The evidence indicates that the Beta resolution was an attempt to qualify the charitable bequests for the deduction under section 2055(a). There is no evidence indicating a nontax reason for the Beta resolution. Under these circumstances, we find that petitioner failed to prove that the Beta trust was modified for reasons independent of tax considerations.

Petitioner argues on brief that there was a fiduciary duty to conserve the trust assets and that this fiduciary duty provides a reason independent of tax considerations for the Beta resolution. We are not persuaded by this argument. In the context of this case, this is not a reason independent of tax considerations. In fact, petitioner's fiduciary duty argument depends entirely on tax consequences. Specifically, it was the estate tax savings resulting from the section 2055 tax deduction which petitioner was attempting to salvage by the 98 T.C. 294">*309 creation of the Beta trust that would provide the means for conserving the trust 1992 U.S. Tax Ct. LEXIS 28">*59 assets. The conservation of trust assets will always be a reason for attempting to qualify an otherwise nonqualifying split interest by a means other than that prescribed in section 2055(e)(3). If we were to accept it as the nontax reason for the modification to the Beta trust, then we would render superfluous the requirement that nontax reasons provide part of the reason for the modification.

Petitioner's position would also render superfluous the specific relief provisions in section 2055(e)(3). Under section 2055(e)(3), certain nonqualifying, split-interest trusts may be reformed if done so by means specified by that section. If a trustee could simply assert that she was acting pursuant to her fiduciary duty to conserve trust assets and retroactively amend the trust such that the nonqualifying split interest was eliminated, then there would be no reason for satisfying the strict requirements of section 2055(e)(3). ⁹ We recognize Congress' intent to encourage charitable bequests. See 810 F.2d 930">Flanagan v. United States, supra at 934; 655 F. Supp. 1334">Estate of Strock v. United States, supra at 1339. Nonetheless, we must also recognize that1992 U.S. Tax Ct. LEXIS 28">*60 Congress provided very specific statutory means for reforming nonqualifying charitable trusts.

Petitioner also argues that courts have permitted retroactive modifications similar to the modification in the instant case, because the modification avoided the abuse which Congress was concerned with when it prohibited the deduction for split-interest trusts. The legislative history indicates that section 2055(e)(2) was enacted to prevent estates from claiming a deduction for the charitable bequest in excess of the value of the property actually received by the charity. See 810 F.2d 930">Flanagan v. United States, supra at 935; 727 F.2d 741">First National Bank of Fayetteville v. United States, supra at 748; 712 F.2d 358">Oetting v. United States, supra at 360;1992 U.S. Tax Ct. LEXIS 28">*61 Estate of Thomas v. Commissioner, supra;655 F. Supp. 1334">Estate of Strock v. United States, supra at 1336-1337; Northern Trust Co. v. United States, supra.Although not explicitly relying on this aspect of the legislative history, ¹⁰ these courts have 98 T.C. 294">*310 buttressed their conclusion that a deduction under section 2055(a) was appropriate by noting that this abuse was not present in the case before them. We acknowledge that deductions in excess of amounts actually received by charities were one of the abuses which this legislation addressed; but we cannot ignore the plain reading of section 2055(e)(2) which denies deductions for split-interest charitable remainder trusts unless it is in the form of an annuity trust, a unitrust, or a pooled income fund. See Estate of Burdick v. Commissioner,96 T.C. 168">96 T.C. 170. Thus, we do not think it appropriate to consider legislative history to determine whether a split-interest bequest is deductible when section 2055(e)(2) clearly provides otherwise. Estate of Johnson v. United States,941 F.2d 1318">941 F.2d 1318 (5th Cir. 1991);1992 U.S. Tax Ct. LEXIS 28">*62 see Freytag v. Commissioner,501 U.S.   , 111 S. Ct. 2631, 2636 (1991).

Petitioner also cites three of respondent's revenue rulings in support of its position. Rev. Rul. 89-31, 1989-1 C.B. 277, and Rev. Rul. 78-152, 1978-1 C.B. 296, are easily distinguished from the instant case on the basis that both involved nontax reasons (a will contest and an election by a spouse to take against the will) for the separation of the charitable and noncharitable interests. Rev. Rul. 83-20, 1983-1 C.B. 231, is distinguishable on the basis that the trust involved there qualified for the deduction under section 2055(a) as of date of death. After date of death, decedent's spouse petitioned the local court for an allowance1992 U.S. Tax Ct. LEXIS 28">*63 for support. The surviving spouse's petition was granted, and as a result, a nonqualifying split interest was created in the previously qualified charitable bequest. Because of post mortem, non-tax-related events, a noncharitable party obtained an interest in part of the charitable bequest. Consequently, respondent allowed the deduction but only in an amount that the charity was practically certain to actually receive.

