                        T.C. Memo. 2001-287



                      UNITED STATES TAX COURT



                  LEE NELSON SHAW, Applicant v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

              VIRGINIA MARIE SWEENEY, Applicant v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 1-01-D, 2-01-D.             Filed October 29, 2001.


     Kenneth M. Hart, for applicants.

     William A. Heard III, for respondent.



                        MEMORANDUM OPINION

     DAWSON, Judge:   These consolidated cases were assigned to

Chief Special Trial Judge Peter J. Panuthos pursuant to Rules 180

and 181 and Interim Rule 183.1     The Court agrees with and adopts


     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
                                                   (continued...)
                                 - 2 -

the opinion of the Chief Special Trial Judge, which is set forth

below.

               OPINION OF THE SPECIAL TRIAL JUDGE

     PANUTHOS, Chief Special Trial Judge:    These matters are

before the Court on Lee Nelson Shaw’s (Mr. Shaw) and Virginia

Marie Sweeney’s (Mrs. Sweeney) separate applications to

perpetuate testimony, filed pursuant to Rule 82.    (For

convenience, we will refer to Mr. Shaw and Mrs. Sweeney,

collectively, as the applicants.)    The applicants do not have

current petitions for redetermination of deficiencies before the

Court.

                           Background

     The applicants are siblings.    Mr. Shaw and Mrs. Sweeney were

71 and 78 years of age, respectively, at the time the

applications herein were made.    At the time of filing the

applications, Mr. Shaw resided at Vero Beach, Florida, and Mrs.

Sweeney resided at Chappaqua, New York.

     The applications in these cases state that, in 1951, the

applicants, along with their brother, Robert S. Shaw (now

deceased), each formed separate trusts.    The trusts named City

Bank Farmers Trust Co. (now Citibank) and Marie A. Shaw, the

applicants’ mother, as trustees.    The applications further state:


     1
      (...continued)
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                               - 3 -

(1) The applicants formed the trusts at the direction of their

father, Leo N. Shaw; (2) the applicants’ parents funded the

trusts over a 12-year period either by transferring assets

directly to the trusts or by transferring assets to the

applicants, who in turn transferred the assets to the trusts; and

(3) the applicants’ mother generally converted income from the

trusts to household use.   Although the applicants were named as

beneficiaries of their respective trusts, income from the trusts

was not made available to the applicants until after their

parents died.

     Mr. Shaw’s trust currently holds assets valued at

approximately $5.8 million, and Mrs. Sweeney’s trust currently

holds assets valued at approximately $4.2 million.    The

applicants both have substantial assets in addition to their

trusts.

     The applicants assert that the value of their respective

trusts should not be included in their gross estates for purposes

of computing Federal estate taxes.     In particular, the applicants

maintain that their parents funded the trusts and the applicants

were merely “nominal settlors” with a life estate in the trusts.

The applicants are concerned that, after their deaths, respondent

will examine their estates’ Federal estate tax returns and

determine that the value of the trusts should be included
                                 - 4 -

therein.2   The applicants further anticipate that their personal

representatives will contest respondent’s determinations by

filing a petition with the Court.    The applicants contend that

they are the only living persons with knowledge of the

circumstances underlying the creation, funding, and

administration of the trusts.

     Respondent filed a response in opposition to the

applications, arguing in part:    (1) The applicants have failed to

show that they expect to be parties to a case cognizable in this

Court; and (2) the applicants have failed to show that there is a

significant risk that the desired testimony will be lost before

trial because (a) there is no evidence that either applicant is

suffering from any serious illness, and (b) it is likely that one

of the applicants will be available to testify at a Tax Court

trial concerning the estate of the first to die.

     This matter was called for hearing at the Court’s motions

session in Washington, D.C.    Counsel for the parties appeared at

the hearing and offered argument.

