                        T.C. Memo. 2004-211



                      UNITED STATES TAX COURT



 ESTATE OF ANTOINETTE HARTSELL, DECEASED, DONALD C. RENBARGER,
             PERSONAL REPRESENTATIVE, Petitioner v.
         COMMISSIONER OF INTERNAL REVENUE, Respondent.



     Docket No. 8009-03.          Filed September 21, 2004.



     Steven P. Cole, Jeff L. Todd, and Alan G. Holloway, for

petitioner.

     Gary L. Bloom, for respondent.


              MEMORANDUM FINDINGS OF FACT AND OPINION


     KROUPA, Judge:   Respondent determined a deficiency in the

Federal estate tax of the Estate of Antoinette Hartsell (estate)
                                - 2 -

of $3,074,4081 and an addition to tax under section 6651(a)(2)2

for failure to pay timely.    After concessions, the sole issue for

decision is whether the estate is liable for the addition to tax

under section 6651(a)(2) for failure to pay its Federal estate

tax timely.    We hold that it is liable.

                           FINDINGS OF FACT

     The parties have stipulated some facts, which we incorporate

by this reference.

     Antoinette Hartsell (decedent) was domiciled in Oklahoma

City, Oklahoma, at the time of her death.     When the petition was

filed with the Court, Donald C. Renbarger, the executor, resided

in Oklahoma City, Oklahoma.

     Decedent died on December 18, 1998, with a gross estate

valued in excess of $13 million.    The estate was composed of real

properties, mineral interests, royalty interests, stocks, bonds,

and accounts receivable.    The stocks had a fair market value of

$725,190, and the mineral interests had an estimable return value

of $400,000.    Over 70 percent of the value of the taxable estate

was attributable to nonliquid assets.




     1
      All monetary amounts have been rounded to the nearest
dollar.
     2
      Unless otherwise indicated, 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.
                                - 3 -

     On April 5, 1999, decedent’s Last Will and Testament was

admitted to probate by the District Court for Oklahoma County,

Oklahoma.   Pursuant to the will, decedent devised her entire

estate to her friend Donald C. Renbarger (Mr. Renbarger) and

expressly disinherited her half-sister and step-sister.   Decedent

also designated Mr. Renbarger “personal representative” of the

estate.

     The original due date for the Federal estate tax to be paid

was September 20, 1999.   Mr. Renbarger submitted a timely request

for an extension of time to pay the Federal estate tax under

section 6161 and a partial payment of $100,000 toward a total

Federal estate tax liability of $4,267,373.   Respondent granted

the first request for an extension of time to pay through March

16, 2000.   Mr. Renbarger submitted a second timely request for an

extension of time to pay, which respondent granted through March

18, 2001 (payment due date).

     Mr. Renbarger submitted a third request for an extension of

time to pay on March 9, 2001.   Respondent mailed Mr. Renbarger a

request to substantiate reasonable cause for further extending

the payment due date.   Because Mr. Renbarger failed to

substantiate reasonable cause, respondent denied the estate’s

third request for an extension of time to pay.   The final payment

due date was therefore March 18, 2001.
                                    - 4 -

        Before the payment due date, Mr. Renbarger offered to

compromise the estate’s Federal estate tax liability of

$4,267,373 with respondent for $2,166,000.       Respondent initially

rejected the offer in compromise (OIC).3       Mr. Renbarger appealed

and respondent requested additional information to support the

OIC.        Respondent finally denied Mr. Renbarger’s appeal of his

rejection of the OIC, determining that collecting an amount

larger than the estate’s OIC would not create an economic

hardship.

        Mr. Renbarger planned to pay the Federal estate tax by

selecting five real properties to advertise for sale without the

assistance of a realty company.4       Mr. Renbarger’s asking price

for one property was more than three times the value at which it

was reported on the estate’s Federal estate tax return.         By the

payment due date, none of the advertised properties was sold or

contracted to be sold.

        Mr. Renbarger sold only one property before the payment due

date.       The amount received, $1,572,276, was escrowed for


        3
      More specifically, respondent rejected the estate’s OIC
because respondent’s examination showed that: (1) Respondent
could collect a larger amount than the estate offered; (2) no
exceptional circumstance existed; and (3) the estate failed to
establish that an economic hardship would be created by
liquidating enough assets to pay the Federal estate tax in full.
        4
      On Jan. 16, 2003, almost 2 years after the payment due
date, the estate hired a professional realty company to advertise
and sell three of its properties.
                                - 5 -

respondent on May 10, 2000.   Over 2 years later and after the

payment due date, Mr. Renbarger paid $1.2 million of that amount

to respondent.    The remainder was used to pay State estate taxes.

