                        T.C. Memo. 1996-29



                      UNITED STATES TAX COURT



    ESTATE OF SYLVIA P. GOLDMAN, DECEASED, MARSHA GOLDBERG
AND LINDA TANENBAUM, CO-EXECUTRICES, Petitioner v. COMMISSIONER
                OF INTERNAL REVENUE, Respondent



     Docket No. 16970-94.                 Filed January 25, 1996.



     Gerald N. Daffner, for petitioner.

     Marcie B. Harrison and Theodore R. Leighton, for respondent.


             MEMORANDUM FINDINGS OF FACT AND OPINION

     FOLEY, Judge:   By notice dated July 11, 1994, respondent

determined a deficiency in petitioner's estate tax in the amount

of $271,031.37 and an accuracy-related penalty for negligence

under section 6662(b)(1) in the amount of $42,763.25.

     After concessions, the issues before the Court are as

follows:
     1.   Whether the value of funds (i.e., $160,000), paid to

recipients of sixteen $10,000 checks drawn on the decedent's

checking account by her attorney-in-fact, is includable in the

gross estate.   We hold that it is includable.

     2.   Whether the value of funds (i.e., $50,000), paid to

recipients of two $25,000 checks drawn on the decedent's checking

account by her attorney-in-fact, is includable in the gross

estate.   We hold that it is includable.

     3.   Whether petitioner is liable for an accuracy-related

penalty for negligence in the amount of $42,763.25.    We hold that

petitioner is liable.

                         FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The Stipulation of Settled Issues and the Stipulation of Facts

are incorporated by this reference.    All section references are

to the Internal Revenue Code in effect as of the date of

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

Rules of Practice and Procedure, unless otherwise indicated.

     The estate (petitioner) had a mailing address, and the co-

executrices resided, in New York, New York, at the time the

petition was filed.

     Sylvia Goldman (decedent) resided in New York, New York, in

the years prior to her death in 1991.    Decedent had two children,

Marsha Goldberg and Linda Tanenbaum.    Marsha was married to

Richard Goldberg, and Linda was married to Jay Tanenbaum.
                                   - 3 -

Decedent also had four grandchildren:       Marsha and Richard's

children, Caren and Andrew Goldberg; and Linda and Jay's

children, Steven and Susan Tanenbaum.

     In the fall of 1989, decedent was diagnosed with breast

cancer.   On November 1, 1989, decedent executed a Citibank

Consumer Power of Attorney, exercisable by Marsha and/or Linda.

This document was a standard form that Citibank provided to

customers seeking to give a third party the authority to conduct

banking transactions.       It provided in pertinent part:

     I, Sylvia P. Goldman * * * make Linda G. Tanenbaum
     * * * [and] Marsha G. Goldberg * * * my legal
     representative (called an "attorney-in-fact", and
     referred to in this document as the "Attorney") to do
     the following business with Citibank, N.A. (the "Bank")
     in my name:

          1. To open and/or operate any one or more deposit
     or other accounts in my name or any other name
     including the name of the Attorney.

          2. To deposit money, checks, notes and other
     instruments for the payment of money; to endorse any of
     these instruments with my name for the purpose of
     cashing or depositing them or paying them to other
     persons, including the Attorney.

          3. To write and sign checks and other instruments
     to be paid by the Bank; to give orders for the
     withdrawal, transfer or other use of money on deposit
     at the Bank or otherwise available to me;

     *       *          *           *        *        *        *

          I give my Attorney full authority to do anything
     he or she considers necessary and proper to conduct
     this business with the Bank, even if it is for the
     Attorney's own benefit, as if I were personally doing
     it. * * *
                                                 - 4 -

         On December 4, 1989, decedent was admitted to Lenox Hill

Hospital in New York to have a mastectomy.                                  The operation was

performed on December 5, 1989, and decedent was discharged from

the hospital on December 12, 1989.                         On November 26, 1990,

decedent, suffering from shortness of breath, was again admitted

to Lenox Hill Hospital.                 Tests revealed a large cancerous mass on

her chest wall, and she was discharged from the hospital on

November 29, 1990.

