                         T.C. Memo. 2007-203



                       UNITED STATES TAX COURT



ESTATE OF GERTRUDE ZLOTOWSKI, DECEASED, GUNTHER GREWE, ANCILLARY
              ADMINISTRATOR, C.T.A., Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 22150-04.               Filed July 24, 2007.



          Susan Litwer, Howell Bramson, and Robert H. Rosh

     (specially recognized), for petitioner.

          Lydia A. Branche and Shawna A. Early, for

     respondent.



                         MEMORANDUM OPINION


     HALPERN, Judge:    This case involves the Federal estate tax.

The decedent (decedent) is Gertrude Zlotowski.   By notice of

deficiency dated August 24, 2004, respondent determined a
                                - 2 -

deficiency in Federal estate tax of $933,437 and an addition to

tax for failure to file timely the estate tax return of $233,359.

     All section references are to 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.

     On account of stipulations made by the parties, which we

accept, the sole issue remaining for our decision is the addition

to tax for failure to file timely the estate tax return.

     Some facts have been stipulated and are so found.   The

stipulation of facts, with accompanying exhibits, is incorporated

herein by this reference.   We need find few facts in addition to

those stipulated and shall not, therefore, separately set forth

our findings of fact.   We shall make additional findings of fact

as we proceed.

                             Background

     We may be brief in our background discussion since the issue

before us is narrow:    Was the failure to timely file the estate

tax return due to reasonable cause and not due to willful

neglect?

     Decedent died on September 10, 1999.   At that time, although

a U.S. citizen, she was domiciled in Germany.   She had made two

wills, the U.S. will and a later, German will (the German will),

which revoked the U.S. will.
                               - 3 -

     Apparently in ignorance of the German will, on or about May

22, 2000, two individuals nominated in the U.S. will as

executors, Jacques Roisen (Mr. Roisen) and Henry Helman (Mr.

Helman), presented the U.S. will for probate in the Surrogate’s

Court of the State of New York (the Surrogate’s Court).   On May

31, 2000, the Surrogate’s Court granted them preliminary letters

testamentary.   James R. Ledley, Esq. (Mr. Ledley), represented

them in connection with their services in administering

decedent’s estate (the estate).   Messrs. Roisen and Helman played

little role in the selection of Mr. Ledley as their counsel, but

they accepted him as having been selected by decedent’s attorney.

Some time early in June 2000, Mr. Ledley learned about the German

will.

     Because of the value of the estate, a Form 706, United

States Estate (and Generation-Skipping Transfer) Tax Return, was

due from the executors of the estate on or about June 12, 2000.

Messrs. Roisen and Helman requested and received an extension to

file that return (the estate tax return) until December 10, 2000.

The parties have stipulated that, with respect to that request,

Mr. Ledley represented Messrs. Roisen and Helman.   Messrs. Roisen

and Helman did not file the estate tax return until September 19,

2001.

     Some time in 2003, the heirs under the German will hired an

American attorney to help with ancillary proceedings in the
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Surrogate’s Court.    On June 4, 2004, Dr. Gunther Grewe (Dr.

Grewe) was appointed Ancillary Administrator, C.T.A., of the

estate.    At the time the petition was filed, Dr. Grewe had a

mailing address in Rye, New York.

     On or about June 4, 2004, the preliminary letters

testamentary issued to Messrs. Roisen and Helman were revoked.

     At the trial of the case, Mr. Roisen testified; Mr. Helman

did not, since he was deceased.     In part, Mr. Roisen testified as

follows:    He is 85 years old.   He owns real estate and is the

head of his own diamond firm.     He believes that he was nominated

as an executor because he was close to decedent’s husband, with

whom he had done business.    He knew nothing about the estate and

relied fully on the attorneys (i.e., Mr. Ledley), who were in

charge of the estate.    The job of filing the estate tax return

was in Mr. Ledley’s hands.    He (Mr. Roisen) did not participate

in the preparation of the estate tax return.     He had full

confidence in Mr. Ledley, and his only responsibility with

respect to filing the estate tax return was to sign it after it

had been prepared by Mr. Ledley.     He signed the estate tax return

on August 28, 2001.    He never discussed with Mr. Ledley penalties

for a late-filed return.    In response to respondent’s counsel’s

question as to whether Mr. Ledley had ever discussed with him

whether the estate tax return was going to be filed on time, he

answered as follows:    “Well, they mentioned it to me at one time
                                 - 5 -

that they were a little late in the filing, and that they took

care of it, and that they would file it a little later.”

      Mr. Ledley also testified at the trial of the case.   In

part, he testified as follows:    It was his duty to prepare the

estate tax return for Messrs. Roisen and Helman.    He began that

preparation after being retained in 2000.    In late September or

early October of 2000, he advised Messrs. Roisen and Helman to

suspend their administration of the estate.    He did so because he

had received correspondence from Europe that, if Messrs. Roisen

and Helman meddled in the estate, it would be at their own risk.

He advised them to not then file an estate tax return.    He,

himself, suspended preparation of the estate tax return.    He

returned to preparation of the estate tax return either in late

January or early February of 2001, since it was taking a long

time for the heirs under the German will to take over the New

York proceeding.