Finally, we address the effect of the State court proceeding on this issue. The trustees of the revocable trust and Beta trust petitioned the Probate Court for an order approving their actions pursuant to the Beta resolution. The trustees represented all beneficiaries of the revocable trust, and all the individual beneficiaries consented to the granting of relief requested. Two days later, the Probate Court granted the relief requested, finding that the Beta trust was properly 98 T.C. 294">*311 created under Colorado law and that the creation of the trust was retroactive as of the date of decedent's death. This proceeding was not adversarial.

Under section 20.2055-2(e)(1)(i), Estate Tax Regs., the principles of section 2056 are applied for purposes of determining whether1992 U.S. Tax Ct. LEXIS 28">*64 an interest in property has passed from decedent for charitable purposes and an interest in the same property also has passed from the decedent for private purposes. A determination of the nature of the interest which passes under section 2056 is made under the law of the jurisdiction under which the interest passes. Estate of Bowling v. Commissioner,93 T.C. 286">93 T.C. 286, 93 T.C. 286">293 (1989); Estate of Holland v. Commissioner,64 T.C. 499">64 T.C. 499, 64 T.C. 499">503 (1975).

Petitioner's legal position in effect is that under the laws of Colorado, a trustee may retroactively amend a trust, and a State court order confirming that amendment is binding on those who were not parties to the court proceeding and who otherwise had no opportunity to object to the amendment. Petitioner suggests on brief that the Probate Court order indicates the appropriateness of this position. Petitioner cites no Colorado authority which supports this position, and we are unaware of any. ¹¹ Instead, we believe that Colorado would follow the general rule, as articulated by the Tenth Circuit Court of Appeals, that --

as between parties to an instrument a reformation relates back1992 U.S. Tax Ct. LEXIS 28">*65 to the date of the instrument, but that as to third parties who have acquired rights under the instrument, the reformation is effective only from the date thereof. [Sinopoulo v. Jones,154 F.2d 648">154 F.2d 648, 154 F.2d 648">650 (10th Cir. 1946); fn. ref. omitted.]

This and other courts have generally disregarded the retroactive effect of State court decrees for Federal tax purposes. See Van Den Wymelenberg v. United States,397 F.2d 443">397 F.2d 443, 397 F.2d 443">445 (7th Cir. 1968); Straight Trust v. Commissioner,245 F.2d 327">245 F.2d 327, 245 F.2d 327">329-330 (8th Cir. 1957), affg. 24 T.C. 69">24 T.C. 69 (1955); Estate of Nicholson v. Commissioner,94 T.C. 666">94 T.C. 666, 94 T.C. 666">673 (1990);1992 U.S. Tax Ct. LEXIS 28">*66 Fono v. Commissioner,79 T.C. 680">79 T.C. 680, 79 T.C. 680">695 (1982), affd. without published opinion 749 F.2d 37">749 F.2d 37 (9th Cir. 1984); American Nurseryman 98 T.C. 294">*312 Publishing Co. v. Commissioner,75 T.C. 271">75 T.C. 271, 75 T.C. 271">275 (1980), affd. without published opinion 673 F.2d 1333">673 F.2d 1333 (7th Cir. 1981). See Estate of Kraus v. Commissioner,T.C. Memo. 1988-154, affd. on this issue 875 F.2d 597">875 F.2d 597 (7th Cir. 1989).