Mr. Renbarger submitted one additional payment of $168,682 to

respondent 2 days before trial.

     Since decedent’s death, the estate has paid State estate

taxes to four States.   By the time of trial, the estate had paid

$1,433,288 to the State of Oklahoma, $85,704 to the State of

Colorado, $18,090 to the State of Kansas, and $12,589 to the

State of Texas.   In total, the estate has paid State estate and

Federal estate taxes of $3,209,052, including interest.

     Before her death, decedent had lent $760,000 to Mr.

Renbarger’s son and $111,000 to Mr. Renbarger.    Mr. Renbarger’s

son ceased making interest payments to decedent of approximately

$4,000 per month after she died.   As the executor, Mr. Renbarger

later forgave the loan to himself and had not, by the trial date,

enforced collection of the principal or interest on the loan to

his son.

     The estate was a party to three cases involving its

properties on the payment due date.     Three additional cases

commenced after the payment due date.

     Mr. Renbarger directed two informal inquiries into the

possibility of using one of the estate’s properties as collateral

for a loan in order to pay its Federal estate tax.    In both
                               - 6 -

instances, Mr. Renbarger was told that he would have to

personally guarantee the loan, which he refused to do.

     Respondent mailed the estate a notice of deficiency and the

estate timely filed a petition for redetermination.

                              OPINION

     Section 6651(a)(2) provides for an addition to tax5 for

failure to pay taxes shown on a return on or before the payment

due date.   The addition to tax under section 6651(a)(2) does not

apply, however, if the failure to pay is due to reasonable cause

and not due to willful neglect.   United States v. Boyle, 469 U.S.

241, 245 (1985); Jackson v. Commissioner, 864 F.2d 1521, 1527

(10th Cir. 1989), affg. 86 T.C. 492 (1986); Crocker v.

Commissioner, 92 T.C. 899, 912 (1989); sec. 301.6651-1(a)(2),

Proced. & Admin. Regs.

     The taxpayer bears the burden of proof as to reasonable

cause and willful neglect.6   Charlotte’s Office Boutique, Inc. v.

Commissioner, 121 T.C. 89, 110 (2003); Higbee v. Commissioner,


     5
      The addition to tax is one-half percent of the amount shown
as tax on a return for each month or fraction thereof during
which the failure to pay continues, not exceeding 25 percent in
the aggregate. Sec. 6651(a)(2).
     6
      The Commissioner has the burden of production under sec.
7491(c) as to the addition to tax. Sec. 7491(c); Higbee v.
Commissioner, 116 T.C. 438, 446 (2001). Sec. 7491(c) only
applies, however, to individuals. Even if we assume arguendo
that sec. 7491(c) applies to the estate in this case, the estate
has conceded that it failed to pay the Federal estate tax timely,
and so respondent has met his burden of production.
                                 - 7 -

116 T.C. 438, 446 (2001); Estate of Newton v. Commissioner, T.C.

Memo. 1990-208.    The taxpayer bears a “heavy burden” of proving

both that the failure was due to reasonable cause and not willful

neglect.   United States v. Boyle, supra at 245.

     Failure to pay timely is due to “reasonable cause” if the

taxpayer exercised ordinary business care and prudence and was

nevertheless unable or would suffer an undue hardship to pay the

tax by the due date.     Id. at 246; Bank of the West v.

Commissioner, 93 T.C. 462, 471 (1989); Estate of Paxton v.

Commissioner, 86 T.C. 785, 819 (1986); sec. 301.6651-1(c),

Proced. & Admin. Regs.

     The reasonable cause standard is a one-time test to be

passed or failed at the payment due date.    See Indus. Indem. v.

