DOJ Insists Equitable Recoupment was Inappropriate Remedy

Frank Branson died in 1991, owning 12,900 shares of Savings Bank of Mendocino County stock and 500 shares of Bank of Willits stock. His estate reported the value of the Savings and Willits shares as $181.50 and $485 respectively. Branson's will provided that all estate taxes were to be paid from the residuary estate. His daughter and executrix of his estate, Mary March, obtained an order allowing the estate to sell some of the Savings shares at $335 per share and all of Willits stock at $850 per share. March sold the stock in 1992 and paid federal and state estate taxes.

The estate reported the capital gain from those sales on Schedule D of its Form 1040, calculating the gain by subtracting the value of the shares reported on the estate tax return from the amount received in the sales. The estate did not pay any income tax on the gains; instead it reported a net long-term capital gain distribution to March, who reported the gain on her own Schedule D.

The IRS determined a deficiency against the estate, asserting that the fair market values of the Savings and Willits shares were $300 and $850, respectively, per share. In a memorandum opinion, the Tax Court found that the correct values were $276 and $626, respectively. (For a summary of the memorandum opinion, see Tax Notes, July 19, 1999, p. 389; for the full text, see Doc 1999-23753 (53 original pages) or 1999 TNT 134-8 .) In anticipation of an adverse decision, the estate argued that it was entitled to equitable recoupment of the income tax March overpaid -- the refund of which was barred by the statute of limitations -- in determining the amount of its estate tax liability.

A divided Tax Court then held that under the doctrine of equitable recoupment, the estate is entitled to a credit for the income tax overpaid by the residuary legatee on the gains recognized on the sales of the stock, because the date-of-death value was greater than that reported by the estate. The court noted that it had jurisdiction to consider claims of equitable recoupment and that the doctrine is limited to use as a defense against an otherwise valid claim (i.e., a deficiency claim by the IRS). (For a summary of the divided opinion, see Tax Notes, July 19, 1999, p. 391; for the full text, see Doc 1999-23756 (70 original pages) or 1999 TNT 34-11 .)

The Department of Justice acknowledges that the Tax Court may exercise equitable powers over matters properly within its jurisdiction. However, the DOJ insists that it is not within the Tax Court's jurisdiction to grant equitable recoupment with respect to a deficiency or overpayment that is not before it. The Justice Department emphasizes that in this case the Tax Court presumed to exercise equitable powers with respect to a matter that was altogether unnecessary to the determination of the issue before it. The matter to be decided by the Tax Court was the redetermination of an estate tax deficiency, so the question whether the Marches overpaid their 1992 income taxes was not within the Tax Court's jurisdiction.

[1] This reply brief is directed to those matters set forth in the appellee's brief that warrant response. With respect to matters not addressed herein, we rely on our opening brief.

[2] 1. In our opening brief (at 14-27), we demonstrated that the Tax Court lacks authority to permit a taxpayer to set off (or "recoup") a time-barred tax overpayment against a tax deficiency timely asserted against it with respect to the same transaction. This is because, as the Supreme Court held with respect to the Board of Tax Appeals in Commissioner v. Gooch Milling & Elevator Co., 320 U.S. 418 (1943), a determination whether equitable recoupment was appropriate with respect to a time-barred overpayment necessarily required a determination that there actually was an overpayment of a tax other than the tax to which the petition before the Board related, but that there was no statutory provision that authorized the Board to determine an overpayment of such other tax. Without the authority to determine overpayments in other taxes, the Supreme Court reasoned, the Board could not consider whether they could be recouped against the tax to which the petition before it related. We also pointed out (opening br. 35) that the Sixth Circuit, in Estate of Mueller v. Commissioner, 153 F.3d 302, 306 (6th Cir. 1998), cert. denied, 525 U.S. 1140 (1999), concluded that the rationale of Gooch Milling is equally applicable in Tax Court cases, the controlling statutes, so far as relevant here, being substantially identical to those considered dispositive in Gooch Milling. Finally, we pointed out (opening br. 28-29) that the Tax Court's having been made an Article I "legislative court" by the Tax Reform Act of 1969, Pub. L. No. 91-172, sections 951-962, 83 Stat. 487, 730, did not have the effect of conferring equitable jurisdiction upon it, as the Fifth Circuit held in Continental Equities, Inc. v. Commissioner, 551 F.2d 74, 82-84 (5th Cir. 1977), and that the Tax Court, therefore, was wrong in distinguishing this case from Gooch Milling on that basis and in concluding that the Sixth Circuit erred in Estate of Mueller by failing to consider the Tax Court's status as an Article I court.