We recognize that the revocable trust authorized the trustees to take the actions which they took. However, the actions taken by the trustees split the trust's assets, removed beneficiaries, and created an entirely new legal entity. Clearly, these post-death actions modified or amended the dispositive provisions of the trust. ¹²While we will look to local law in order to determine the nature of the interests provided under a trust document, we are not bound to give effect to a local court order which modifies the dispositive provisions of the document after respondent has acquired rights to tax revenues under its terms. 94 T.C. 666">Estate of Nicholson v. Commissioner, supra at 673;1992 U.S. Tax Ct. LEXIS 28">*67 75 T.C. 271">American Nurseryman Publishing Co. v. Commissioner, supra at 275; Estate of Hill v. Commissioner,64 T.C. 867">64 T.C. 867, 64 T.C. 867">875-876 (1975), affd. in an unpublished opinion 568 F.2d 1365">568 F.2d 1365 (5th Cir. 1978). As the Court of Appeals explained in 397 F.2d 443">Van Den Wymelenberg v. United States, supra at 445:

Were the law otherwise there would exist considerable opportunity for "collusive" state court actions having the sole purpose of reducing federal tax liabilities. Furthermore, federal tax liabilities would remain unsettled for years after their assessment if state courts and private persons were empowered to retroactively affect the tax consequences of completed transactions and completed tax years.

In conclusion, although the revocable trust, as modified by the Beta resolution, appears to meet the requirements of section 2055(a), we nevertheless find that respondent is entitled to estate taxes on the basis1992 U.S. Tax Ct. LEXIS 28">*68 of the trust's dispositive provisions that existed at the time of decedent's death. 94 T.C. 666">Estate of Nicholson v. Commissioner, supra at 680. Petitioner's attempt to qualify for the section 2055(a) deduction by execution of the Beta resolution and obtaining the court order of April 20, 1989, fails.

After reviewing the entire record, we find that the revocable trust was a nonqualifying split interest under section 2055(e)(2) and, therefore, does not qualify for the deduction for 98 T.C. 294">*313 charitable bequests. We also find that the Beta resolution had no nontax purpose and, therefore, does not qualify the revocable trust for the deduction under section 2055(a). Accordingly, we hold for respondent on this issue. Because we hold for respondent on this issue, we need not reach the issue of whether the subsequent reduction of the Beta trust's funding and corresponding increase in the revocable trust's funding entitled the estate to a deduction for charitable bequests in excess of that claimed on its return.

The second issue for decision is whether petitioner is liable for an addition to tax under section 6651(a)(1) for failure to file timely its Federal estate1992 U.S. Tax Ct. LEXIS 28">*69 tax return. Petitioner concedes that, under section 20.6081-1(a), Estate Tax Regs., it was not entitled to the second 6-month extension of time to file its estate tax return, and that, therefore, the estate tax return was not timely filed. However, petitioner argues that it is not subject to the section 6651(a)(1) addition to tax because it relied on its attorney's erroneous advice that it could obtain the second 6-month extension which it requested, and that reliance on this advice constitutes reasonable cause for failure to file timely its estate tax return.

The addition to tax under section 6651(a)(1) does not apply if the failure to file is due to "reasonable cause and not due to willful neglect". ¹³Sec. 6651(a)(1); United States v. Boyle,469 U.S. 241">469 U.S. 241, 469 U.S. 241">245 (1985); Jackson v. Commissioner,864 F.2d 1521">864 F.2d 1521, 864 F.2d 1521">1527 (10th Cir 1989); Crocker v. Commissioner,92 T.C. 899">92 T.C. 899, 92 T.C. 899">912 (1989). Respondent contends that reliance on advice of counsel with respect to a return due date, no matter how reasonable, does not constitute reasonable cause for purposes of section 6651(a)(1). Respondent also argues1992 U.S. Tax Ct. LEXIS 28">*70 that petitioner's reliance on advice from its attorney was not reasonable because Ms. Koithan should have known that the advice was erroneous and should have conducted independent research to verify it.

A failure to file timely a return is due to "reasonable cause" if the taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return within the date prescribed by law. Sec. 301.6651-1(c)(1), Proced. & Admin. 98 T.C. 294">*314 Regs.; 469 U.S. 241">United States v. Boyle, supra at 246; Bank of the West v. Commissioner,93 T.C. 462">93 T.C. 462, 93 T.C. 462">471 (1989); Estate of Paxton v. Commissioner,86 T.C. 785">86 T.C. 785, 86 T.C. 785">819 (1986). When a taxpayer shows that he reasonably relied on the "advice" of an accountant or attorney, even when such advice turned out to be mistaken, courts have frequently held that such reliance constitutes "reasonable1992 U.S. Tax Ct. LEXIS 28">*71 cause". Such reliance is consistent with the "ordinary business care and prudence" required by section 301.6651-1(c)(1), Proced. & Admin. Regs.; Jackson v. Commissioner,864 F.2d 1521">864 F.2d 1521, 864 F.2d 1521">1527 (10th Cir. 1989). See Denenburg v. United States,920 F.2d 301">920 F.2d 301, 920 F.2d 301">303 (5th Cir. 1991).