                              Discussion

     Rule 82 provides for the taking of depositions before the




     2
        Although the applicants state that they became aware of
the trust issue following their brother’s death, there is no
allegation that respondent issued a notice of deficiency to the
Estate of Robert S. Shaw.
                               - 5 -

commencement of a Tax Court case “to perpetuate testimony or to

preserve any document or thing regarding any matter that may be

cognizable in this Court”.   Rule 82 is derived from rule 27(a) of

the Federal Rules of Civil Procedure, and we are guided by

judicial interpretations of rule 27 of the Federal Rules of Civil

Procedure in the absence of our own precedent.   Reed v.

Commissioner, 90 T.C. 698, 700 (1988).

     Rule 82 states that an application must include:   (1) The

facts showing that the applicant expects to be a party to a case

cognizable in this Court but is at present unable to bring it or

cause it to be brought; (2) the subject matter of the expected

action and the applicant’s interest therein; and (3) all matters

required to be shown in an application under paragraph (b)(1) of

Rule 81 except item (H) thereof.   Rule 81(b)(1), as is relevant

here, requires the applicant to show the reason for deposing a

person rather than waiting to call the person as a witness at

trial and the substance of the testimony that the applicant

expects to elicit.   Rule 82 further provides:

     If the Court is satisfied that the perpetuation of the
     testimony or the preservation of the document or thing
     may prevent a failure or delay of justice, then it will
     make an order authorizing the deposition and including
     such other terms and conditions as it may deem
     appropriate consistently with these Rules. * * *

     The instant applications state that the applicants expect

that, after the death of each, their respective estates will be

parties to cases cognizable in this Court and that the cases will
                               - 6 -

concern the question whether the values of their trusts should be

included in their gross estates for purposes of computing Federal

estate taxes.   As indicated, respondent objects to the

applications.

     It is our view that Rule 82 was not intended to be invoked

under the abstract circumstances of these cases.   The facts here

are clearly distinguishable from those in GlaxoSmithKline

Holdings (Americas) Inc. v. Commissioner, 117 T.C. 1 (2001).     In

GlaxoSmithKline Holdings, the examination of the taxpayer was

ongoing.   Attempts were made to resolve differences through the

Advance Pricing Agreement Program and through the Internal

Revenue Service’s Office of Appeals.   The taxpayer further

requested relief from double taxation under the so-called

competent authority process.   At the time of making the

application to perpetuate testimony, the taxpayer anticipated

that the competent authority process could be protracted and that

it would be 4 or 5 years before the case might proceed to trial.

The Court concluded in GlaxoSmithKline Holdings that there was a

reasonable expectation that the applicants would be adversaries

in an action cognizable in the Court and a significant risk that

critical testimony might be lost.

     By contrast, the applications in these cases involve the

possible estate taxes of persons who are still alive.     The only

certainty in these cases is that the applicants will die someday.
                                 - 7 -

No one can say for a certainty when their respective deaths will

occur.   More importantly, the events that might occur after the

death of the applicants are all speculative.    Upon the respective

deaths of the applicants, if representatives of each of the

estates conclude the estates were subject to estate tax, Federal

estate tax returns would be due 9 months after the death of each

applicant.   Secs. 6018, 6075.   The Federal estate tax returns

might or might not be filed.     Assuming Federal estate tax returns

were filed, or were required to be filed, the Internal Revenue

Service might examine the returns and/or the estates.    If

examined, adjustments might be made, and each respective estate

might disagree with proposed adjustments.    At some point, a

notice of deficiency to each estate might be issued, and a

petition might be filed on behalf of each estate.

     Unlike the circumstances in GlaxoSmithKline Holdings, there

are far too many contingencies for us to conclude that the

respective legal representatives of the applicants will be

parties cognizable in this Court.    In Reed v. Commissioner, supra

at 701, we emphasized that “The relief provided for by Rule 82 is

an extraordinary measure and invoked only to prevent the failure

or delay of justice.”   See also Masek v. Commissioner, 92 T.C.

814, 815 (1989), supplementing 91 T.C. 1096 (1988).     We are not

persuaded on this record that the perpetuation of the applicants’
                                 - 8 -

testimony may prevent a failure or delay of justice.

Accordingly, we will deny the applications.

     To reflect the foregoing,

                                              Orders will be entered

                                         denying the applications to

                                         perpetuate testimony.
