Return, electing the alternate valuation date of July 31, 2002.

Treating the Citigroup stock as community property, on Schedule

A, Gross Estate in the United States, the estate reported:

          At the decedent’s death 250,000 shares of
     Citigroup Inc. common stock stood in his name. Under
     Belgian law the decedent and his wife, Roshankhanu
     Dhanani, each held a one-half community interest in
     these shares. Accordingly, a one-half interest, or
     125,000 shares, is included in the gross estate of the
     decedent.

     A letter dated November 6, 2002, from Nele Daem, an attorney

licensed to practice law in Belgium, representing petitioners,

was attached to the return.   The letter stated, in part

          I have been advised by my clients that the
     decedent, at his death, held 250,000 shares of the
     common stock of CITIGROUP Inc. in account with FORTIS
     BANK ASIA HK. The account was titled in the sole name
     of decedent. I have also been advised that the account
     consists of assets acquired by the decedent and Mrs.
     DHANANI during their marriage, and that no part of the
     account consists of assets acquired by either of them
     by gift or inheritance during the marriage or by other
     means that would cause the assets to be considered the
                              - 7 -

     separate property of one spouse under the law of
     Belgium.

          Under Belgian law, the account was therefore the
     community property of the decedent and Mrs. DHANANI
     immediately prior to the death of the decedent. As
     community property, one-half of the account was owned
     by the decedent, and one-half of the account was owned
     by Mrs. DHANANI, notwithstanding that title to the
     account was in the sole name of the decedent. Upon the
     death of the decedent, Mrs. DHANANI became entitled to
     receive one-half of the assets held in the account as
     her community property, and this one-half of the assets
     was not subject to disposition by the Will of the
     decedent or to succession to the heirs of the decedent
     by operation of law. Mrs. DHANANI’s right to receive
     one-half of the assets held in the account is due to
     her community interest in the account prior to the
     death of the decedent and not to any right arising from
     the death of the decedent.

     On February 22, 2007, the IRS sent to the estate a notice of

deficiency determining that the value of all 250,000 shares

should be included in the value of decedent’s gross estate.    The

notice also determined an addition to tax under section

6651(a)(1).

     Petitioners sent to the IRS a letter dated July 6, 2007,

requesting that the addition to tax be waived on the ground that

the failure to file and pay any taxes owed in a timely manner was

not due to willful neglect, but reasonable cause.   The IRS abated

the additions to tax that had been assessed on June 21, 2004,

during the administrative portion of this case.

     The parties agree that our decision in this case is

appealable to the Court of Appeals for the First Circuit.
                                 - 8 -

                            Discussion

     Decedent and Mrs. Dhanani, United Kingdom citizens, after

being exiled from the place of their births and marriage, made

Belgium their residence for approximately 30 years and intended

to remain in Belgium indefinitely.       Thus both were domiciled in

Belgium at the date of decedent’s death--a matter respondent does

not dispute.   The decisive question is thus whether the forced

exile of decedent and his wife from Uganda altered the location

of the matrimonial domicile, as used to determine the marital

property regime under applicable law.      Few precedents have been

identified, and none of the authorities relied on by the parties

is directly in point or categorical.      None of the authorities is

recent.

     As a general rule, the Internal Revenue Code imposes a

Federal tax “on the transfer of the taxable estate (determined as

provided in section 2106) of every decedent nonresident not a

citizen of the United States.”    Sec. 2101(a).    The taxable estate

of a nonresident not a United States citizen is defined in

section 2106(a) as “the value of that part of * * * [a

decedent’s] gross estate which at the time of his death is

situated in the United States”, less applicable deductions.

Section 2103 specifies that the gross estate of a nonresident

alien “shall be that part of his gross estate (determined as

provided in section 2031) which at the time of his death is
                                  - 9 -

situated in the United States.”     Thus, the gross estate of a

nonresident alien comprises “all property, real or personal,

tangible or intangible”, to the extent provided in sections 2033

through 2045, so long as that property is located in the United

States.    Secs. 2031(a), 2103.

     Under section 2104(a), corporate stock held by a nonresident

who is not a U.S. citizen is deemed property situated within the

United States only if it is stock issued by a domestic

corporation.    A domestic corporation is one organized in the

United States or under the law of the United States or of any

State.    Sec. 7701(a)(4).   It is not disputed that the Citigroup

stock is property situated within the United States because it is

stock issued by a domestic corporation and that an estate tax

return must be filed because decedent’s gross estate in the

United States exceeds $60,000.     See sec. 6018(a)(2).