         From November 26 through December 10, 1990, decedent wrote

the following checks drawn on her Citibank account:
Check       Date on                                                               Memo
Number      Check          Amount   Payee                                         Notation
2267        11/26/90   $    25.00   St. Jude Children's Research Hospital         Contribution
2268        11/26/90        50.00   Anti-Def. League                              Contribution
2269        12/26/90        25.00   American Red Cross Greater N.Y.               Contribution
2272        11/26/90        36.00   Israel Cancer Research Fund                   Contribution
2273        11/26/90        25.00   Jewish Guild for Blind                        Contribution
2274        11/26/90        18.00   American Red Mogan David, Israel              Contribution
2275         12/1/90       108.00   A.A.R.P. Health Ins. Program                  December, 1990
2277         12/1/90     1,482.63   215 East 68th St. Co.                         Apr. 17- Dec. 1990
2278         12/3/90       259.80   B. Smith & Sons                               Invoice 11/29/90

2279         12/3/90      125.35    Tower Chemists                                Billing date 11/24/90
2280         12/3/90       16.04    AT&T                                          Inv. date 11/26/90
2281         12/1/90      200.00    Linda Tanenbaum                               --
2282         12/1/90       25.00    Susan H. Tanenbaum
                          --
2283         12/1/90       25.00    Steven E. Tanenbaum                           --
2284         12/1/90      200.00    Marsha Goldberg                               --
2285         12/1/90    1,200.00    Cash                                          --
2286         12/6/90      500.00    Steven Tanenbaum                              Happy 21st B
2287         12/7/90      500.00    Linda G. Tanenbaum                            Happy B
2289         12/6/90       40.27    N.Y. Telephone                                Due date 12/20/90
2290        12/10/90      100.00    Susan H. Tanenbaum                            Happy Chanukah
2291        12/10/90      100.00    Caren J. Goldberg                             Happy Chanukah
2292        12/10/90      250.00    Marsha & Richard Goldberg                     Happy Chanukah
2293        12/10/90      250.00    Linda & Jay Tanenbaum                         Happy Chanukah
2294        12/10/90       25.00    Adam R. Roberts                               Happy Chanukah
2295        12/10/90       25.00    Beth N. Roberts                               Happy Chanukah
2296        12/10/90      100.00    Andrew N. Goldberg                            Happy Chanukah
2297        12/10/90      100.00    Steven E. Tanenbaum                           Happy Chanukah
2298        12/10/90      135.45    Blue Cross Blue Shield                        1/1/91-4/1/91



         On December 12, 1990, decedent was readmitted to Lenox Hill Hospital,

where she remained until her death on January 19, 1991.                        Marsha visited

decedent regularly.          Linda, however, was preoccupied with caring for her son

who had recently undergone a bone marrow transplant.                         Thus, she did not spend

as much time with decedent.
                                                        - 5 -
         Decedent's condition slowly worsened.                          When she had enough strength,

however, she enjoyed getting out of bed and writing checks.                               On December 12,

1990, decedent wrote the following checks:
Check       Date on                                                                      Memo
Number      Check               Amount          Payee                                    Notation
2299        12/12/90         $   800.00         [illegible] Brokerage Corp.              --
2300        12/12/90              18.00         N.Y. Times                               11/5-12/2/90
2301        12/12/90             158.75         Town Club                                Inv. 12/1/90
2302        12/12/90              73.54         Chemical Credit Services        Due 12/31/90
2303        12/12/90           1,000.00         Dr. Victor J. Sendax                     Invoice 11/29/90
2305        12/12/90          13,520.00         Georgia Dept. of Revenue                 Seymour J. Goldman,
                                                                                         Dec'd, Sylvia P. Goldman
2306        12/12/90          2,100.00          Gerald N. Daffner                        Georgia Tax Exam