[3] In response, the estate argues (Br. 11) that our position is flawed in that it fails to recognize the difference between equitable jurisdiction and the exercise of equitable powers over matters within a court's jurisdiction. Equitable jurisdiction, the estate explains, is the "ability of a court to gain jurisdiction over a case solely on equitable grounds" (Br. 11), whereas the term "'equitable powers' refers to a court's ability to do equity in a case where -- as here -- it ALREADY HAS jurisdiction" (Br. 12). The estate examines (Br. 12-16) cases concerning the Tax Court's exercise of equitable powers with respect to the matters before it, Flight Attendants Against UAL Offset v. Commissioner, 165 F.3d 572 (7th Cir. 1998); Kelley v. Commissioner, 45 F.3d 348, 351 (9th Cir. 1995); Buchine v. Commissioner, 20 F.3d 173 (5th Cir. 1994); Bokum v. Commissioner, 992 F.2d 1136 (11th Cir. 1993), and it concludes from them that (Br. 18):

In sum, the weight of Circuit Court authority (including

[5] As we shall demonstrate below, the estate's arguments lack merit.

[6] 2. We do not dispute the estate's point that the Tax Court may exercise equitable powers over matters properly within its jurisdiction. But this proposition does not take the estate where it wishes to go. It begs the critical question here, which is whether granting equitable recoupment with respect to a deficiency or overpayment that is not before it is within the Tax Court's jurisdiction.

[7] a. The Tax Court has jurisdiction under I.R.C. section 6213(a) to redetermine deficiencies in income, estate, gift, and certain excise taxes that have been the subject of a notice of deficiency issued pursuant to I.R.C. section 6212(a). Phillips Petroleum Co. v. Commissioner, 92 T.C. 885, 888 (1989). ¹ We explained in our opening brief (pp. 28-29) that, as the Fifth Circuit held in Continental Equities, the Tax Court's jurisdiction was not affected by its having been made an Article I court by the Tax Reform Act of 1969. The Tax Court's own jurisprudence was consistent with this view. As the Tax Court itself declared not long after the Tax Reform Act of 1969 was enacted (Burns, Stix Friedman & Co. v. Commissioner, 57 T.C. 392, 396 (1971) (footnotes omitted):

The basic jurisdiction of the Tax Court was not changed by

[9] The decision in Buchine v. Commissioner similarly upheld the power of the Tax Court to equitably reform a consent to an extension of the time for assessment to change the year shown in the consent to reflect the (different) year actually intended by the parties and at issue in the case. In that case, the Fifth Circuit explained that the Tax Court could exercise equitable powers in the course of determining a deficiency, a matter within that court's jurisdiction (Buchine, 20 F.3d at 178):

At the core of the Buchines' case, as in Woods, is the Tax

Although of limited jurisdiction, the Tax Court must have

[12] As the foregoing discussion shows, in each of the cases upon which the estate relies, the Tax Court was held to have the power to apply equitable principles (equitable estoppel and equitable reformation of documents) in the course of determining whether the Commissioner had timely asserted the deficiency that was at issue before the Tax Court or whether the petitioner had timely filed suit. The application of equitable principles was necessary in each of those cases in order for the Tax Court to determine the underlying dispute, but there was no doubt that the subject matter of the underlying disputes (i.e., redetermination of a deficiency or the issuance of a declaratory judgment) was within the Tax Court's statutory jurisdiction. The courts of appeals thus sustained the Tax Court's exercise of equitable powers where necessary for the Tax Court to dispose of a matter within its jurisdiction. None of those cases involved equitable recoupment.

[13] b. In contrast, the Tax Court here presumed to exercise equitable powers with respect to a matter that was altogether unnecessary to the determination of the issue before it. The matter to be decided by the Tax Court was the redetermination of an estate tax deficiency. The Commissioner did not issue a notice of deficiency to the Marches, and the Marches did not file a petition in the Tax Court, so the question whether the Marches overpaid their 1992 income tax was not within the Tax Court's jurisdiction. Indeed, as we pointed out in our opening brief (p.35), whether the Marches overpaid their income tax, and whether equitable recoupment of that overpayment against the estate's deficiency was appropriate, had no bearing on the redetermination of the estate tax deficiency. ² Accordingly, the estate's unsupported assertion that "[t]he doctrine of equitable recoupment -- at least as applied in this case -- is virtually indistinguishable from equitable estoppel" (Br. 15 n.6) is plainly wrong.

