Taxpayer Relies on Attorney’s Erroneous Advice, Comes Out Ahead

In Estate of Liftin v. United States, the executor of theestate, the decedent’s son, wanted to avoid penalties for the late filing of anestate tax return. 

The executor wanted to delay the filing until the survivingspouse of the decedent determined whether or not to become a citizen.  She later did choose to become a citizen,thus qualifying the estate for a marital deduction.

The lawyer incorrectly advised the executor that he coulddelay filing the estate tax return until the surviving spouse attainedcitizenship without suffering a penalty. The Federal Claims Court held that the estate was liable for the amountof the late filing penalty, but by waiting to claim the marital deduction, theexecutor saved $266,284.97 in taxes, almost twice the amount of the penalty.

See Liftin:Executor Scores Half a Loaf from Late Filing, CharitablePlanning.com,Apr. 1, 2013.