         On December 15, 1990, Marsha wrote the following checks:
Check       Date on                                                                     Memo
Number      Check                      Amount            Payee                          Notation
2425        12/15/90                 $10,000    Steven E. Tanenbaum                     Gift
2426        12/15/90                  10,000    Susan H. Tanenbaum                      Gift
2430        12/15/90                  10,000    Andrew Goldberg Trust                   Gift
2433        12/15/90                  10,000    Richard Goldberg                        Gift
2434        12/15/90                  10,000    Marsha Goldberg                         Gift
2435        12/15/90                  10,000    Caren Goldberg Trust                    Gift
2439        12/15/90                  10,000    Jay H. Tanenbaum                        Gift
2440        12/15/90                  10,000    Linda G. Tanenbaum                      Gift


         From December 20, 1990, through January 3, 1991, decedent

wrote the following checks:
Check       Date on                                                                              Memo
Number      Check                               Amount   Payee                                   Notation
2312        12/21/90     $            50.00     Adam R. Roberts                         Happy "B"
2315        12/20/90                  85.00     Maria Falcon [maid]                     Week ending Dec. 20, 1990
2316        12/23/90               1,810.00     ABT/Metropolitan Opera                  --
2319        12/26/90                   8.81     American Express                        Closing date 12/11/90
2321        12/26/90                  17.35     Lenox Hill News Delivery                11/12-12/9/90
2322        12/28/90                  85.00     Maria Falcon [maid]                     Week ending Dec. 28, 1990
2323        12/30/90                  76.95     Con Edison                              11/8/90-12/12/90
2325          1/1/91                 112.00     AARP Health Insurance                   January, 1991
2327          1/1/91                 100.00     Maria Falcon [maid]                     Merry X-mas
2328          1/3/901              1,000.00     Marsha Goldberg                         --
2329          1/3/901              1,000.00     Linda G. Tanenbaum                      --
2330          1/3/901                150.00     Caren J. Goldberg                       --
2331          1/3/901                 25.00     Steven E. Tanenbaum                     --
2332          1/3/901                 25.00     Susan Tanenbaum                         --
2333          1/3/901                150.00     Andrew N. Goldberg                      --

1
  Although dated in 1990, these checks were paid by the bank in January of 1991, and the sequence of the check
numbers indicates that they were written in 1991. Therefore, we find that these checks were written in 1991.

         On January 3, 1991, decedent began feeling much weaker, and

on January 4, 1991, the hospital started her on a program of

chemotherapy.           Although decedent remained mentally alert, she was

experiencing considerable pain and greater difficulty breathing.
                                                  - 6 -
From January 10 through January 15, 1991, Marsha wrote the

following checks:



Check      Date on                                                                            Memo
Number     Check                Amount            Payee                                       Notation
2424       1/15/91              $25,000.00        Linda G. Tanenbaum                 Reimbursement of expenses
2427       1/10/91               10,000.00        Caren Goldberg Trust Acct.                  Gift
2428       1/10/91               10,000.00        Andrew Goldberg Trust                       Gift
2429       1/17/91                   31.90        Con Edison                                  --
2431       1/10/91               10,000.00        Richard Goldberg                            Gift
2432       1/10/91               10,000.00        Marsha Goldberg                             Gift
2436       1/10/91               10,000.00        Susan H. Tanenbaum                          Gift
2437       1/10/91               10,000.00        Jay H. Tanenbaum                            Gift
2438       1/10/91               10,000.00        Linda G. Tanenbaum                          Gift
2441       1/10/91               10,000.00        Steven E. Tanenbaum                         Gift
2442       1/11/91                   74.34        Chemical Bank Gold Master Card              --
2443       1/11/91                    2.55        Lenox Hill News                             --
2444       1/15/91               25,000.00        Marsha Goldberg                    Reimbursement of expenses
2445       1/11/91                   16.04        AT&T                                                 12/26/90
2446       1/11/91                  257.93        Mount Hebron Cemetery                       --
2447       1/11/91                   21.65        Bloomingdales                               --
2448       1/11/91                    7.00        The New York Times                          --
2449       1/11/91                   50.60        Tower Chemists                              --
2450       1/11/91                   38.11        N.Y. Telephone                              --


         On January 17, 1991, decedent's health deteriorated

significantly, and it became clear that her death was imminent.

