In Amplatz v. Commissioner (U.S. Tax Court (April 23, 2026)), the estate sought summary judgment against the government to set aside their notices of deficiency for failure to provide notice under Internal Revenue Code Section 7517.
Kurt Amplatz established a medical device company and several trusts. The company borrowed extensively from a funding trust but made no payments on the loans and extended the due dates for a majority of them. After his death, the estate obtained an appraisal of the company and the value of the notes to be repaid as of May 6, 2026. The appraised value of the estate’s interest in the company was $0, and the total value of the notes (originally loans made of more than $19 million) was appraised at $1 million.
However, that summer, the company entered into negotiations with a potential buyer. In the fall, six months after the appraisal date, the company was sold to a third party for $15 million.
The IRS audited the estate tax return and determined that, based on the gross valuation misstatement and substantial estate tax valuation understatement, negligence penalties applied under IRC Section 6662.
The IRS sent the estate a preliminary examination report showing the adjustment based on a brief explanation of the valuation of the company and promissory notes on Form 886-A, “Explanation of Items.”
The estate emailed the IRS to request a written statement of the government’s valuation under Section 7517. That section allows taxpayers to request written statements from the Commissioner explaining the basis of their valuation for estate and gift tax purposes. The IRS reviewed the request and determined that the preliminary examination report qualified as such a statement, but didn’t communicate that to the estate.
Then, a month later, the IRS sent a notice of deficiency and further statements regarding the valuation adjustments on an additional Form 886-A, noting the penalties again.
The estate argued that the IRS failed to comply with the written statement requirement by responding to its inquiry under Section 7517. However, the court held that Section 7517 has no enforcement mechanism. In this case, the notice of deficiency included a brief explanation of the IRS valuation, and the estate value of the company appears flagrantly off the mark. As a result, the court wasn’t inclined to rule on summary judgment for the estate that the failure to separately comply with Section 7517 by sending a separate valuation explanation would prevent the IRS from bringing this valuation case to trial.
