The Tax Court has recently held in Estate of Russell Badgett, Jr. et al. v. Commissioner, that federal income tax refunds that were due to a decedent at the time of his death are to be included as a property interest in his gross estate for federal estate tax purposes. Internal Revenue Code Section 2033 requires the gross estate to include the value of all property. If there is no offsetting liability in existence then under Section 6402(c) of the Internal Revenue Code the IRS “shall” refund the balance of any tax over-payments to the taxpayer. The Tax Court held that Section 6402(c) did not apply to the Russell estate and the court upheld the Notice of Deficiency that the estate received. The full text of the Tax Court decision can be read here.
See Dawn S. Markowitz, Income Tax Refunds Constitute Property, Trusts & Estates, November 25, 2015.
