IRS Answers Estate's Stock Valuation Challenge

Estate of David G. Massad, Deceased, Pamela A.
Massad, Personal Representative,
Petitioner(s)
v.
Commissioner of Internal Revenue
Respondent

UNITED STATES TAX COURT

ANSWER

RESPONDENT, in answer to the petition filed in the above-entitled case, without benefit of the administrative file, admits, denies, and alleges as follows:

1. Admits.

2. Admits.

3. Admits Form 706, United States Estate (and Generation Skipping Transfer) Tax Return was timely filed by Petitioner. Alleges the return was filed on March 13, 2020.

4. Admits.

5. Admits.

6. Denies, alleges respondent did not make factual or legal errors in calculating the deficiency proposed in the statutory notice of deficiency.

7. Denies generally the allegation that respondent erred. In response to petitioner's paragraph 7 subparagraphs:

a. Denies. Alleges respondent did not err by increasing the value of 5,400,588 shares (the “Shares”) of common stock of Berkshire Hills Bancorp, Inc. (“BHLB”) reported on Schedule B, Item 33, includible in the gross estate, by $19,423,539.

b. Denies, alleges to the extent petitioners are asserting a dispute as to statutory interest, such dispute is not proper in the instant case proceeding since the Court does not have jurisdiction to determine interest in this case pursuant to I.R.C. § 7442 other than the jurisdiction set forth in I.R.C. §§ 6404 and 7481(c).

c. Admits petitioner may be entitled to additional administration expenses incurred and to be incurred. To the extent that petitioner is alleging that it is entitled to attorney's fees and costs, denies. Alleges, petitioner's prayer for fees and costs is premature, since petitioner has not established the status of a prevailing party as required by I.R.C. § 7430; and petitioner's prayer for fees and costs is improper under Tax Court Rule 34.

8. Neither admits nor denies on the ground that petitioner's assertions constitute legal conclusions or otherwise do not constitute material allegations of fact that would require a response pursuant to Tax Court Rule 36(b), but to the extent any of the assertions are deemed material, denies for lack of sufficient knowledge or information.

9. In answer to petitioner's paragraph 9 subparagraphs:

a. Admits.

b. Admits.

c. Denies for lack of knowledge or sufficient information.

d. Denies for lack of knowledge or sufficient information.

e. Denies for lack of sufficient knowledge or information.

f. Admits petitioner reported the fair market value of the Shares on the return as $123,965,758. Denies remainder for lack of knowledge or sufficient information.

g. Admits.

h. Admits respondent sent a letter dated July 11, 2022 and admits the letter stated the fair market value of the Shares at the date of death was $145,112,858. Denies respondent failed to fully take into account substantial restriction on Shares and denies respondent incorrectly determined the fair market value of the Shares. Alleges respondent's determination of the fair market value of the Shares as of the date of decedent's death as stated in the statutory notice of deficiency is correct.

i. Admits respondent issued a memo dated October 12, 2022. Admits the value of the Shares stated therein was $145,112,858. Denies remainder for lack of sufficient knowledge or information. Alleges respondent's determination of the fair market value of the Shares as of the date of decedent's death as stated in the statutory notice of deficiency is correct.

10. Denies generally each and every allegation of the petition not herein specifically admitted, qualified or denied.

WHEREFORE, it is prayed that the relief sought in the petition be denied and that petitioner's prayer for additional deductions under I.R.C. § 2053 is premature and that respondent's determination, as set forth in the notice of deficiency, be in all respects approved.

DRITA TONUZI
Deputy Chief Counsel (Operations)
Internal Revenue Service

Date: 5/25/2023

By: WILLIAM B. BELVIN
Senior Attorney
(Small Business/Self-Employed)
Tax Court Bar No. BW0906
10 Causeway Street, Room 401
Boston, MA 02222-1061
Telephone: 617-788-0656
william.b.belvin@irscounsel.treas.gov

Date: 5/25/2023

By: MOLLY H. DONOHUE
Associate Area Counsel
(Small Business/Self-Employed)
Tax Court Bar No. DM0389
10 Causeway Street, Room 401
Boston, MA 02222-1061
Telephone: 617-788-0807
molly.h.donohue@irscounsel.treas.gov

OF COUNSEL:
JOSEPH W. SPIRES
DIVISION COUNSEL
(Small Business/Self-Employed)
MICHAEL R. FIORE
Area Counsel
(Small Business/Self-Employed)