     Section 2033 provides that “The value of the gross estate

shall include the value of all property to the extent of the

interest therein of the decedent at the time of his death.”

Petitioners contend that Citigroup shares registered in

decedent’s name at his death were community property under

Belgian law, and that only one-half of the value is included in

the value of decedent’s gross estate.     Respondent argues that the

Citigroup shares were not community property but separate

property according to English law.
                              - 10 -

     Community property is not defined in the Internal Revenue

Code for estate and gift tax purposes.   See section 2033 and the

regulations thereunder.   To resolve this issue, we must examine

foreign law.   Under Rule 146, the determination of foreign law is

an issue of law for this Court, and we may consider any relevant

material or source, whether or not submitted by a party or

otherwise admissible in evidence.   See Fed. R. Civ. P. 44.1; see

also Pittway Corp. v. United States, 88 F.3d 501, 504 (7th Cir.

1996).

     Pursuant to Rule 146, the parties have submitted copies of

relevant materials and sources that they rely on, including

foreign cases.   Additionally, respondent relies on the following

English conflict of laws treatises:    (1) Dicey, Morris & Collins

on the Conflict of Laws (Lawrence Collins et al. eds., 14th ed.

2006) (hereinafter Dicey, Morris & Collins); (2) Dicey & Morris

on the Conflict of Laws (Lawrence Collins et al. eds., 11th ed.

1987); and (3) Cheshire and North’s Private International Law 163

P.M. North & JJ. Fawcett eds., 12th ed. 1992).   Respondent also

submitted reports from the Law Library of Congress that evaluate

matrimonial property regimes under Belgian conflicts law, whether

Belgian or English law would apply in this case, and whether any

Ugandan law dealt with movable property ownership of spouses once

domiciled in Uganda.   Neither the Law Library of Congress foreign

law specialist who wrote the report on Ugandan law nor the Court
                              - 11 -

found any material to indicate whether Uganda law would govern

the ownership of movable property of spouses once domiciled in

Uganda who had left Uganda.

     Petitioners rely principally on an opinion prepared on their

behalf by London Barrister Matthew Cook regarding English law

and an opinion from Professor Hans Van Houtte, a Belgian law

professor.

     Petitioners’ reply brief concisely and fairly summarizes the

analysis presented by the parties as follows:

          (a) Belgian law determines whether or not the
     250,000 Citigroup shares were held as community
     property;
          (b) under Belgian conflict of laws principles, the
     ownership of matrimonial property is governed by the
     law of the common nationality of the spouses, in this
     case the law of the United Kingdom;
          (c) the key question for decision is whether an
     English court in this case would follow the doctrine of
     immutability, under which the question whether property
     is held as community property turns on the law of the
     parties’ domicile at the time of marriage, or the
     doctrine of mutability, under which the question turns
     on the law of the parties’ domicile at the time of the
     decedent’s death;
          (d) if the immutability doctrine applies,
     ownership of the Citigroup shares continued to be
     governed by English substantive marital property law
     even after the move of Decedent and his spouse to
     Belgium, and Petitioners must lose this case because
     Decedent and his spouse did not formally change their
     marital regime under the procedures prescribed by the
     Belgian Code Civil;
          (e) if, on the other hand, the doctrine of
     mutability applies, Petitioners win, because the exile
     of Decedent and his spouse from Uganda and their
     arrival in Belgium with the intent to remain there
     permanently brought them as a matter of law under
     Belgium’s community property regime, with no need to
     follow the Code Civil formalities.
                               - 12 -

Determining the Marital Regime

     Applying Belgian conflict of laws rules, the answer to the

question presented is found by reference to English law,

including English conflict of laws rules.   Under English conflict

of laws rules, in the absence of a contract or settlement, the

rights obtained by a husband or wife in each other’s movable

property as a result of marriage are determined by the law of the

matrimonial domicile, whether the property is possessed at the

time of the marriage or acquired afterwards.   See Re Egerton's

Will Trusts, (1956) Ch. 593; Collier, Conflict of Laws 281 (3d

ed. 2001).   Thus the matrimonial domicile in this case is

determined according to English law.

     Under English conflict of laws principles, a person’s

domicile is his or her permanent home, where he or she resides

without any intention of moving from it permanently or for an

indefinite period of time.   See Dicey, Morris & Collins pars. 6-

004 and 6-005.    A person can acquire a domicile of choice through

a combination of residence and intention of permanent or

unlimited residence exclusively in the domicile of choice.   See

id. par. 6-034.