Snyder, 41 Bankr. 882, 883 (E.D. Wash. 1984); see also

Photographic Assistance Corp. v. United States, 82 AFTR 2d 98-

6804, 98-2 USTC par. 50,820 (N.D. Ga. 1998) (failure to offer any

explanation for a failure to pay when due prevents any finding of

reasonable cause).   Events occurring after the due date are still

relevant, however, to the reasonable cause determination.    See

Estate of Sowell v. United States, 198 F.3d 169 (5th Cir. 1999)

(distinguishes Indus. Indem., stating that, although later

justifications could not stop penalties from accruing, they were

not irrelevant).
                                  - 8 -

      To satisfy “undue hardship”, it must appear that substantial

financial loss would result to the taxpayer from making payment

by the due date.   Sec. 1.6161-1(b), Income Tax Regs.; see also

sec. 20.6161-1(a)(2)(ii), Estate Tax Regs.    Further, if a market

exists, the sale of property at the current market price is not

ordinarily considered an undue hardship.     Sec. 1.6161-1(b),

Income Tax Regs.; see also sec. 20.6161-1(a)(2)(ii), Estate Tax

Regs.

      Consideration will be given to all the facts and

circumstances of the taxpayer’s financial condition in

determining whether the taxpayer was unable to pay despite the

exercise of ordinary business care and prudence.    Sec. 301.6651-

1(c), Proced. & Admin. Regs.

I.   Contentions of the Parties

      Mr. Renbarger concedes that he did not pay the estate’s

Federal estate tax timely but argues that his failure to pay was

due to reasonable cause rather than willful neglect.

Specifically, Mr. Renbarger argues that he created a plan to pay

the Federal estate tax, that the plan was prudent and reasonable,

and that he could not have paid the Federal estate tax when due

without “extreme hardship”.

      Respondent counters that the estate failed to show

reasonable cause and lack of willful neglect and did not exercise

ordinary business care and prudence to pay its Federal estate
                                - 9 -

tax.    Respondent specifically argues that Mr. Renbarger failed to

seriously pursue financing, did not advertise a sufficient amount

of real estate to pay the Federal estate tax, preferred State

estate tax payments over Federal estate tax payments, and failed

to collect outstanding accounts receivable.      For the reasons set

forth, the Court agrees with respondent that the estate has

failed to show reasonable cause and no willful neglect for its

failure to pay timely and is therefore liable for the addition to

tax under section 6651(a)(2).

II.    The Estate’s Payment History

       The estate paid only $100,000 to respondent by the payment

due date.    The estate made two additional payments after the

payment due date and before trial.      First, the estate paid

respondent $1.2 million, its only significant payment, more than

2 years after the payment due date.      Second, the estate paid

respondent $168,682 nearly 3 years after the payment due date and

just 2 days before trial.

       Moreover, the estate’s $1.2 million payment was not even

attributable to efforts it made to sell property.      Rather, the

sale resulted from the buyer’s exercise of an option to purchase

that decedent had granted before her death.      Further, the

proceeds from the sale were deposited in escrow for respondent on

May 10, 2000, and yet the estate waited an additional 2 years

before it released the funds to respondent.
                               - 10 -

       Mr. Renbarger attributes the more-than-2-year lag in payment

to respondent’s failure to consent to a release of the funds.      We

disagree.    As respondent explains, the escrow agreement stated

that the funds could be released either when respondent sent a

closing letter to the escrow agent or “otherwise [consented]”.

Respondent consented on June 6, 2001, in a letter specifically

requesting the estate to provide a “check for $1,564,405.89 plus

interest, which is currently being held in escrow”.    Despite this

consent to release, Mr. Renbarger continued to wait another year

before he transmitted the funds to respondent, and even then

transferred only a portion of the full escrow amount.

       Mr. Renbarger also ignored advice from his tax adviser, who

specifically recommended that he transmit the escrowed funds to

respondent earlier.    Mr. Renbarger cavalierly explained that he

knew the funds belonged to respondent and that he expected

respondent to come and collect the money when he was ready.     The

estate benefited from the additional interest that accumulated on

the escrowed funds in the meantime.

       We find that the estate failed to exercise ordinary business

care and prudence in waiting more than a year to transmit the

escrowed funds to respondent, contrary to respondent’s explicit

consent and contrary to the advice of the estate’s tax adviser.

III.    The Estate’s Plan To Pay the Federal Estate Tax

       We turn now to the merits of Mr. Renbarger’s “plan” to raise

capital to pay the estate’s Federal estate tax.    The plan
                               - 11 -

constitutes the estate’s central argument that it exercised

ordinary business care and prudence and could not, without undue

hardship, sell sufficient property to pay its Federal estate tax

by the payment due date.   The plan essentially involved selecting

five properties to sell, advertising and marketing those

properties, and, once they were sold, selecting additional

properties to sell.