On that date, her physician executed a form that indicated

decedent lacked the mental capacity to make medical decisions,

and Marsha executed a form that authorized decedent's physicians

to withhold resuscitation in the event of heart and/or lung

failure.    Also on that date, several family members deposited the

following six checks written by Marsha:

Check      Date on      Date of                   Date
Number     Check        Deposit                   Paid             Amount            Payee
2425       12/15/90     1/17/91                   1/18/91          $10,000           Steven E. Tanenbaum
2426       12/15/90     1/17/91                   1/18/91           10,000           Susan H. Tanenbaum
2436        1/10/91     1/17/91                   1/18/91           10,000           Susan H. Tanenbaum
2438        1/10/91     1/17/91                   1/18/91           10,000           Linda G. Tanenbaum
2440       12/15/90     1/17/91                   1/18/91           10,000           Linda G. Tanenbaum
2441        1/10/91     1/17/91                   1/18/91           10,000           Steven E. Tanenbaum



         Decedent went into a coma on January 18, 1991.                      On that day,

family members deposited the following eight checks written by

Marsha:

Check      Date on    Date of           Date
Number     Check      Deposit           Paid          Amount                 Payee
2427       1/10/91    1/18/91           1/22/91       $10,000                Caren Goldberg Trust Acct.
                                           - 7 -
2428      1/10/91      1/18/91   1/22/91      10,000         Andrew Goldberg Trust
2430      12/15/90     1/18/91   1/22/91      10,000         Andrew Goldberg Trust
2431      1/10/91      1/18/91   1/22/91      10,000         Richard Goldberg
2432      1/10/91      1/18/91   1/22/91      10,000         Marsha Goldberg
2433      12/15/90     1/18/91   1/22/91      10,000         Richard Goldberg
2434      12/15/90     1/18/91   1/22/91      10,000         Marsha Goldberg
2435      12/15/90     1/18/91   1/22/91      10,000         Caren Goldberg Trust


On January 29, 1991, Jay Tanenbaum deposited two $10,000 checks.

       Decedent died on January 19, 1991.                Her will, which named

Marsha and Linda as executrices, provided for specific bequests

to Susan Tanenbaum, Steven Tanenbaum, Caren Goldberg, and Andrew

Goldberg, each in the amount of $5,000.                  All of decedent's

personal effects and the residue of her estate were to be divided

equally between Marsha and Linda.

       On October 15, 1991, Marsha and Linda signed the estate's

estate tax return, which was postmarked October 16, 1991.                            They

did not report the funds paid to recipients of the sixteen

$10,000 checks and of the two $25,000 checks.                   Neither Marsha nor

Linda reviewed the return or scrutinized its accuracy.

       On July 11, 1994, respondent issued a notice determining an

estate tax deficiency of $271,031.37.                  This deficiency was

attributable to respondent's determination that petitioner had

failed to properly include in the gross estate the value of

several assets, including the value of the funds paid to

recipients of the sixteen $10,000 checks and of the two $25,000

checks.      Respondent also determined an accuracy-related penalty

for negligence under section 6662(b)(1) in the amount of

$42,763.25.          Respondent determined that petitioner negligently

failed to report six bank accounts with an aggregate value of
                                 - 8 -

$365,798.02 and understated funds in one account by $106,941.08.

Inclusion of these items resulted in a $213,816.24 increase in

tax.

       On September 19, 1994, petitioner filed its petition.    On

May 9, 1995, petitioner and respondent executed a Stipulation of

Settled Issues, in which petitioner conceded several of

respondent's determinations.

                               OPINION

       Petitioner, in its petition, disputed respondent's

disallowance of a $500 deduction for decedent's cleaning expenses

and a $1,733 deduction for her rental expenses.    It also disputed

respondent's determination that one of petitioner's bank accounts

had a balance of $146,644.08 instead of $39,703.00, the amount

that was reported on the estate's tax return.    Petitioner,

however, offered no evidence at trial to refute these

determinations and failed to address these issues in its briefs.