     Historically, the matrimonial domicile has been deemed to be

the domicile of the husband at the time of marriage.   See

Collier, supra at 281.    When the parties are domiciled in the

same country at the time of the marriage, the issue of domicile
                               - 13 -

does not typically arise, and “in the absence of special

circumstances, that country is the matrimonial domicile.”      Dicey,

Morris & Collins n.6, par. 28-009; Re Egerton’s Will Trusts,

supra.    In this case the spouses were domiciled in the same

country at the time of marriage, and English law would identify

the matrimonial domicile of decedent and Mrs. Dhanani as Uganda

from the time of their marriage until they were exiled from

Uganda.    See Re Egerton’s Will Trusts, supra.     (The Domicile and

Matrimonial Proceedings Act 1973 now provides that a married

woman’s domicile is to be ascertained by the same factors as any

other individual’s domicile.    See Cheshire and North’s Private

International Law 163.    This Act is not applicable here because

decedent and Mrs. Dhanani were married before its enactment.      In

any event, both spouses here apparently always maintained the

same domicile.)

     As petitioners recognize, the issue to be decided is

whether English law would recognize a change in decedent and Mrs.

Dhanani’s matrimonial domicile to Belgium as effecting a change

in their property rights.    English law is unsettled regarding

this issue.    It has been summarized as follows:

          There are two competing theories, those of
     ‘immutability’ and ‘mutability’. According to the
     first, * * * the parties’ property acquired after the
     change of domicile is subject to the regime which was
     established before the change of domicile. Under the
     latter doctrine, * * * rights to property acquired
     after the change are regulated by the law of the
                              - 14 -

     parties’ domicile at the date of its acquisition.
     [Collier, supra at 282.]

     The primary English case dealing with migratory spouses and

movable property is De Nicols v. Curlier, (1900) A.C. 21, 26.       In

this case the House of Lords held that the matrimonial regime

applicable to the parties was not affected by the change of

domicile.   In De Nicols, the husband and wife were both French

citizens married in France.   At the time, French law provided

that property of the marriage was community property.

Thereafter, they moved to England and accumulated substantial

wealth.   The husband predeceased the wife.   In his English will

he attempted to dispose of his entire movable estate, as

permitted under English law, by establishing a trust for the life

benefit of his wife.   The surviving wife contested the provisions

of the will, contending that under French law she already had a

vested interest in half of her husband’s personal property

acquired during the marriage and that French law should control

the disposition of all property acquired before and after the

spouses became domiciled in England.   The House of Lords ruled

for the surviving spouse on the premise that, absent other

agreement, under French law the spouses were deemed to have

adopted the community property regime for the duration of their

marriage as if they had signed a contract to that effect, an

implied contract theory.   The French law of community property
                                - 15 -

applied to the property acquired after they became domiciled in

England, just as to property acquired before the move.

     In reaching the decision in De Nicols v. Curlier, supra, the

House of Lords distinguished the earlier case of Lashley v. Hog,

4 Paton 581 (Scottish Appeals Case 1804), identifying that case

as considering an issue of rights of inheritance under the

applicable law of domicile at death and not marital property

rights.   In Lashley, the spouses were domiciled in England at the

time of their marriage and later moved to Scotland, where the

wife predeceased the husband.    After the husband’s death an issue

arose as to whether all the property of the marriage or only half

would be disposed of entirely to his heirs.   The court held that

half of the combined marital estate passed under Scottish

succession law to the heirs of each spouse.

     Respondent asserts that

          Although De Nicols v. Curlier is not a modern
     decision, it has never been overruled. Further the
     House of Lords in De Nicols rejected the result in
     Lashley v. Hog on a number of grounds. De Nicols
     clearly recognizes an implied contract of spouses upon
     marriage, and there has been no intervening decision to
     the contrary.

Respondent contends that “since Decedent and Mrs. Dhanani had the

common nationality of a common law country, and did not select a

community property regime after they moved to Belgium, their

marital regime by default is that of separate property.”
                              - 16 -

     Applying the traditional analysis, decedent and Mrs.

Dhanani, as citizens of the United Kingdom marrying in a country

where the law is based upon English common law, at the time of

their marriage would have considered that British law, separation

of property, applied regarding their marital property.

Petitioners, however, contend that De Nicols v. Curlier, supra,

is distinguishable from this case, primarily because “The case

says nothing at all about circumstances of forced exile.”