[14] The foregoing makes it clear that the estate did not assert the Marches' income tax overpayment as a matter that was relevant in determining the amount of the estate's deficiency in estate tax. Rather, the estate sought to use the Marches' income tax overpayment as an affirmative defense or offset to the estate's deficiency. This situation is virtually identical to the circumstances in Gooch Milling, in which the Supreme Court held that the Board of Tax Appeals lacked jurisdiction to grant equitable recoupment relief. In that case, the taxpayer sought to recoup a time-barred overpayment for 1935 against a deficiency for 1936 that was determined by the Board. With respect to this circumstance, the Supreme Court said (320 U.S. at 421; emphasis added):

There was no occasion here for the Board to exercise its power

The reasoning in Gooch Milling is just as applicable to the

Continental cross-appeals, urging that the Tax Court erred in

[17] Ironically, the estate faults (Br. 16) the Sixth Circuit's decision in Estate of Mueller for not having discussed Continental Equities. Any reference to Continental Equities would have supported the holding in Estate of Mueller, just as Continental Equities supports reversal of the Tax Court's decision in this case. Moreover, contrary to the estate's suggestion (Br. 16), the decision in Estate of Mueller is not contrary to the weight of appellate authority. Rather, it is consistent with the only other decision by a court of appeals that concerns the authority of the Tax Court, in its capacity as an Article I court, to grant equitable recoupment, as well as with the appellate decisions concerning years that predate the Tax Reform Act of 1969. In short, both Estate of Mueller and Continental Equities were correctly decided, and this Court should follow them.

[18] 3. The estate also asserts (19-20) that the Tax Court did not exceed its jurisdiction in applying equitable recoupment because it "did not need to engage in any fact-finding to determine whether or not there was an overpayment of income tax" (Br. 19). The argument is ill-considered and completely ignores the way the Tax Court operates.

[19] The estate notes, correctly, that once the Tax Court found a higher value for the Savings Bank and Willits stock than the value originally reported in the estate's estate tax return, it followed that using the lower value as basis resulted in too large a gain, and that, therefore, the Marches had overpaid their tax. The estate also correctly points out that the Tax Court did not reopen the Marches' 1992 taxable year, and that it left the calculation of the amount of the overpayment to the parties. But this does not advance the estate's case.

[20] After the Tax Court adjudicates a disputed issue of fact or law, if the amount of the resulting deficiency or overpayment is not already apparent from the record, the parties essentially are directed to submit a computation of the effects of the Tax Court's ruling. The Tax Court will not actually become involved in the computation unless the parties cannot agree. See Rule 155, Tax Court Rules of Procedure.

[21] The Tax Court applied Rule 155 here. The opinion in which the Tax Court found the value of the estate's Savings Bank and Willits stock and resolved the other disputed issues concerning the estate's liability for estate tax required a computation under Rule 155. (2Exc. 272.) This computation would have been of the amount of the estate tax due in light of the Tax Court's findings. After the Tax Court further ruled that it had authority to grant equitable recoupment relief, and that the estate was entitled to equitable recoupment with respect to the Marches' 1992 income tax overpayment, it once again required the parties to submit a computation under Rule 155 to reflect its decision. This latter Rule 155 computation necessarily required a computation of the amount of the Marches' 1992 income tax overpayment. Absent an agreed computation or stipulation, the Tax Court would have had to determine the correct amount under the procedures set forth in Rule 155(b). Without an agreed or court- determined computation of the amount of the Marches' income tax overpayment, the Tax Court would not have been able to enter the decision that it did in this case, i.e., "[t]hat there is a deficiency in estate tax due from the petitioner in the amount of $343,016.00, and [t]hat the petitioner is entitled, under the doctrine of equitable recoupment, to a credit of $96,515 for income tax overpaid by Mary M. March and Charles March for the taxable year 1992." (2Exc. 343; emphasis added.) The estate's assertion that the Tax Court did not determine the Marches' 1992 income tax overpayment in the course of rendering its decision is wholly unsupportable