Accordingly, petitioner has not satisfied its burden of proof on

these items, and respondent's determinations with respect to

these issues are sustained.    Rule 149(b); Lowry Hosp. Assn. v.

Commissioner, 66 T.C. 850, 851 (1976).    We now turn to the

contested issues in this case.

I.   Includability of the Sixteen $10,000 Checks

       We must first determine whether the value of the funds

(i.e., $160,000), paid to recipients of sixteen $10,000 checks

written by Marsha, is includable in the gross estate.    The gross
                                 - 9 -

estate includes the value of all property to the extent that the

decedent had an interest in it at the time of her death.      Sec.

2033.     "The amount of cash belonging to the decedent at the date

of his death, whether in his possession or in the possession of

another, or deposited with a bank, is included in the decedent's

gross estate."     Sec. 20.2031-5, Estate Tax Regs.   State law

determines the extent of a decedent's interest in property.

Burnet v. Harmel, 287 U.S. 103, 110 (1932).

     Petitioner contends that decedent intended to make $10,000

gifts to family members and that the power of attorney authorized

Marsha to make such gifts.     We hold that decedent did not intend

to make these transfers and that Marsha had no authority to make

them.

     A.    Decedent's Intent To Make Gifts

     We must determine, under New York law, whether the sixteen

$10,000 checks that Marsha wrote to various family members were

valid and completed gifts.     United States v. Rodgers, et al, 461

U.S. 677, 683 (1982); Muserlian v. Commissioner, 932 F.2d 109,

113 (2d Cir. 1991), affg. T.C. Memo. 1989-493.     According to the

New York Court of Appeals, New York's highest court, a gift is

valid only if donative intent, delivery, and acceptance are

established.     See, e.g., Gruen v. Gruen, 496 N.E. 2d 869, 872

(1986).     "[T]he proponent of a gift has the burden of proving

each of these elements by clear and convincing evidence."         Id.

[citations omitted].
                              - 10 -

     Petitioner offered the testimony of Richard, Linda, and

Marsha to establish decedent's intent.   Richard testified that he

was in decedent's hospital room when she asked Marsha to make

gifts to family members.   Our analysis of the record as set forth

below leads us to conclude that this event never occurred.

Linda's testimony was vague and unconvincing.   She stated that

decedent intended to make gifts to family members, but could not

recall whether it was Marsha or decedent that provided her with

this information.   Marsha's testimony, however, is the key

element in our determination whether decedent intended to make

these transfers.

     Marsha testified that decedent kept her checkbook at the

hospital and that she and decedent wrote their checks out of this

checkbook.   The record indicates, however, that (1) on December

12, 1990, decedent wrote checks numbered 2299, 2300, 2301, 2302,

2303, 2305, and 2306; (2) on December 15, 1990, Marsha wrote

eight $10,000 checks numbered 2425, 2426, 2430, 2433, 2434, 2435,

2439, and 2440; and (3) from December 21, 1990, through January

3, 1991, decedent wrote checks with numbers ranging from 2312 to

2333.   The check numbers would not be so out of sequence if they

were written, as Marsha says, only days apart and out of the same

checkbook.

     When Marsha was asked on direct examination why the $10,000

checks dated December 15, 1990, were not deposited by her and the

other donees until January, she replied that "we were all
                              - 11 -

supposed to go away for Christmas.     So the only thing I could

think of is that we went away."   We do not believe that the

family went on an extended vacation during the period decedent

was in the hospital.   Moreover, we find it curious that all eight

of the check recipients held their $10,000 checks for more than a

month and that seven of the eight recipients deposited their

checks during the 2-day period immediately preceding decedent's

death.1

     A further review of the facts reveals additional reasons to

doubt Marsha's testimony.   On December 15, 1990, Marsha wrote

eight $10,000 checks to family members.     Yet during the 2 weeks

prior to December 15, 1990, decedent wrote 14 checks to family

members (i.e., as birthday gifts, Chanukah gifts, etc.) in

amounts ranging from $25 to $500.    During the 3-week period after

December 15, 1990, decedent wrote six checks to family members in

amounts ranging from $25 to $1,000.     Also during this period, she

wrote a $50 birthday gift check to Adam Roberts and a $100

Christmas gift check to Maria Falcon (her maid).