The leading case on whether reliance on an agent constitutes reasonable cause is 469 U.S. 241">United States v. Boyle, supra. In Boyle, the executor of an estate relied upon an attorney to prepare and file the estate tax return. However, due to a clerical oversight, the attorney filed the estate tax return 3 months late. 469 U.S. 241">United States v. Boyle, supra at 243. The executor argued that his reliance on the attorney to file the return constituted "reasonable cause" for failure to file timely. 469 U.S. 241">United States v. Boyle, supra at 244. The Supreme Court held that reliance on an agent to actually file a return, no matter how reasonable, will not, as a matter of law, constitute reasonable cause for a late filing under section 6651(a)(1). ¹⁴ The Supreme Court stated:

Congress1992 U.S. Tax Ct. LEXIS 28">*72 has placed the burden of prompt filing on the executor, not on some agent or employee of the executor. * * * That the attorney, as the executor's agent, was expected to attend to the matter does not relieve the principal of his duty to comply with the statute. [469 U.S. 241">469 U.S. at 249-250.]

The facts in Boyle are distinguishable from the instant case because Ms. Koithan relied on the attorney's erroneous advice that the estate could obtain a second extension for filing its return. She did not rely on the attorney to actually file the return or the requests for extension of time to file. By contrast, the taxpayer in Boyle relied on its attorney to actually perform what the Supreme1992 U.S. Tax Ct. LEXIS 28">*73 Court described as "an unambiguous, precisely defined duty to file the return within nine months". 469 U.S. 241">Boyle v. United States, supra at 250. The 98 T.C. 294">*315 Supreme Court acknowledged the legitimacy of this distinction when it stated that "This case is not one in which a taxpayer has relied on the erroneous advice of counsel concerning a question of law." 469 U.S. 241">United States v. Boyle, supra at 250. ¹⁵ Thus, although Boyle is not directly on point, it does suggest that reliance on an expert for advice on when the law requires a return to be filed (as opposed to reliance on an agent to fulfill an unambiguous, nondelegable duty) may constitute reasonable cause. ¹⁶

1992 U.S. Tax Ct. LEXIS 28">*74 This Court, as well as others, has addressed the issue of whether reliance on an agent constitutes reasonable cause for failure to file timely a return. Many of these cases deal with the same type of situation presented in Boyle, i.e., the taxpayer relied on an agent to actually perform the nondelegable duty of filing the return. ¹⁷ As in Boyle, these cases held that reliance on an agent was not reasonable cause for failing to perform a nondelegable duty. Other cases involved situations where the taxpayer claimed to have relied on an expert's advice concerning whether or when a return had to be filed as opposed to relying on the expert to file the return. Our review of such cases indicates that the holdings fall into three categories.

1992 U.S. Tax Ct. LEXIS 28">*75 The first category of cases holds that, although a taxpayer claimed to have relied on an expert's advice concerning filing requirements, the section 6651(a)(1) addition nonetheless applied. In some of these cases, the courts found that the taxpayers did not prove that the expert actually gave the 98 T.C. 294">*316 advice upon which the taxpayer claims to have relied.¹⁸ In other cases, the courts found that the taxpayers did not fully disclose all relevant information to the expert, apparently concluding that reliance on an uninformed expert is not reasonable.^{191992 U.S. Tax Ct. LEXIS 28">*76} In still other cases, the courts found that the taxpayers did not demonstrate that the individual upon whose advice the taxpayer relied was an expert, apparently reasoning that reliance on someone who is not shown to be an expert for expert advice is not reasonable.²⁰ In all these cases, the courts found either that no advice was given upon which the taxpayer could rely, or that the taxpayer was not reasonable in relying on the advice given.

