Justia U.S. 1st Circuit Court of Appeals Opinion Summaries

The executor paid estate taxes in October, 2003, and filed the estate tax return in September, 2004, but the IRS denied a second extension request and he did not file an amended return and refund request for overpaid estate taxes in the amount of $237,813.48 until September, 2007. The IRS denied the claim on the ground that the refund sought was outside the three-year look-back period set forth in 26 U.S.C. 6511(b)(2)(A). The district court dismissed and the First Circuit affirmed, for lack of subject matter jurisdiction. The IRS correctly determined that it did not have the authority to and did not grant a second six-month extension. While the regulations do not explicitly say that there may be only one extension for executors who are not abroad, they provide for only one automatic extension. An equitable estoppel claim is not available and would have no merit.

In 2002 one of the company's founders informed the company that he wanted the company to buy out his 23 percent stock ownership interest. The company agreed to pay $255,908 plus $400,000, the equivalent of one year's salary, for a one-year covenant not to compete. The company amortized the covenant payments over the 12-month duration, which straddled tax years 2002 and 2003. The IRS determined that the covenant was an amortizable section 197 intangible, amortizable over 15 years and not over the duration of the covenant. The tax court upheld the decision. The First Circuit affirmed. A "section 197 intangible" includes any covenant not to compete entered into in connection with the acquisition of any shares, substantial or not, of stock in a corporation that is engaged in a trade or business.