     Decedent undoubtedly was willing and able to write her own

gift checks during this period.   The fact that she did not write

any of the $10,000 checks is probative of her lack of intent.

     1
       A more plausible explanation is that Marsha wrote these
checks in January and backdated them. Indeed, the check numbers
and Marsha's testimony would lead us to this conclusion. The
parties, however, have stipulated that the dates shown on the
checks are the dates such checks were written. Therefore, we
will accept their stipulation despite our skepticism.
                               - 12 -

Marsha, however, asks us to believe that her gravely ill mother

chose personally to write numerous checks of modest amounts to

family members and routine checks to creditors, yet delegated to

Marsha the pleasure of writing checks of large amounts to family

members.    In essence, Marsha's testimony did not have "that

reasonableness and probability, in view of all the circumstances,

as would naturally lead to the belief that a gift had been made

and intended."    In re Sherman, 125 N.E. 546, 547 (1919); cf.

McKeon v. Van Slyck, 119 N.E. 851, 852 (1918); Glasberg v.

Krauss, 260 N.Y.S.2d 570 (A.D. 1 Dept. 1965); 62 NY Jur. 2d Gifts

sec. 5 (1987) (stating that "courts look with suspicion upon

gifts alleged to have been made by a donor who is dead, and

therefore unable to corroborate or deny the claim").    Therefore,

we conclude that petitioner has not met its burden of

establishing, by clear and convincing evidence, decedent's intent

to make gifts.

     B.    Marsha's Authority Pursuant to the Power of Attorney

     We must next determine whether the power of attorney

authorized Marsha to execute gifts on behalf of decedent.    We

turn to the law of New York to analyze the scope of the power of

attorney.    Morgan v. Commissioner, 309 U.S. 78, 80 (1940); Estate

of Casey v. Commissioner, 948 F.2d 895 (4th Cir. 1991), revg.

T.C. Memo. 1989-511.

     The New York Court of Appeals has not considered whether a

power of attorney may confer the authority to make gifts where
                               - 13 -

the power of attorney does not explicitly so state.    Where the

highest court in the State has not ruled on a particular point,

our task is to give "proper regard" to the relevant rulings of

the State's lower courts in determining the law.    Commissioner v.

Estate of Bosch, 387 U.S. 456, 465 (1967).

     In recent cases involving gifts by attorneys-in-fact to

themselves and third parties, lower New York courts have

consistently invalidated the transfers absent a showing that the

power of attorney explicitly authorized them.   See Semmler v.

Naples, 563 N.Y.S. 2d 116 (A.D. 3 Dept. 1990); Moglia v. Moglia,

533 N.Y.S. 2d 959 (A.D. 2 Dept. 1988); Matter of Griffin, 611

N.Y.S. 2d 743 (Surr. Ct. 1994); Estate of Iannone, 431 N.Y.S. 2d

904 (Surr. Ct. 1980); Estate of DeBelardino, 352 N.Y.S. 2d 858

(Surr. Ct. 1974), affd. 363 N.Y.S.2d 974 (A.D. 4 Dept. 1975);

Gaughan v. Nickoloff, 214 N.Y.S.2d 487 (Sup. Ct. 1961); In re

Robertson's Estate, 81 N.Y.S.2d 286 (Surr. Ct. 1948).

     In Semmler, the decedent's son, acting pursuant to a power

of attorney, closed all of the decedent's bank accounts prior to

her death and deposited the funds in an account held jointly by

himself and his sister.   The decedent's grandchildren, who were

also beneficiaries under the will, brought suit to have the

diverted funds declared an asset of the estate.    The Appellate

Division affirmed the Supreme Court's judgment that the funds

were an asset of the estate.   The Appellate Division noted that

the power of attorney did not explicitly authorize gifts and held
                               - 14 -

that no valid gift was made.   The court stated that "an agent may

not make a gift to himself or a third party of the money or

property which is the subject of the agency relationship."