In the second category of cases, the taxpayers claimed that they did not timely file returns because they relied on an expert's advice that no additions to tax would be due because no tax liability existed upon which the addition to tax is computed. ²¹ In these cases, the expert did not tell the taxpayers that they were not required to file a return or give erroneous advice 1992 U.S. Tax Ct. LEXIS 28">*77 concerning the proper filing date. Instead, the expert told the taxpayers that no addition to tax would be owing even if a required return was not timely filed. In this situation, the taxpayers were not reasonable in failing to file because the expert upon whose advice they claimed to rely did not tell them that they did not have to file a return. These cases are similar to many of the cases in the first category in that there really was no erroneous advice concerning returnfiling requirements upon which to rely. As in the first category, the courts held that the failure to file was not due to reasonable cause.

1992 U.S. Tax Ct. LEXIS 28">*78 In the third category of cases, the courts found that reliance on an expert was reasonable cause for failing to file timely the return. ²² In these cases, the courts found that the taxpayer 98 T.C. 294">*317 made full disclosure to the expert, that the taxpayer relied in good faith on the expert's advice, and that the taxpayer did not otherwise know that the return was due. In these cases, the courts found that the addition to tax did not apply.

1992 U.S. Tax Ct. LEXIS 28">*79 The distinction between the first two categories and the third is clear: in the former, the evidence indicated that the taxpayer's claimed reliance was not proven or was not reasonable. By contrast, cases in the third category involved taxpayers who reasonably and in good faith relied on the erroneous advice of their experts.

Our analysis would not be complete if we failed to acknowledge that this third category of cases has two subcategories. The first subcategory involves expert advice that the taxpayer's situation was such that no return at all was required. Examples of these situations include advice that no gift tax return was required because no taxable gift was made, Georgia Ketteman Trust v. Commissioner,86 T.C. 91">86 T.C. 91, 86 T.C. 91">108-109 (1986); advice that the value of an estate was less than the amount necessary to give rise to a legal requirement to file an estate tax return, Estate of Paxton v. Commissioner,86 T.C. 785">86 T.C. 785, 86 T.C. 785">819-820 (1986); and advice that a taxpayer did not fall within the legal definition of a personal holding company and, therefore, need not file a personal holding company return, Haywood Lumber & Mining Co. v. Commissioner,178 F.2d 769">178 F.2d 769 (2d Cir. 1950).1992 U.S. Tax Ct. LEXIS 28">*80 As to this subcategory, reliance on legal advice that the taxpayer had no obligation at all to file a return constitutes reasonable cause for purposes of section 6651(a)(1). Ballard v. Commissioner,854 F.2d 185">854 F.2d 185, 854 F.2d 185">189 (7th Cir. 1988); 86 T.C. 785">Estate of Paxton v. Commissioner, supra at 819-820. With respect to these situations the Supreme Court said:

When an accountant or attorney advises a taxpayer on a matter of tax law, such as whether a liability exists, it is reasonable for the taxpayer to rely on that advice. Most taxpayers are not competent to discern error in the substantive advice of an accountant or attorney. To require the taxpayer to challenge the attorney, to seek a "second opinion," or to try to monitor counsel on the provisions of the Code himself would nullify the very purpose 98 T.C. 294">*318 of seeking the advice of a presumed expert in the first place. [United States v. Boyle,469 U.S. 241">469 U.S. at 251.]

The second subcategory of cases involves taxpayers whose late filing was caused by erroneous expert advice as to the date that the law required the taxpayer to file its return. The Supreme Court acknowledged that courts are split on whether reliance on this type of advice can constitute reasonable cause for purposes of section 6651(a)(1).

Courts have differed over whether a taxpayer demonstrates "reasonable cause" when, in reliance on the advice of his accountant or attorney, the taxpayer files a return after the actual due date but within the time the adviser erroneously told him was available. Compare Sanderling, Inc. v. Commissioner,571 F.2d 174">571 F.2d 174, 571 F.2d 174">178-179 (CA 3 1978) (finding "reasonable cause" in such a situation); Estate of Rapelje v. Commissioner,73 T.C. 82">73 T.C. 82, 73 T.C. 82">90, n. 9 (1979) (same); Estate of DiPalma v. Commissioner,71 T.C. 324">71 T.C. 324, 71 T.C. 324">327 (1978)1992 U.S. Tax Ct. LEXIS 28">*82 (same), acq., 1979-1 Cum. Bull. 1; Estate of Bradley v. Commissioner,33 TCM 70, 72-73 (1974) (same), affd. 511 F.2d 527">511 F.2d 527 (CA 6 1975), with Estate of Kerber v. United States,717 F.2d 454">717 F.2d 454, 717 F.2d 454">454-455, and n.1 (CA 8 1983) (per curiam) (no "reasonable cause"), cert. pending, No. 83-1038; Smith v. United States,702 F.2d 741">702 F.2d 741, 702 F.2d 741">742 (CA 8 1983) (same); Sarto v. United States,563 F. Supp. 476">563 F. Supp. 476, 563 F. Supp. 476">478 (ND Cal. 1983) (same). We need not and do not address ourselves to this issue. [United States v. Boyle,469 U.S. 241">469 U.S. at 251 n.9.]

