When Does an Estate Have Reasonable Cause for Failure to Timely File Its Estate Tax Return?When Does an Estate Have Reasonable Cause for Failure to Timely File Its Estate Tax Return?

In Estate of Liftin, No. 10-589 (Fed. Cl., March 29, 2013), the Court of Federal Claims held that an estate was subject to a late-filing penalty due to its failure to timely file its estate tax return.  The decedent died in March 2003, and his son was appointed the Executor of his estate.  The decedent’s will provided for outright bequests to a number of people, including his surviving spouse, who was a U.S. resident and a citizen of Bolivia.  Following the decedent’s death, Mrs. Liftin also asserted various claims against the estate based on a prenuptial agreement between herself and the decedent (the “ancillary matters”).

The attorney for the estate advised that the estate could not claim a marital deduction under Internal Revenue Code...