                            Discussion

I.   Statutory Scheme

      Section 2001(a) imposes an estate tax, and section 6018

imposes on the executor the obligation to make the necessary

return of tax.   The term “executor” is defined in section 2203,

and the parties agree that (1) Messrs. Roisen and Helman were

executors within the meaning of those sections, and (2) they, and
                               - 6 -

only they, were responsible for filing the estate tax return when

it became due.

      Section 6075 establishes that an estate tax return must be

filed within 9 months after the decedent’s death, and section

6081 allows the Secretary of the Treasury to grant an extension

of time to file for no more than 6 months.   Messrs. Roisen and

Helman received an extension to file the estate tax return until

December 10, 2000.   The return was not filed until September 19,

2001, however, and was, therefore, delinquent.

      Section 6651(a)(1) provides for an addition to tax in the

event a taxpayer fails to file a timely return (determined with

regard to any extension of time for filing), unless it is shown

that such failure is due to reasonable cause and not due to

willful neglect.   The amount of the addition is equal to 5

percent of the amount required to be shown as tax on the

delinquent return for each month or fraction thereof during which

the return remains delinquent, up to a maximum addition of 25

percent for returns more than 4 months delinquent.

II.   Dispute

      The parties do not dispute the computation of the section

6651(a)(1) addition to tax (which respondent agrees must be

recomputed, due to additional deductions allowed petitioner).

They dispute only whether petitioner has avoided the addition to

tax by showing that Messrs. Roisen and Helman’s delinquency in
                               - 7 -

filing the estate tax return was due to reasonable cause and not

due to willful neglect.1

     The term “willful neglect” denotes “a conscious, intentional

failure or reckless indifference.”     United States v. Boyle, 469

U.S. 241, 245 (1985).   Reasonable cause is established where,

despite the exercise of ordinary business care and prudence, a

taxpayer is unable to file timely.     Id. at 246 & n.4; sec.

301.6651-1(c)(1), Proced. & Admin. Regs.; see also McMahan v.

Commissioner, 114 F.3d 366, 369 (2d Cir. 1997) (considering

elements constituting reasonable cause for late filings under

section 6651(a)(1)), affg. T.C. Memo. 1995-547.

     Respondent does not contend that the return was delinquent

because of Messrs. Roisen and Helman’s willful neglect, only that

they have failed to establish reasonable cause for the

delinquency.   Respondent relies on the following points to

support his reasonable cause conclusion:    Reliance on the advice

of an attorney concerning matters of law constitutes reasonable

cause.   However, a taxpayer’s reliance on the advice of an

attorney with respect to matters such as meeting filing deadlines

generally does not constitute reasonable cause.    Here, Mr. Ledley



     1
        The delinquency having been established, respondent has
met the burden of production placed on him by sec. 7491(c), see,
e.g., Weaver v. Commissioner, T.C. Memo. 2004-108, and petitioner
bears the burden of proving reasonable cause and the lack of
willful neglect, see Rule 142(a); Higbee v. Commissioner, 116
T.C. 438, 446-447 (2001).
                                   - 8 -

gave Messrs. Roisen and Helman no advice on which they could

rely.       They have failed to show that he advised them that, as a

matter of law, it was not necessary to file timely the estate tax

return.       Moreover, their reliance on him to file the estate tax

return was an impermissible delegation of their responsibility as

executors.       Respondent adds: “If the executor is unable to obtain

complete information about the decedent[’s] assets, he must still

file a timely tax return based on the information available at

that time.”

       Petitioner relies principally on the argument that Messrs.

Roisen and Helman had reasonable cause “because it is abundantly

clear that they relied on the advice of their attorney not to

file at the time the return was due.”

III.    Discussion

       A.     Introduction

       In United State v. Boyle, supra at 249-250, the Supreme

Court stated:

            Congress has placed the burden of prompt filing
       [of an estate tax return] on the executor, not on some
       agent or employee of the executor. * * * Congress
       intended to place upon the taxpayer an obligation to
       ascertain the statutory deadline and then to meet that
       deadline, except in a very narrow range of situations.

The Court recognized that engaging an attorney to assist in

probate proceedings is “plainly an exercise of the ‘ordinary

business care and prudence’ prescribed by [section

301.6651-1(c)(1), Proced. & Admin. Regs.]”.       Id. at 250.
                              - 9 -

Nevertheless, describing the executor’s duty to file the return

as an “unambiguous, precisely defined duty”, the Court cautioned

that the executor’s expectation that the attorney, as his agent,

would attend to the matter “does not relieve the principal of his

duty to comply with the statute.”     Id.   The Court described as

among those very narrow circumstances in which an executor may be

excused from discharging his duty to ascertain and meet the

filing deadline the circumstance in which an executor has relied

on the erroneous advice of counsel concerning a question of law;

e.g., “when a taxpayer shows that he reasonably relied on the

advice of an accountant or attorney that it was unnecessary to

file a return, even when such advice turned out to have been

mistaken.”   Id.