In Estate of DiPalma v. Commissioner,71 T.C. 324">71 T.C. 324, 71 T.C. 324">327 (1978), the attorney for the estate led the executrix to believe that pending litigation justified 1992 U.S. Tax Ct. LEXIS 28">*83 delaying the filing of the estate tax return. As a result, the estate tax return was filed late. Respondent argued that the executrix had a nondelegable duty to file timely and that she could not discharge this duty by 98 T.C. 294">*319 relying on an attorney. We rejected this argument, pointing out that the cases on which respondent relied generally involved taxpayers who had relied upon their lawyers or accountants to actually perform the nondelegable duty of filing. We held that the taxpayer's good faith reliance on its attorney's erroneous advice regarding the due date of the return constituted "reasonable cause". Accord Sanderling, Inc. v. Commissioner,571 F.2d 174">571 F.2d 174, 571 F.2d 174">178-179 (3d Cir. 1978); Estate of Rapelje v. Commissioner,73 T.C. 82">73 T.C. 82, 73 T.C. 82">90, n.9 (1979); Estate of Bradley v. Commissioner,T.C. Memo. 1974-127. In 73 T.C. 82">Estate of Rapelje v. Commissioner, supra at 90 n.9, we commented on our opinion in Estate of DiPalma and noted that reasonable reliance on an attorney's advice as to when a return is due falls into the same category of cases as those in which taxpayers1992 U.S. Tax Ct. LEXIS 28">*84 relied on an attorney's advice that no return at all need be filed. Both situations require someone to ascertain the duties imposed by law, and in both situations, lay persons typically rely on the advice of experts. These cases are distinguishable from those in which the taxpayer simply delegates all responsibility for filing to an agent.

The Supreme Court contrasted the rule applied by this Court and the Third Circuit with Estate of Kerber v. United States,717 F.2d 454">717 F.2d 454, 717 F.2d 454">454 n.1, 455 (8th Cir. 1983) (per curiam), and Smith v. United States,702 F.2d 741">702 F.2d 741, 702 F.2d 741">742 (8th Cir. 1983). 469 U.S. 241">United States v. Boyle, supra at 251 n.9. We have examined these two Eighth Circuit decisions and the cases upon which they rely. Kerber and Smith rely on Boeving v. United States,650 F.2d 493">650 F.2d 493 (8th Cir. 1981), and Boeving relies on Estate of Lillehei v. Commissioner,638 F.2d 65">638 F.2d 65 (8th Cir. 1981). However, Estate of Lillehei did not involve a taxpayer who relied on the erroneous advice of an expert. Instead, Estate of Lillehei involved1992 U.S. Tax Ct. LEXIS 28">*85 a taxpayer who relied on an expert to perform the nondelegable duty of filing its return. The executor in Estate of Lillehei "never inquired as to when the return was due, nor did he follow up with his lawyer to make sure the return was not filed late." 638 F.2d 65">Estate of Lillehei v. Commissioner, supra at 66. Neither Kerber, Smith, nor Boeving addresses this factual distinction. Instead, they cite Estate of Lillehei, or its progeny, Boeving, and hold that reasonable cause did not exist. From this we can only conclude that the Eighth Circuit did not believe that the facts in Kerber, Smith, and Boeving were 98 T.C. 294">*320 distinguishable from Estate of Lillehei. All these opinions preceded 469 U.S. 241">United States v. Boyle, supra.In Boyle, the Supreme Court made clear that a taxpayer's reliance on an agent to perform a nondelegable duty is different from a taxpayer's reliance on an expert's advice. We hold that reasonable reliance on the erroneous advice of an attorney with respect to the due date of a return can constitute "reasonable cause" within the meaning of section 6651(a)(1).