Semmler v. Naples, supra [citations omitted].

     In Porges v. United States Mortgage and Trust Co., 96 N.E.

424, 426 (1911), the New York Court of Appeals invalidated an

agent's transfer of his principal's money to himself.   The court

held that a power of attorney cannot be "enlarged by implication

or construction" to authorize a transfer of the principal's

property to the agent.   Porges v. United States Mortgage and

Trust Co., supra at 427 [emphasis added].   It further held that a

power of attorney is to be construed:

     according to the natural meaning of the words in view
     of the purpose of the agency and the needs to its
     fulfillment. The authority within it under such
     construction is not to be broadened or extended and the
     sole right of a court is to ascertain, through the rule
     stated, and apply the authority. [Porges v. United
     States Mortgage and Trust Co., supra at 426; cf. Matter
     of Zalewski, 55 N.E. 2d 184, 187 (1944); 3 NY Jur.
     Agency and Independent Contractors sec. 66 (1979).]

     Petitioner's power of attorney authorized the attorney-in-

fact to "do anything he or she considers necessary and proper to

conduct this business with the Bank".   [Emphasis added.]    "[T]his

business" refers to the explicit grant of authority to open and

close accounts, deposit and withdraw money, and write checks.

     Applying the holdings of New York's lower courts and

considering the New York Court of Appeals' holding in Porges that

powers of attorney are not to be "enlarged by implication or
                              - 15 -

construction", we conclude that a New York court would invalidate

the transfers in the present case.     The court would apply the

rule set out in Semmler v. Naples, supra, and invalidate

purported gifts by the attorney-in-fact absent explicit authority

in the power of attorney instrument.     The power of attorney in

the present case did not explicitly or implicitly authorize

Marsha to make gifts of decedent's funds.     Thus, no valid gifts

were made and decedent retained the right to the funds.     We

further conclude that the New York Court of Appeals would be

particularly reluctant to imply broad authority in Citibank's

standard two-page fill-in-the-blanks form.

     Petitioner argues that a New York court might ratify the

gifts because they benefit the estate by reducing its Federal

estate tax liability.   It bases its argument on Matter of Cohen,

an unreported Surrogate's Court opinion.     The court stated:


       To the extent the petition seeks the ratification of
     various gifts amounting to sums far in excess of the
     annual exclusion made by the attorney-in-fact on behalf
     of Rose J. Cohen during the years 1985 through 1993,
     the relief requested is denied. The power of attorney
     heretofore described was executed in statutory short
     form and contains no expressed power for gift giving.
     In these circumstances, the power of attorney conferred
     no such authority upon the attorney-in-fact and those
     gifts were accordingly unauthorized and their
     ratification is denied (Moglia v. Moglia, 114 AD2d
     347). * * * [N.Y. Law J., August 17, 1993, at 26.]

     This language is subject to varying interpretations.

Petitioner contends that the court in Matter of Cohen ratified

the gifts to the extent they did not exceed the annual exclusion
                               - 16 -

amount.    Respondent, on the other hand, contends that the court

invalidated the transfers entirely.     Even if we were to accept

petitioner's interpretation, Matter of Cohen is distinguishable

from the present case.    In Matter of Cohen, the decedent for over

10 years had annually given $10,000 gifts to her children and

grandchildren.    Petitioner, however, has presented no evidence to

demonstrate such a pattern of inter vivos transfers to family

members.    Therefore, we reject petitioner's argument.

      Because we have found that no valid gifts were made, the

value of the funds totaling $160,000 was includable in decedent's

gross estate pursuant to section 2033.

II.   Includability of the Two $25,000 Checks

      Respondent determined that the value of funds (i.e.,

$50,000), paid to recipients of two $25,000 checks, was

includable in decedent's gross estate pursuant to sections 2031

and 2033.    The taxpayer bears the burden of proving that

respondent's determination is erroneous.     Rule 142(a); Welch v.

Helvering, 290 U.S. 111, 115 (1933).

      Marsha wrote one $25,000 check to herself and one to Linda.

