May 22, 2011
Smith met the next day with Daniel and Marilyn. “Okay here’s the deal. We can settle now for about $5 Billion in estate taxes and interest or we can fight this, or we can counter-offer.” Daniel thought about it and asked, “If we don’t settle what are our chances in Court?” Smith thought for a second, “Pretty good, I think. The legal bills will total $200-300,000, which are deductible. The facts are better for us than for them, but they have the presumption of correctness, but the problem for them is that under Virginia law, your father is presumed to have died on August 9, 2010. They’re going to have a tough time with that one.” Daniel ran the numbers in his head, “Let’s offer them $100 Million and see how big their balls are”, smiling as he said the words. “That’s a whole lot of money to walk away from. I mean that equals some Congressman’s entire career’s worth of pork.”

Smith called the Jackson on the telephone. “Mr. Jackson, I’m going to fax you a letter, but I wanted to let you know our thoughts. I talked it over with the family and we do not believe we owe you a dime. However, there is always some small risk in litigation, no matter how ridiculous and we consider this to be legalized extortion. That said, we’ll offer you $100 Million total (including interest), you waive all penalties.”

Jackson called the Head of Appeals, the District Director and District Counsel and Congressman Witherspoon, this was a conference call that required everyone’s input including a member of Congress who served on the Joint Committee on Taxation. “Okay, we have an offer of $100 Million from Mr. Frome’s family. Our demand was $9 Billion. Our offer to settle was about $5 Billion. They have a pretty strong circumstantial case. They have the state law presumption that the date of death is the date the body is found. They have numerous witnesses who thought they saw the decedent on January 1, 2010. They have the children’s testimony that he went outside. They have the maid’s testimony that she talked to the Decedent on December 25, 2009. They have post mortem frostbite which tends to confirm their story, not ours. All we have is that no one can positively say that they saw his entire face, but they did think they saw him.” The District Counsel frowned. “Boy, we’d be out on a limb on this one. No doubt about it, their case is better than ours. What do you think?”, he asked the District Director. The District Director thought for a minute. “I think this is a big enough case that we need to hear what the Commissioner has to say. They’ve offered us a ton of money which we all know is a test of our will. On the other hand, their case is much better than ours and we’ll go into Court pretty much buck naked. The question is, Is this the test case we ought to litigate?”

After being briefed in great detail, Mort Copeland, the Commissioner of the Internal Revenue Service responded, “Let’s litigate it. I really don’t want to leave $9 Billion on the table and while you’re at it, add in the fraud penalties. I mean, either they faked this whole scenario, or they didn’t. If the Court finds that they made all this up, they’re liable for fraud penalties. That means the tax rises to their entire net worth. Let’s see if they’re willing to see this bluff through, although if they offer one Billion or more, let’s talk again.”

February 15, 2011.

“Holy Cow”, Fred yelled when he opened the mail. “We just got a 30 day letter telling us we have 30 days to appeal an assessment of $9 Billion including interest and late payment and late filing penalties. This is nuts.”

He looked at the letter and saw the name Brian Peterson and dialed his number. After Brian picked up the phone, Fred launched into his tirade. “Where in the hell did you come up with this idea that the old man died before January 1, 2010. I talked to his children that day and they told me the old man getting ready to go out for a walk. I gave you numerous statements from witnesses who saw him on his walk. What gives?” Brian waited. “It is up to you to prove to us that Mr. Frome died on the date stated. All you have given us are statements from witnesses and none who saw part of his face.” “But the Sheriff’s report tells you the family reported him missing that day.” Fred argued. “All self-serving”, said Brian “and they had about 7.5 Billion reasons to lie.”

May 21, 2011.

Fred met with Appeals Officer, Gerome Jackson at the Baltimore office of the Internal Revenue Service. Fred laid out all of the facts and added the statement of Esmerelda concerning the Christmas Day conversation she had with Mr. Frome on the telephone. “As you can see Mr. Jackson, there is no doubt in my mind that this man died on January 1, 2010”. All you have is conjecture and speculation. We only have to prove to the Tax Court by a preponderance of the evidence that it is more likely that he died on January 1, 2010 as opposed to an earlier date.