     Mr. Renbarger chose to sell a mere five properties from an

estate composed of more than 60 properties.   He advertised the

properties by placing a single “for sale” sign on each with a

phone number.   Mr. Renbarger waited, no bids were received, and

the deadline, extended twice, passed without payment.   One person

contacted the estate regarding a property but expressed no

interest upon hearing the asking price.   Mr. Renbarger did not

enlist the assistance of a professional real estate broker and

instead relied on his own expertise and that of a small team,

which included his two sons.

     Mr. Renbarger attributes his lack of success in selling the

estate’s five properties to macroeconomic events including a

slowing economy, the national recession beginning March 2001, the

collapse of Enron, the State and national declines in real

income, the evaporation of stock investor wealth, and even the

uncertainties of war in Afghanistan and Iraq and the events of

September 11, 2001.   We are unconvinced by Mr. Renbarger’s

argument, particularly considering that most of the events
                                - 12 -

occurred on or after the payment due date.     For example, the

recession beginning in March 2001, the events of September 11,

2001, and the collapse of Enron in December 2001 all occurred on

or after March 18, 2001, the estate’s payment due date.

     Adverse economic conditions do not necessarily constitute

reasonable cause.    See Wolfe v. United States, 612 F. Supp. 605,

607-608 (D. Mont. 1985), affd. on other grounds 798 F.2d 1241

(9th Cir. 1986), amended on denial of rehearing 806 F.2d 1410

(9th Cir. 1986).    In Wolfe, the court considered whether

financial difficulties due in part to the Arab oil embargo

constituted reasonable cause for failing to pay by the payment

due date.   Id.    The court stated that almost every nonwillful

failure to pay taxes is the result of financial difficulties, and

to allow taxpayers to postpone paying taxes until economic

conditions improve would severely restrict the Internal Revenue

Service’s ability to raise revenue.      Id.

     Likewise, the estate has failed to adequately demonstrate

how these economic events causally affected its ability to sell

properties.   Rather, we attribute the lack of interest in the

estate’s properties to its arbitrary prices, negligible marketing

efforts, too few properties advertised, a desire to save paying

third parties other than Mr. Renbarger and his sons, and,

overall, a desire to sell at a profit rather than at current

market prices.     See sec. 20.6161-1(a)(2)(ii), Estate Tax Regs.
                               - 13 -

     We find that the estate did not adequately determine

reasonable prices at which the five advertised properties could

sell.    Asked how prices were calculated, Mr. Renbarger stated

simply that he put a figure on them and waited for an offer to

come along.    One witness for the estate testified that little

research was conducted to ascertain proper sales prices and that

Mr. Renbarger would merely declare a price and place a “for sale”

sign on the property.    These arbitrary price determinations are

exemplified by one property’s being priced at three times the

value at which it was reported on the estate’s Federal estate tax

return.7

     While the Court does not begrudge Mr. Renbarger’s attempt to

profit from sales of estate property, he cannot do so and

simultaneously urge the Court to find that the estate faced an

undue hardship because it could sell only at sacrifice prices.

See sec. 20.6161-1(a)(2)(ii), Example (2), Estate Tax Regs.       No

undue hardship exists where a taxpayer can sell at current market

values.    See sec. 1.6161-1(b), Income Tax Regs. (if a market

exists, the sale of property at the current market price is not

ordinarily considered an undue hardship).    Mr. Renbarger has

failed to demonstrate that he ever offered the five properties at




     7
      The reported value of the Garden Ridge Property in the
estate’s Federal estate tax return was $1,294,700. The asking
price was approximately $3,833,000.
                              - 14 -

current market prices, much less sacrificial prices or, for

instance, received an offer at a sacrifice price.

     Additionally, Mr. Renbarger’s braggadocio at reaping large

profits from sales after the payment due date further undermines

his argument that he could sell only at sacrifice prices.    Mr.

Renbarger claimed the plan was succeeding because “it brought in

at least 40 percent more value to the estate” when the properties

sold after the due date at his original asking prices.   When

asked whether he received fair values, Mr. Renbarger testified

that he got “way more than the appraisal” on the properties.    The

record therefore demonstrates that Mr. Renbarger’s dominant

motivation was to reap a profit rather than pay by the payment

due date.