[22] 4. The estate next argues (Br. 20-22) that a holding that the Tax Court lacks equitable recoupment jurisdiction unfairly discriminates against less affluent taxpayers because only taxpayers who have the means to pay their deficiencies and bring refund suits in the district courts, which have equitable recoupment jurisdiction, will be able to benefit from application of the doctrine. The short answer to this argument is that if there is a problem here, it is for Congress, not the courts, to remedy. See United States v. Calamaro, 354 U.S. 351, 357 (1957) ("Neither we nor the Commissioner may rewrite the statute simply because we may feel that the scheme it creates could be improved upon."); United States v. Olympic Radio & Television, 349 U.S. 232, 236 (1955) ("The fact that the construction we feel compelled to make favors the taxpayer on the cash basis and discriminates against the taxpayer on the accrual basis may suggest that changes in the law are desirable. But, if they are to be made, Congress must make them.").

[23] The Supreme Court, in Gooch Milling, after noting that the jurisdiction of the Board of Tax Appeals was controlled by the Internal Revenue Code, not by general equitable principles, stated that the Board would not have jurisdiction to adjudicate equitable recoupment claims until Congress changed the law. Gooch Milling, 320 U.S. at 422. ("Until Congress deems it advisable to allow the Board to determine the overpayment or underpayment in any taxable year other than the one for which a deficiency has been assessed, the Board must remain impotent when the plea of equitable recoupment is based upon an overpayment or underpayment in such other year"). The operative language of the statutes controlling the Tax Court's jurisdiction has not changed since Gooch Milling was decided.

[24] In the last analysis, the estate's argument proves too much. The estate is poorly positioned to complain about the Tax Court's lack of equitable recoupment jurisdiction; it is the only forum available to a taxpayer who wishes to litigate his tax liability without first paying the tax, thereby obtaining what is, in substance, a declaratory judgment on his liability. That form of relief is explicitly prohibited in 28 U.S.C. section 2201(a) with respect to federal taxes (other than a declaratory judgment action under I.R.C. section 7428) in "any court of the United States." But this does not include the Tax Court, which in this regard has broader jurisdiction than the district courts or the Court of Federal Claims. Congress carefully delimited the Tax Court's jurisdiction, and plainly did not intend it to be the same as the jurisdiction of Article III courts.

[25] 5. The estate seeks (Br. 23-25) to distinguish this case from Gooch Milling on the ground that, unlike Gooch Milling, which was an income tax case, this is an estate tax case to which I.R.C. section 6214(b) does not apply. Further, it seeks to distinguish this case from both Gooch Milling and Estate of Mueller on the ground that this case concerns taxes (estate and income) that were paid in the same year. Although the distinctions to which the estate refers exist, they are irrelevant to the question presented.

[26] We discussed the interpretation and effect of I.R.C. section 6214(b) at length in our opening brief (pp. 31-35), and we will not reiterate that discussion here, except to point out that the authority granted to the Tax Court by I.R.C. section 6214(b) to consider facts that relate to taxes other than the tax to which the notice of deficiency at issue relates does not apply where, as here, the asserted deficiency is in estate tax. And it bears repeating that the Sixth Circuit correctly held that the rationale of Gooch Milling is equally applicable in estate tax cases. Estate of Mueller, 153 F.3d at 306.

[27] It is also fortuitous -- and irrelevant -- that, in this case, the estate and the Marches both paid their taxes at issue in the same year. As the Sixth Circuit also correctly noted, under I.R.C. section 6512(b)(1), "the Tax Court has jurisdiction to determine an overpayment only if the overpayment concerns the same kind of tax and, as to income and gift taxes, only if it was paid in the same year. This makes sense because determining an overpayment of a particular kind of tax in a particular year is no different from determining the accuracy of an assessment for that same tax." Estate of Mueller, 153 F.3d at 305 (emphasis added). Quite clearly, the estate tax paid by the estate is not the same kind of tax as the Marches' income tax, and whether those taxes were paid in the same year makes no difference.

[28] 6. The estate disputes (Br. 28) our suggestion that the Marches were less diligent in pursuing their claim than was the estate in Bull v. United States, 295 U.S. 247 (1935). The estate asserts that in Bull, the estate did not file its refund claim for more than five years after the Commissioner asserted the income tax deficiency that was inconsistent with the previously paid estate tax, whereas here Ms. March filed the petition on behalf of the estate within a few months after she received the deficiency notice. The estate's argument misconstrues our position.