     London Barrister Matthew Cook suggests in his opinion,

prepared at petitioners’ request, that under an implied contract

theory as applied in De Nicols v. Curlier, supra, when decedent

and Mrs. Dhanani changed their domicile they must be considered

to have chosen to accept the law of their new domicile--Belgium--

including the principles of matrimonial property that Belgium may

apply.   Barrister Cook further opines that a

     British court would apply the doctrine of mutability,
     under which the domicile of a married couple may be
     changed under certain circumstances (such as forced
     exile) rather than the doctrine of immutability, under
     which a couple’s domicile cannot be changed except by a
     document signed by them. Applying the doctrine of
     mutability a British court would hold that the spouses’
     forced exit from Uganda and their establishment of a
     permanent domicile in Belgium changed their marital
     domicile from Uganda to Belgium, with the result that
     Belgian substantive law would govern their rights in
     marital property.

     In his opinion, Professor Van Houtte quotes a passage from

Dicey, Morris & Collins, supra at 431:
                             - 17 -

     “The doctrine of immutability does not produce
     satisfactory results if the spouses are forced to
     change their domicile by political or economic
     pressure. It does not seem reasonable that refugees,
     who have acquired a domicile of choice in England or
     elsewhere after their marriage, should continue to be
     governed for the rest of their lives by the law of
     their matrimonial domicile.”

     Petitioners have neither provided persuasive authority nor

proposed a workable rule as to when mutability becomes effective.

They have not cited any law suggesting that the earnings of

decedent from which the shares were purchased were community

income under the laws of Belgium.   See, e.g., Angerhofer v.

Commissioner, 87 T.C. 814 (1986); Westerdahl v. Commissioner, 82

T.C. 83 (1984); Zaffaroni v. Commissioner, 65 T.C. 982 (1976).

There are no objective criteria for determining that a change in

the character of their marital property occurred and, if so,

whether it took effect immediately or 5, 10, or 20 years after

decedent and Mrs. Dhanani left Uganda.   The only objective

evidence is that the Citigroup shares were acquired and held

solely in decedent’s name in 1997, approximately 25 years after

the move to Belgium.

     Although they resided in Belgium for 30 years, decedent and

Mrs. Dhanani did not take the steps available under Belgian law

to change their marital property regime, and there is no other

evidence of their intention, before the date of death, to change

the character of their property.    The parties have not cited, and

we have not found, any authorities that determine the nature of
                              - 18 -

property without regard to intent, expressed or implied,

according to the law applicable at the time of the marriage.

     We conclude that under English law, applied pursuant to

Belgian conflict of laws principles, all of the shares of

Citigroup stock were property of decedent taxable in his estate.

Section 6651(a)(1) Addition to Tax

     Petitioners argue that no addition to tax should be imposed

because the failure to file the estate tax return timely was due

to reasonable cause rather than willful neglect.

     Under section 6075 an estate tax return is due within 9

months after the date of a decedent’s death.   The IRS may grant a

reasonable extension of the time to file an estate tax return.

See sec. 20.6081-1(c), Estate Tax Regs.   An extension of time for

filing a return does not operate to extend the time for payment

of the estate tax.   Sec. 20.6081-1(e), Estate Tax Regs.

     Executors who are abroad may request extensions beyond the

automatic 6-month period.   See sec. 6081(a); sec. 20.6081-1(b)

and (c), Estate Tax Regs.   The regulations provide that the

request for an extension of time to file should be made before

the expiration of the time within which the return is due and

early enough to enable the IRS to consider the request and reply

to it.   Sec. 20.6081-1(c), Estate Tax Regs.

      In this case, the Form 4768 request for an extension was

filed October 31, 2002.   The IRS granted an extension for filing
                              - 19 -

the estate tax return until April 30, 2003.   The record does not

indicate that petitioners requested an extension for filing

beyond the initial request that the IRS granted.    The estate tax

return was filed April 29, 2004, approximately a year after the

extended due date.

     Section 6651(a)(1) provides that in the case of failure to

file a tax return on the date prescribed for filing (including

any extension of time for filing), there shall be added to the

tax required to be shown on the return an amount equal to 5

percent of that tax for each month or fraction thereof that the

failure to file continues, not exceeding 25 percent in the

aggregate, unless it is shown that the failure to file timely is

due to reasonable cause and not due to willful neglect.

     Reasonable cause for delay is established where a taxpayer

is unable to file timely despite the exercise of ordinary

business care and prudence.   United States v. Boyle, 469 U.S.

241, 246 & n.4 (1985); sec. 301.6651-1(c)(1), Proced. & Admin.