Petitioner argues, and Marsha testified, that the checks were

reimbursements for amounts Marsha and Linda expended on

decedent's behalf, and alternatively, that the transfers

constituted valid and complete gifts.     Respondent contends that

these transfers were not for reimbursement, and did not

constitute valid and complete gifts.     Thus, respondent argues,
                                - 17 -

decedent retained an interest in the funds, and the amounts were

properly includable in the gross estate.

       Petitioner has not carried its burden of proof.   Although it

claims that Marsha and Linda paid for decedent's hairdressers,

doctors, housekeepers, doormen, moving people, and manicurists,

it has not produced any records to substantiate its claim.     It

produced no cancelled checks or receipts.    Moreover, neither

Marsha nor Linda could recall whether they had actually spent

$25,000 each.    In fact, Linda testified that decedent intended

that some of the money was to be used for future outlays.

Therefore, we reject petitioner's argument and find that the

transfers were not reimbursement for expenditures made on behalf

of decedent.

       We also reject petitioner's alternative argument that the

transfers qualified as gifts.     The purported gifts fail due to an

absence of sufficient evidence of decedent's intent and Marsha's

lack of authority to make a gift.    Accordingly, we sustain

respondent's determination that the value of funds (i.e.,

$50,000), represented by the $25,000 checks paid to Marsha and

Linda, is includable in the gross estate pursuant to section

2033.

III.    Accuracy-related Penalty for Negligence Under Section 6662

       Respondent contends that petitioner was negligent in

understating its tax liability.    Section 6662(a) imposes a

penalty in an amount equal to 20 percent of the portion of the
                                - 18 -

underpayment of tax to which the section applies.    Sec. 6662(a).

The section applies to, among other enumerated items, the portion

of an underpayment attributable to "negligence or disregard of

rules or regulations."    Sec. 6662(b)(1).

     Negligence is defined as the "lack of due care or failure to

do what a reasonable and ordinarily prudent person would do under

the circumstances."     Neely v. Commissioner, 85 T.C. 934, 947

(1985) (construing the predecessor to the current section 6662).

It includes the failure to make a reasonable attempt to comply

with the Internal Revenue Code, as well as a failure by the

taxpayer to keep adequate books and records or substantiate items

properly.   Sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs.

Petitioner bears the burden of proving it was not negligent.

Rule 142(a); Goldman v. Commissioner, 39 F.3d 402, 406 (2d Cir.

1994), affg. T.C. Memo. 1993-480.

     Petitioner failed to include in the gross estate the value

of six bank accounts.    It also undervalued an account by

$106,941.08.   Petitioner contends that "in an estate exceeding

$3.1 million, such an inadvertent omission ($388,000) * * *

do[es] not justify imposition of the addition to tax."    Section

6662, however, does not have a de minimis exception.    Therefore,

we reject this argument.

     Marsha testified that she relied on her accountant to

prepare the return.   Although a taxpayer is not liable for the

negligence penalty if reasonable cause is established, a mere
                              - 19 -

showing of reliance on professional advice will not suffice.

Sec. 1.6664-4(b), Income Tax Regs.     In order to serve as a

defense, the reliance on professional advice must be reasonable.

See Freytag v. Commissioner, 89 T.C. 849, 888 (1987), affd. 904

F.2d 1011 (5th Cir. 1990), affd. 501 U.S. 868 (1991).     Marsha and

Linda neither read nor understood the estate's tax return when

they signed it.   Marsha testified:    "I'm just one of those people

that the accountant or lawyer tells me to sign [the return], I

guess I just signed it".   It is well established that such blind

reliance on a professional does not establish reasonable cause.

See Bagur v. Commissioner, 66 T.C. 817, 823-824 (1976), remanded

on other grounds 603 F.2d 491 (5th Cir. 1979); Georgiou v.

Commissioner, T.C. Memo. 1995-546.     Nor was it shown here that

the accountant was furnished with all the information necessary

to prepare the return for petitioner in an accurate fashion.

Accordingly, we sustain respondent's determination.


                                 Decision will be entered

                               under Rule 155.