[29] Our point (opening br. 51-53) was a simple one: at the time the Commissioner issued the notice of deficiency in this case asserting that the value of the Savings Bank and Willits stock was greater than that reported on the estate tax return, there remained thirteen months before the expiration of the statute of limitations on claiming a refund with respect to the Marches' 1992 income tax. Thus, the Marches had thirteen months in which they could have filed a timely protective refund claim for any overpayment of income tax that might follow from the Tax Court's determination of the value of the stock. If the Marches had acted diligently to protect their interest by filing a timely refund claim, there would have been no occasion for the estate to seek equitable recoupment in this case.

[30] In contrast, the estate in Bull had only about four weeks in which it might have filed a timely protective refund claim after learning that the Commissioner asserted a tax deficiency on an inconsistent theory. In Bull, the estate paid estate taxes based on the inclusion in the taxable estate of the decedent's post-death partnership income on June 17, 1921, and August 10, 1921. Bull, 295 U.S. at 252; Bull v. Commissioner, 7 B.T.A. 993, 994 (1927). In July 1925, the Commissioner determined that such post-death partnership income should have been reported as income of the estate, and he issued a notice of a deficiency in the estate's income tax for the year of the decedent's death based on that and other determinations. Bull, 295 U.S. at 252. As then in effect, the statute of limitations on claiming refunds required that refund claims be filed within four years of the payment of the tax of which refund was claimed. section 1012, Revenue Act of 1924, ch.234, 43 Stat. 253. Thus, the time in which the estate in Bull could have filed a timely protective claim for refund of estate tax expired on August 10, 1925, no more than 41 days after the Commissioner issued the notice of income tax deficiency in July 1925. A maximum of 41 days is a far cry from the thirteen months available to the Marches for filing a timely refund claim.

[31] The five years (to which the estate emphatically refers (Br. 28)) that elapsed between the time that the income tax deficiency was issued in Bull and the time the estate filed its income tax refund claim is attributable to a procedural oddity that no longer exists. After the Commissioner issued the notice of income tax deficiency in Bull, the estate filed a petition in the Board of Tax Appeals seeking a redetermination of the deficiency. The estate lost the case, and it paid the income tax deficiency. Thereafter, the estate filed a claim for refund of its payment of the amount that the Board had determined to be due. After the refund claim was rejected, the estate brought a refund suit in the Court of Claims. 295 U.S. at 253. It was on further appeal from the judgment of the Court of Claims that the Supreme Court held that equitable recoupment was available. Such a course of events could not occur today. Taxpayers have not been entitled to claim refunds of amounts paid that were determined by the Board of Tax Appeals (or, more recently, by the Tax Court) to be due on petitions filed after the effective date of the Revenue Act of 1926. section 284(d), Revenue Act of 1926, ch. 27, 44 Stat. 9.

[32] 7. Finally, the estate argues (Br. 25-40) that recoupment is appropriate on the facts of this case (assuming that the Tax Court has jurisdiction to adjudicate an equitable recoupment claim). We agree with the estate that any claim for refund of the Marches' 1992 income taxes is time-barred (Br. 26) and that there is a sufficient identity of interest between the Marches and the estate (Br. 39). But the estate's additional contention -- that there has been inconsistent treatment of the same taxable item -- lacks merit.

[33] In our opening brief (p. 40) we noted that the Supreme Court has emphasized that "a claim of equitable recoupment will lie only where the Government has taxed a single transaction, item, or taxable event under two inconsistent theories." United States v. Dalm, 494 U.S. 596, 605 n.5 (1990). We then explained (opening br. 41-43) that, in this case, the liability for estate tax and the liability for capital gain (income) tax did not arise out of a single transaction or taxable event. Rather, there were two distinct taxable events: (1) the transmission of property at the decedent's death, on which an excise (estate) tax was imposed, and (2) the estate's subsequent sale of its property to a third person, on which a capital gain (income) tax was imposed. We also explained that imposing estate tax on the stock as an asset of the estate was not inconsistent with imposing income tax on the gain realized on the subsequent sale of the stock, and, indeed, that the distinction between these two events is reaffirmed by the fact that the value of stock as appraised for federal estate tax purposes is not in all cases necessarily conclusive as to the value of the stock, but rather is prima facie evidence of actual value, for purposes of determining, for income tax purposes, whether gain or loss was realized by the heirs when they subsequently sold the stock. See Ford v. United States, 276 F.2d 17 (Ct. Cl. 1960); Rev. Rul. 54-97 1954-1 C.B. 113.