Our next inquiry1992 U.S. Tax Ct. LEXIS 28">*86 is whether petitioner in this case relied in good faith on an attorney's advice with respect to the due date of the return. Petitioner's representative, Ms. Koithan, did not delegate her duty to file the estate tax return to the estate's attorney, Mr. Tipton. Indeed, she was aware that the estate tax return had to be filed within 9 months of the date of decedent's death and that it was her responsibility to file the return. However, when the filing due date of the estate tax return approached, Ms. Koithan was concerned that she would not be able to file an accurate estate tax return because of a lack of adequate appraisals. She consulted with Mr. Tipton who advised her to request an extension. She followed Mr. Tipton's advice and filed a request for a 6-month extension to file the estate tax return, which was approved by respondent.

Six months later when the extended due date approached, Ms. Koithan was again concerned that she would not be able to file an accurate return. She consulted with Mr. Tipton. Mr. Tipton advised her that petitioner could obtain a second extension of time in which to file its estate tax return. She relied on his advice and filed a second request 1992 U.S. Tax Ct. LEXIS 28">*87 for a 6-month extension. Mr. Tipton's advice that petitioner could obtain a second extension beyond the original 6 months was erroneous. However, Ms. Koithan did not know that this advice was not correct.

Section 6075(a) provides that an estate tax return shall be filed within 9 months after the date of decedent's death. Section 6081(a) provides, however, that "The Secretary may grant a reasonable extension of time for filing any return * * *. Except in the case of taxpayers who are abroad, no such extension shall be for more than 6 months." (Emphasis added.) Although an extension referred to in section 6081 is limited to 6 months, the statute does not explicitly state that the 98 T.C. 294">*321 Secretary may only grant one extension, ²³ or that the taxpayer may not receive multiple extensions, or that the aggregate of all extensions may not exceed 6 months. The instructions which accompany the Application for Extension of Time to File U.S. Estate Tax Return and/or Pay Estate Tax (Form 4768) state that "The time to file extension may not exceed 6 months unless the personal representative is out of the country." (Emphasis added.) Again, there is no explicit statement that1992 U.S. Tax Ct. LEXIS 28">*88 a second extension may not be granted or that the aggregate of extensions may not exceed 6 months. It is only after reading the penultimate sentence of the pertinent estate tax regulation that one finds a statement that literally restricts the total allowable extended time period to 6 months. Section 20.6081-1(a), Estate Tax Regs., provides:

Extension of time for filing the return. -- (a) In case it is impossible or impracticable for the executor to file a reasonably complete return within 9 months * * * from the date of death, the district director or the director of a service center may, upon a showing of good and sufficient cause, grant a reasonable extension of time for filing the return required by section 6018. Unless the executor is abroad, the extension may not be for more than 6 months from the date for filing provided by section 6075(a). Therefore, unless the executor is abroad, the due date for filing the return under any extension granted by a district director or a director of a service center may not be later than 15 months * * * from the date of the decedent's death. The extension may, of course, be for a lesser period of time. [Emphasis added.]

Respondent1992 U.S. Tax Ct. LEXIS 28">*90 did not notify petitioner that she had not approved petitioner's second request for an extension until the audit of petitioner's estate tax return in 1986. Respondent did, however, negotiate the check which accompanied petitioner's 98 T.C. 294">*322 second request for extension of time. From petitioner's perspective, this sequence of events was exactly the same as what had taken place with respect to its first request for an extension: petitioner submitted a request for an extension along with a check; respondent negotiated the check which accompanied the request; and respondent, contrary to the instructions in her own form, failed to notify petitioner that she had approved or denied the request. ²⁵ Respondent's failure to notify petitioner that its second request for extension was denied, coupled with the fact that respondent negotiated the check which accompanied this request, left petitioner with the impression that respondent had approved the request.

1992 U.S. Tax Ct. LEXIS 28">*91 When petitioner finally filed the estate tax return, it made an election on the return to pay the tax in installments pursuant to section 6166. This election, to be valid, must be made on a timely filed return. After petitioner made this election, respondent billed petitioner for the annual installments due under petitioner's section 6166 election. While this alone would not constitute reasonable cause, it indicates petitioner's reasonableness in continuing to believe that it had obtained a second extension for filing.