     The estate’s failure to list properties with a realty

company before the due date also exhibits a lack of ordinary

business care and prudence.   Mr. Renbarger’s explanation was

merely that he wanted to save the 6- to 8-percent commission.

Avoiding fees cannot constitute reasonable cause for paying late,

however, particularly where the estate had virtually no success

of its own in selling property.   A more prudent course would have

been to hire a realty company when it became apparent the five

properties advertised for sale would not sell by the payment due

date.
                              - 15 -

      Further, Mr. Renbarger’s choice to advertise five of

approximately 60 properties constituted too limited an attempt to

raise sufficient capital to pay the Federal estate tax.      By Mr.

Renbarger’s own admission, proceeds from the five properties

would not fully satisfy the estate’s Federal tax liability, but

rather would make a “big impact" toward that liability.

Regardless, Mr. Renbarger refused to advertise more properties

because, he testified, he saw no reason to deviate from his plan,

despite not receiving a single offer by the payment due date.

This sentiment runs counter to the mandated duties of an executor

and the obligations of an estate in meeting Federal estate tax

obligations.   Here, the estate’s properties were situated in four

States and 21 counties.   Additional properties could have been

advertised for sale, and contrary to testimony from one of the

estate’s experts, without worry of depressing prices in any

single local market.   Overall, we find Mr. Renbarger’s plan did

not constitute the serious effort required to pay the Federal

estate tax timely.

IV.   Whether the Estate Faced Cessation of a Going Concern

      Mr. Renbarger argues that the estate would have suffered an

undue hardship to pay the Federal estate tax by the payment due

date.   Mr. Renbarger relies on Estate of La Meres v.

Commissioner, 98 T.C. 294 (1992), for this proposition.      We find

the facts in Estate of La Meres distinctly different from the
                                - 16 -

facts before us.    The Court in Estate of La Meres discussed

“undue hardship” in the context of a section 6166 election and a

closely held business, specifically addressing an example in the

regulations.     See sec. 20.6161-1(a)(2)(ii), Example (1), Estate

Tax Regs.   Undue hardship may exist where a farm or other closely

held business constitutes a significant portion of an estate and

sufficient funds could be raised from “other sources” to pay the

estate tax if a section 6161 extension to pay were granted.      Id.

This is not the case here.

     First, the example in section 20.6161-1(a)(2)(ii), Estate

Tax Regs., addresses situations where a taxpayer faces the

cessation and sale of a farm or other closely held business in

order to pay the Federal estate tax but does not meet the

threshold 35-percent requirement in section 6166(a)(1).8    In our

case, the estate had no going concern of its own, and hence

whether the estate might qualify under section 6166 is not at

issue.   Second, Mr. Renbarger had no plan to raise money from

“other” sources.    Mr. Renbarger specifically stated that he would

not grant the personal guaranty he claimed was necessary to

obtain a loan and that he was not willing to sell the estate’s

liquid assets.    Instead, Mr. Renbarger requested an extension of

time to pay so he could continue advertising for sale precisely

     8
      An estate may elect to pay its Federal estate tax liability
in installments if the value of a closely held business exceeds
35 percent of the adjusted gross estate. Sec. 6166(a)(1).
                               - 17 -

the same limited number of properties he had previously

advertised for sale.    Finally, the taxpayer in Estate of La Meres

erroneously assumed that a proper section 6166 election had been

made and that its due date for payment was postponed.     Id. at

313.    Mr. Renbarger was fully aware that the estate’s payment due

date had passed.

V.   Administrative Burden of Ongoing Litigation

       We now address Mr. Renbarger’s claim that pending litigation

presented an extraordinary administrative burden on the estate.

An estate’s involvement in proceedings that might affect the

estate tax does not constitute reasonable cause for late payment.

See Estate of Duttenhofer v. Commissioner, 49 T.C. 200, 206-207

(1967) (pending litigation, even where the outcome would affect

the determination of an estate tax, is not reasonable cause for

failing to file an estate tax return timely), affd. per curiam

410 F.2d 302 (6th Cir. 1969); Porter v. Commissioner, 49 T.C.

207, 226-227 (1967) (pending litigation affecting the fair market

value of a taxpayer’s interest in property at the time of death

was not reasonable cause for untimely filing).