“Why did you file the return on September 23, 2010 as opposed to nine months after August 9, 2010?” Jackson asked. “We wanted to get it filed because we assumed he died on January 1, 2010 and even though the death certificate says August 9 which is the binding date of death, we wanted to err on the side of caution and file it so that it would be timely received.”
“What about the frost bite?” Jackson shot back. “He died in a snow storm, his body was apparently frozen in a snow drift for several weeks. Of course it was frostbitten. In fact if it wasn’t frost bitten, it would be questionable.”

“I’m prepared to make a concession in this case”, Jackson added. “I’ll give you a 50% concession since I think this is a 50/50 case and waive the penalties.” Smith listened intently and said, “I am not going to recommend that to my clients, but I am obliged to deliver the offer”.

September 23, 2010.

“Well Daniel, here is the Federal Estate Tax return for you to sign. It shows assets of $15 Billion. And of course no tax due. I put down that the date of death was August 9, 2010 since that was the date the body was found, but I put a footnote that the date could have been as early as January 1, 2010. I can’t understand why you pressed to get this prepared by today” “I just want to get this chapter over with and get Marilyn her money, she’s been bitching about living on a budget for months. I’m tired of it and just want to see some money freed up so she’ll get off my back.” Daniel looked at the return which had the phrase that he was signing under penalty of perjury. If they were ever caught, he would owe fraud penalties, late payment penalties, and could even go to jail, etc. At least the return was being filed within 9 months of the real date of death”, he thought, so there would be no late filing penalty.

December 23, 2010.

“Brian, I have an estate tax return for you to review, the Estate of Sidney Frome”, the division chief told him. “I want you to confirm the date of death. The death certificate says the cause was unknown and that the date of death was the date the body was found. August 9, 2010. I’m a bit suspicious because well apparently no one can prove when he died and the return was filed on September 23, 2010 which is 9 months after December 23, 2010. Can you look into this?”

“I will, sir, but aren’t those death certificates binding on us?” “No, we can look at the
evidence and make them prove when he died.” “So, we just say, that the date of death was some other date?” asked Brian. “Remember, son, we have the presumption of correctness, but I need something to hang my hat on”.

December 30, 2010

“Daniel, this is Fred, we got an audit letter from the IRS. They want to us to tell them how we arrived at the date of death.” “Talk to the Sheriff and get the names of the people who saw Sidney walking through town on January 1, 2010. Get sworn statements from them. I know they won’t believe you and me, but they ought to believe them.”

“I will”, Fred replied.

April 10, 2010.
“Hi, Marilyn”, Daniel said looking up from some financial reports. “You look angry is something wrong?” he asked. “You bet there’s something wrong. First I had to drag dad’s dead body all over the place and wear his clothes, and now you have me on some strict financial diet. I’m living like a nun. No vacations, no fun, nothing,” shouted Marilyn. “Now, Marilyn, we discussed this with dad last December, until his body is found, we can’t spend any money. Its not ours until he is officially dead, and the longer he sits out there, the harder it will be for them to prove his date of death. You’ve been doing a great job going out in the wrong direction every day looking for his body since the snow melted. Let’s keep this up for a few more months. If they haven’t found him by August, we’ll have to find him”, answered Daniel. “I don’t like it one bit”, Marilyn retorted. “Just keep in mind that if this works, you’ll have Two and a Half Billion dollars more, Marilyn”, Daniel responded. “Okay, said Marilyn, but times running”.

June 15, 2010

“Daniel, I’m getting tired of this. What is our deadline for finding dad” begged Marilyn. “Let’s say August 15, 2010. That will allow us a month to do the estate tax return on time”, replied Daniel. “Daniel doesn’t it bother you that Dad is out there, you know, the thought grosses me out”, Marilyn queried. “Yeah, when I think about it, it is, but what do you think happens after someone is buried?” replied Daniel. “I just want to get this over with, soon”, said Marilyn. “Trust me after this is over, you can have all the cabana boys you want”, Daniel smiled at her mischievously.