[34] The estate does not contend that the instant case involves the same taxable event, and it does not even mention Ford or Rev. Rul. 54-97. Rather, it asserts (Br. 29-38) that this case involves the taxation of the same "item" on inconsistent theories, so that "whether this was also part of the 'same transaction' or 'event' is of no consequence" (Br. 38).

[35] The numerous cases to which the estate refers in its brief do not support the proposition that there is inconsistent treatment of a single item in this case (with the exception of some obiter dictum in O'Brien v. United States, 766 F.2d 1038 (7th Cir. 1985), which, as we explained in our opening brief (pp.47-50), was in error). Indeed, those cases do not, in terms, specifically address what constitutes an "item" for this purpose. Useful guidance on this point, however, is to be found in Sections 1311 through 1314 of the Code relating to the mitigation of limitations, which are somewhat analogous to equitable recoupment in that they provide relief from the statute of limitations on income tax deficiencies and overpayments in certain circumstances.

[36] Specifically, I.R.C. section 1312 sets forth the "circumstances of adjustment" in which mitigation of limitations will be available. Of significance here, I.R.C. section 1312(1) refers to the double inclusion of an "item" in gross income and I.R.C. section 1312(3) refers to the double exclusion of an "item" from gross income. The implementing regulations under I.R.C. section 1312 give as examples of such items of gross income accrued rent (Treas. Reg. section 1.1312-1(b), Ex. 1), salary (Treas. Reg. section 1.1312-1(b), Ex. 2), payment for services (Treas. Reg. section 1.1312-3(a)(2), Ex. 1), and partnership income (Treas. Reg. section 1.1312-3(a)(2), Ex. 2).

[37] The term "item" as used in equitable recoupment cases embodies the same concept of "item of gross income." Indeed, the cases granting equitable recoupment similarly involve items of gross income. See, e.g., Bull v. United States, 295 U.S. at 252 (partnership income); Stone v. White, 301 U.S. 532, 533 (1937) (trust income); Boyle v. United States, 355 F.2d 233, 234-235 (3d Cir. 1965) (preferred stock dividends). But just as valuation of an asset is not a taxable event, stock (like the stock involved here) is not itself an "item" of gross income. There is no item of gross income unless gain is realized when the stock is sold. Therefore, subjecting the estate's Savings Bank and Willits stock to the estate tax did not involve taxing the same "item" as did subjecting the gain on the sale of that stock to the income tax.

[38] United States v. Rachal, 312 F.2d 376 (5th Cir. 1962), which held that the valuation of inventory is an "item" of gross income, is not to the contrary. A change in inventory valuation can result in a double inclusion in or exclusion from gross income under inventory accounting principles. But the special role of inventories in calculating gross income does not carry over to the valuation of non-inventory assets, and, hence, neither does the treatment of a valuation change of non-inventory assets qualify as an "item" of gross income. In this regard, we note that I.R.C. section 1312(7) provides as a circumstance of adjustment for mitigation purposes a determination of the basis of property after its erroneous treatment in a prior transaction. ³ If inconsistent valuation of an asset for purposes of calculating gain or loss on its disposition constituted an "item" within the meaning of the double inclusion or exclusion rules of I.R.C. section 1312(1) or (3), then the provisions of I.R.C. section 1312(7) would be superfluous. Therefore, the conclusion is inescapable that inconsistent valuation of a non-inventory asset, such as the stock involved here, is not an "item" of gross income for purposes of determining whether the mitigation provisions apply, and, we submit, the same considerations apply for purposes of determining whether equitable recoupment applies.

CONCLUSION

[39] For the reasons set forth above and in our opening brief, the Tax Court's decision should be reversed.

Respectfully submitted,

[40] Pursuant to Fed. R. App. 32(a)(7)(C) and Circuit Rule 32- 1, I certify that the foregoing reply brief is proportionately spaced, has a typeface of 14 points or more, and contains 5,999 words.

CHARLES BRICKEN

[41] It is hereby certified that service of this reply brief has been made on opposing counsel on this 17th day of August, 2000, by sending two copies thereof to her in an envelope properly addressed as follows:

Mary Catherine Wirth, Esquire

² That the determination of the amount of the estate's deficiency in estate tax is unaffected by the amount of the Marches' income tax overpayment is manifest on the face of the Tax Court's decision in this case, which ordered and decided as follows (2Exc. 343):

That there is a deficiency in estate tax due from the