       The estate has failed to show how litigation significantly

affected its administration.    For instance, Mr. Renbarger

testified that he gave the cases to the estate’s attorney and

that “he gets after [them].”    Further, only three of the six

cases were commenced before the payment due date, which is the
                              - 18 -

point at which we determine whether reasonable cause existed.

Accordingly, we do not find the ongoing litigation imposed a

unique or an undue hardship on the estate.

VI.   The Estate’s Attempts To Obtain Alternative Sources of
      Financing

      Next we address respondent’s arguments that the estate

failed to pursue other sources of potential financing or income

to pay its Federal estate tax.   The estate consists principally

of non-income-producing property.   Consequently, Mr. Renbarger

claimed the few liquid assets the estate owned and the income

they produced were needed to maintain the estate.   Mr. Renbarger

therefore claims that the estate could raise money only by

advertising and selling its real properties.   Respondent counters

that the estate failed to make reasonable efforts to obtain

alternative financing.

      Respondent first claims Mr. Renbarger failed to exercise

ordinary business care and prudence in forgiving two of the

estate’s accounts receivable and not enforcing collection of

interest payments on one.   Before her death, decedent had lent

$111,000 to Mr. Renbarger and $760,000 to his son, Randy

Renbarger.9   Randy Renbarger made monthly interest payments of

approximately $4,000 to decedent in connection with his loan but

instantly stopped making monthly interest payments at decedent’s


      9
      Decedent financed her $760,000 loan to Randy Renbarger by
obtaining a mortgage on certain property she owned.
                                    - 19 -

death.        Mr. Renbarger made no effort, however, to collect either

of the outstanding loans or to collect interest payments from his

son.

        Mr. Renbarger forgave the loan to himself according, he

claims, to decedent’s wishes.        In addition, Randy Renbarger

testified that his interest payments were contingent upon his

“ability to pay”, which coincidentally stopped in the same month

decedent died.10        Mr. Renbarger thereafter refused to enforce

collection of interest payments on Randy Renbarger’s loan,

because he was now the sole beneficiary and, because the loan to

his son became his personal property, he just “called it off”.

We find Mr. Renbarger’s relinquishment of the estate’s right to

accounts receivable and interest payments at a time it owed a

significant Federal estate tax not consonant with ordinary

business care and prudence.

        Respondent also claims the estate made insufficient efforts

to obtain a loan.        Mr. Renbarger counters that he made two

informal inquiries, but that in both instances he would have had

to personally guarantee the loan, which he was not willing to

do.11        There is no evidence in the record that Mr. Renbarger ever


        10
      No promissory note for Randy Renbarger’s loan was
submitted into evidence.
        11
      Respondent asserts that Mr. Renbarger’s failure to
consider granting a personal guaranty to obtain a loan or
contributing proceeds he received from two annuity contracts to
                                                   (continued...)
                                   - 20 -

submitted a formal loan application, and we can infer none was

made.        See Helvering v. Natl. Grocery Co., 304 U.S. 282, 294

(1938) (“To draw inferences, to weigh the evidence and to declare

the result is the function of the * * * [U.S. Tax Court].”); see

also Wichita Terminal Elevator Co. v. Commissioner, 162 F.2d 513,

515 (10th Cir. 1947), affg. 6 T.C. 1158 (1946).       We find both

inquiries inadequate to prove ordinary business care and

prudence.        Both requests were informal and both involved only a

single property as collateral.

        The estate also made no effort to sell or borrow against the

estate’s mineral interests or its portfolio of stocks and bonds.

Respondent argues this is an additional indicium that the estate

failed to exercise ordinary business care and prudence in

attempting to pay its Federal estate tax.        We agree.

VII.     The Estate’s Preferential State Estate Tax Payments

        The estate made a number of State estate tax payments in

preference to paying its Federal estate tax.        Respondent contends

that this further shows a lack of reasonable cause for failing to



        11
      (...continued)
the Federal estate tax is further evidence that the estate failed
to show ordinary business care and prudence in paying its tax
obligation. While there is some authority for holding an
executor personally liable for the estate tax, the weight of
authority seems to hold an executor liable only for a fiduciary
breach. See Schwartz v. Commissioner, 560 F.2d 311 (8th Cir.
1977), revg. and remanding T.C. Memo. 1975-267; Leigh v.
Commissioner, 72 T.C. 1105 (1979). But see Baldwin v.
Commissioner, 94 F.2d 355 (9th Cir. 1938). There is a strong
argument that the executor has breached his fiduciary duties
here, but that question is not before the Court.
                                 - 21 -

pay the estate tax timely.   Mr. Renbarger counters that the

Internal Revenue Code mandates that State estate taxes actually

be paid before Federal estate taxes.      We disagree with Mr.