Regs.   “[W]illful neglect” has been defined as a “conscious,

intentional failure or reckless indifference.”     United States v.

Boyle, supra at 245.   Whether a failure to file timely is due to

reasonable cause and not willful neglect is a question of fact.

Id. at 249 n.8; Commissioner v. Walker, 326 F.2d 261, 264 (9th

Cir. 1964), affg. on this issue 37 T.C. 962 (1962).
                               - 20 -

       Petitioners argue that reasonable cause for the failure to

file timely is established by their counsel’s actions related to

(1) the legal complexities regarding the ownership of the shares

by decedent’s spouse and (2) the practical steps required to form

a qualified domestic trust.

       Respondent, relying on United States v. Boyle, supra,

asserts that petitioners have not presented any details as to why

the return was late and that the record does not support

petitioners’ assertion of reasonable cause because administrators

have a duty to ascertain the due date of the estate tax return

and file it timely, regardless of any reliance on counsel.

       In Boyle, the executor hired an attorney for his mother’s

estate.    The attorney received pertinent information and

documents necessary to file the estate tax return for the estate

and assured Boyle that the return would be filed on time, but it

was filed 3 months late because of a clerical error.    Id. at 242-

243.    The Supreme Court in Boyle also noted factors that have

been considered “reasonable cause” by the IRS including

       unavoidable postal delays, the taxpayer’s timely filing
       of a return with the wrong IRS office, the taxpayer’s
       reliance on the erroneous advice of an IRS officer or
       employee, the death or serious illness of the taxpayer
       or a member of his immediate family, the taxpayer’s
       unavoidable absence, destruction by casualty of the
       taxpayer’s records or place of business, failure of the
       IRS to furnish the taxpayer with the necessary forms in
       a timely fashion, and the inability of an IRS
       representative to meet with the taxpayer when the
       taxpayer makes a timely visit to an IRS office in an
                              - 21 -

     attempt to secure information or aid in the preparation
     of a return. * * * [Id. at 243 n.1.]

     None of the above factors is present here.   There is no

evidence of steps taken by petitioners to assure that the return

was filed on time.   Petitioners have asserted generally that they

relied on counsel to determine whether a U.S. estate tax return

was due, that there were legal complexities regarding the

ownership of the Citigroup shares, and that time was necessary to

form a qualified domestic trust.   The reasonableness of their

actions and excuses for lateness is not self-evident.

     Regulations provide that even if the information available

is not sufficient to permit preparation of a complete estate tax

return as of an extended due date for filing such a return, a

return that is as complete as possible must be filed by that due

date.   Sec. 20.6081-1(d), Estate Tax Regs.; see also sec.

20.6018-2, Estate Tax Regs.   Additionally, filing of supplemental

information is permitted.   See Estate of Eddy v. Commissioner,

115 T.C. 135, 142 (2000); sec. 20.6081-1(d), Estate Tax Regs.

     The estate tax return mailed to respondent on April 29,

2004, reported the shares as community property, as indicated on

the extension request dated October 31, 2002.   Thus, it does not

appear that petitioners were unaware of the requirement of filing

a return or the due date or that their filing position changed

from the date of their extension request to the date the return
                              - 22 -

was filed.   The alleged complexities are not among the

circumstances recognized to constitute reasonable cause.

     Petitioners also argue that because the IRS abated additions

to tax that had been assessed at the time the return was filed,

the remaining addition to tax under section 6651(a)(1) should

also be abated because there is no logical or legal reason for

treating the section 6651(a) addition differently for the

deficiency than there was for the amount reported on the late-

filed return.

     Respondent contends that in the absence of a closing

agreement or other binding agreement covering the late-filing

addition to tax, the applicability of the addition to tax in

dispute must be decided on the record before the Court.

     This Court has held that the IRS did not exceed its

statutory authority by determining an addition to tax after an

abatement of a late-filing addition to tax.   See sec. 7121;

Estate of Wilbanks v. Commissioner, 94 T.C. 306 (1990) (the

determination of reasonable cause by the director of an IRS

service center under section 301.6651-1(c), Proced. & Admin.

Regs., is an administrative action and does not estop the IRS

from later reasserting the addition to tax for late filing); sec.

301.7121-1(a), Proced. & Admin. Regs.   Petitioners have not shown

any agreement that would preclude the determination of the
                              - 23 -

addition to tax here.   Because the record does not establish

reasonable cause, the addition to tax will be sustained.


     To reflect the foregoing,

                                      Decision will be entered for

                                 respondent.