     B.   Analysis

     We start our analysis with two unassailable facts:     Messrs.

Roisen and Helman were obligated to file the estate tax return no

later than December 10, 2000, and they failed in that obligation.

Petitioner may escape an addition to tax on account of that

failure if he can show that they had reasonable cause for the

failure because they reasonably relied on the advice of Mr.

Ledley that they had no such obligation.     Petitioner, however,

has failed to make that showing.    Indeed, petitioner has failed

to show that, on December 10, 2000, Messrs. Roisen and Helman

were aware that the last day for filing the estate tax return was
                             - 10 -

passing without the return being filed, much less that they let

it pass without filing the return in reliance on Mr. Ledley’s

advice.

     Mr. Helman is deceased, and petitioner has provided no

evidence of Mr. Helman’s state of mind.    Mr. Roisen testified

about his administration of the estate, and, from that testimony,

we draw the conclusion that he was almost completely disengaged

from estate administration, relying on Mr. Ledley to do virtually

all that was required of him and Mr. Helman.    Specifically, we

make the following findings, based on Mr. Roisen’s testimony:      He

agreed to serve as an executor to accommodate his old business

acquaintance, decedent’s husband.   He relied on decedent’s

attorney for the selection of Mr. Ledley as executors’ counsel.

He knew nothing about the estate and relied fully on Mr. Ledley,

who, from his perspective, was in charge of the estate.    Apart

from signing the Form 706, he did not participate in filing it,

which job, he believed, was in Mr. Ledley’s hands.    He never

discussed with Mr. Ledley penalties for a late-filed return.      He

only discussed with Mr. Ledley whether the return was going to be

filed on time after it already was late.

     Mr. Roisen’s almost complete disengagement from return

preparation is captured by his final exchange with one of

respondent’s counsel:
                                - 11 -

     Q:     So, essentially your testimony is that they [i.e.,
            Mr. Ledley] took care of everything relative to
            the filing of the return?

     A:     Absolutely.   That is a hundred percent correct.

     Q:     And you had no participation in the filing of the
            return?

     A:     No, except that they required my signature,
            because being the executor of the will, I had to
            sign it, and which I did. I had full confidence
            in them.

     Mr. Roisen signed the estate tax return, on August 28, 2001,

after it was more than 8 months overdue.

     While we have before us Mr. Ledley’s testimony that, in late

September or early October of 2000, he advised Messrs. Roisen and

Helman to suspend their administration of the estate and he also

advised them not to file an estate tax return, we have no

testimony from Mr. Roisen that either he or Mr. Helman ever

received (or, if received, understood) that advice.     At trial,

Mr. Roisen was called as a witness by petitioner.     He was

examined by one of petitioner’s counsel with respect to advice

received from Mr. Ledley.     He readily agreed with counsel that he

had received advice from Mr. Ledley and had followed that advice.

Counsel’s questions, however, were with respect to advice

generally; she did not ask Mr. Roisen whether he received and

followed any advice with respect to not making a timely return of

tax (i.e., filing the estate tax return on or before December 10,

2000).    We infer from that failure of inquiry that Mr. Roisen’s
                              - 12 -

answer to that question would not have been favorable to

petitioner’s case.   See Wichita Terminal Elevator Co. v.

Commissioner, 6 T.C. 1158, 1165 (1946) (“the failure of a party

to introduce evidence within his possession and which, if true,

would be favorable to him, gives rise to the presumption that if

produced it would be unfavorable”), affd. 162 F.2d 513 (10th Cir.

1947).   We are not dissuaded by Mr. Ledley’s testimony from our

conclusion, expressed above, that petitioner has not shown that

Messrs. Roisen and Helman’s failure to file timely the return was

due to their reliance on advice received from Mr. Ledley.

     Finally, even considering Mr. Ledley’s advice, it was not

advice that, as a matter of law, Messrs. Roisen and Helman had no

obligation to file an estate tax return by December 10, 2000.    It

was simply advice that there was some risk (unspecified) with

continuing their administration of the estate (including filing

the estate tax return).   Indeed, Mr. Ledley returned to

preparation of the estate tax return in late January or early

February 2001 since, he testified, it was taking a long time for

the heirs under the German will to take over the New York

proceeding.2


     2
        Until Messrs. Roisen and Helman were relieved of their
duties as executors, there is no question but that it was their
obligation to file the Form 706. See sec. 20.6018-2, Estate Tax
Regs. Although they may not have had complete information about
the German assets, they could have satisfied that obligation by
filing a timely tax return based on the best information
                                                   (continued...)
                              - 13 -

      C.   Conclusion

      Petitioner has failed to show that, on account of reasonable

cause and not due to willful neglect, petitioner is excepted from

liability for the section 6651(a)(1) addition to tax.

IV.   Conclusion

      Petitioner is liable for an addition to tax pursuant to

section 6651(a)(1) for failure to file timely the Form 706.


                                         Decision will be entered

                                    under Rule 155.




      2
      (...continued)
available and later filing an amended return. See Estate of
Vriniotis v. Commissioner, 79 T.C. 298, 311 (1982).