Renbarger’s characterization of the Code.      Section 2011(c)(2)

allows a credit for State estate taxes up to 4 years after the

filing of the Federal estate tax return or up to the expiration

date of any section 6161 extension of time to pay.      See Howard v.

United States, 40 F. Supp. 697 (E.D. La. 1941) (courts cannot

extend this period), affd. on other grounds 125 F.2d 986 (5th

Cir. 1942).

     Mr. Renbarger also asserts but did not substantiate that

respondent’s Appeals Office advised him to pay State estate taxes

before Federal estate taxes so the estate might receive the

section 2011 credit for State estate taxes paid.      As respondent

correctly points out, the estate had already begun paying State

estate tax before the purported advice.      Any advice therefore

could not have been given before the payment due date because

respondent did not commence examination of the estate’s Federal

estate tax return until May 14, 2001.      Consequently, Mr.

Renbarger makes a disingenuous argument when he claims the advice

influenced his decision to prefer State estate tax payments over

Federal estate tax payments.12


     12
      We are aware of the State estate tax credit phase-out
under sec. 2011. In this case, the estate could credit State
estate tax payments actually paid until approximately February
2004, 4 years from the date it filed its Federal estate tax
                                                   (continued...)
                                - 22 -

VIII.     Executor’s Business Experience

     Finally, we are unpersuaded by Mr. Renbarger’s assertion

that he lacked the necessary business education and experience to

liquidate over $6 million in assets to pay Federal and State

estate taxes and administrative expenses.     There is no cause to

find an experienced executor incompetent to manage the affairs of

an estate where the executor is experienced in business.      Estate

of Thomas v. Commissioner, T.C. Memo. 2001-225 (executrix was not

a naive, incapacitated, elderly citizen but rather an experienced

businesswoman).     In this case, Mr. Renbarger had sufficient

business expertise to act as the executor.     He was a 99-percent

owner of Westgate Market Place Developers, L.L.C., and was

involved in numerous real estate transactions, including many

with the estate’s properties.     We also note that Mr. Renbarger is

quick to allege his incompetence when it supports his argument

but was apparently content to rely substantially on his own

expertise when he assembled his “small team”, made up of his two

sons, a certified public accountant, and a nonpracticing real

estate broker,13 and, we assume, content to collect his nearly $1

million fee to date as an executor.      In view of Mr. Renbarger’s


     12
      (...continued)
return. The amount the estate could credit under sec.
2011(b)(2)(B) dropped, however, to 75 percent in 2002, 50 percent
in 2003, and 25 percent in 2004, which may have influenced the
estate’s decision to prefer paying State estate tax over Federal
estate tax.
     13
      This individual was also Mr. Renbarger’s partner in
Westgate Market Place Developers, L.L.C.
                               - 23 -

apparent business experience, we do not find him unqualified to

act as the executor.

IX.   Conclusion

      Congress prescribed the civil penalty to ensure timely

payment of tax.    The statutory deadline provision is clear.   It

mandates that the Federal estate tax be paid by the executor

under section 2002 and that payment be remitted at the time

prescribed for filing under section 6151 (or a later date if

extended).    This is a case where the executor was the only heir

to the entire estate.    In that dual capacity, he possessed

complete control over each aspect of the estate and its

administration.    He faced no opposition to any action he chose to

take.   In light of this unbridled authority and the negligible

payment of $100,000 by the payment due date toward a Federal

estate tax liability of approximately $4.2 million, the Court

finds that the estate demonstrably failed to carry its burden of

proving that its failure to pay the tax timely was due to

reasonable cause and not willful neglect.    Accordingly, the

estate is liable for the addition to tax under section

6651(a)(2).

      To reflect the foregoing regarding the addition to tax and

the concessions of the parties regarding the non-addition-to-tax

issues,


                                          Decision will be entered

                                     under Rule 155.