Respondent's failure to notify petitioner of a denial, the negotiation of the accompanying check, and respondent's initial recognition of the section 6166 election suggest that respondent probably did not deny petitioner's second extension until the audit of petitioner's return. Since the second request for extension clearly indicated on its face that the requested extension date was beyond 6 months from the original due date, the most plausible explanation for respondent's actions (or lack thereof) is that her own agents did not recognize that a second extension was not available. The evidence suggesting that respondent's own agents may not have been aware of1992 U.S. Tax Ct. LEXIS 28">*92 the impropriety of petitioner's second extension request cuts against respondent's position that Ms. Koithan should have known that the second request for extension was improper despite the contrary advice of her attorney. See Sanderling, Inc. v. Commissioner,571 F.2d 174">571 F.2d at 178.

98 T.C. 294">*323 Respondent cites Fleming v. United States,648 F.2d 1122">648 F.2d 1122, 648 F.2d 1122">1125 (7th Cir. 1981), and Estate of Smith v. United States,589 F. Supp. 836">589 F. Supp. 836 (E.D. La. 1984), in support of her position that petitioner's failure to file was not due to reasonable cause. Respondent's reliance on these cases is misplaced.

In Fleming, the taxpayer argued that his failure to file was due to reasonable cause because he relied on his attorney's statement that an application for an automatic extension had been filed. The Court held that the failure to file was not due to reasonable cause, because the taxpayer had a personal nondelegable duty to file the return on time, and this nondelegable duty included the proper and timely filing of an application for an extension. The holding in Fleming is consistent with 469 U.S. 241">United States v. Boyle, supra,1992 U.S. Tax Ct. LEXIS 28">*93 and does not turn on the specific issue raised in the instant case.

In 589 F. Supp. 836">Estate of Smith v. United States, supra at 839, the District Court for the Eastern District of Louisiana found as a fact that the estate's representative, relying on his own knowledge and that of his accountant, erroneously believed that the only detriment that the estate would suffer for failing to file timely its estate tax return was that interest would begin to accrue. The court found that the evidence did not demonstrate that the taxpayer relied exclusively on the advice of his accountant and held for the Government. We distinguish Estate of Smith on the basis that the court did not find, as we have in this case, that the expert erroneously advised the taxpayer that it did not have to file a return within the proper time.

Respondent also relies on Sarto v. United States,563 F. Supp. 476">563 F. Supp. 476 (N.D. Cal. 1983). In Sarto, the taxpayer argued that he relied on his attorney to obtain an extension for filing an estate tax return. 93 T.C. 462">Sarto v. Commissioner, supra at 477. The District Court held that timely filing a tax return is a nondelegable1992 U.S. Tax Ct. LEXIS 28">*94 duty and that the failure of an agent to perform this duty does not constitute reasonable cause. 93 T.C. 462">Sarto v. Commissioner, supra at 478. The facts in Sarto are thus distinguishable from the instant case.

Finally, respondent argues that our opinion in Estate of Di Fiore v. Commissioner,T.C. Memo. 1987-588, precludes a finding that petitioner's delinquency was due to reasonable cause. In Estate of Di Fiore, we found as a fact that the estate, acting through its expert, improperly filed a request for 98 T.C. 294">*324 a second extension. Based on this finding, we held that the taxpayer delegated its responsibility for timely filing the return to its expert, and that this delegation did not constitute reasonable cause for failing to file a return. Respondent relies on language in the Estate of Di Fiore opinion which suggests that advice on whether a second extension could be obtained was not a question of law and, as such, a taxpayer could not reasonably rely on it. We have reviewed our opinion in Estate of Di Fiore and find that, in the context of that case, the language to which respondent refers is dicta and we decline to follow respondent's1992 U.S. Tax Ct. LEXIS 28">*95 interpretation of that language.

After reviewing the entire record and examining the relevant case law, we find that petitioner reasonably and in good faith relied on erroneous advice from its attorney. Such reliance caused petitioner's estate tax return to be untimely. We hold that such reliance constitutes "reasonable cause" within the meaning of section 6651(a). Accordingly, petitioner is not liable for the addition to tax under section 6651(a)(1).

The final issue for decision is whether petitioner is liable for the addition to tax under section 6651(a)(2) for failure to pay timely its estate tax. Section 6651(a)(2) provides for an addition to tax for failure to pay taxes shown on a return on or before the date prescribed for payment. The addition to tax is 0.5 percent of the amount of such tax for each month or fraction thereof during which the failure continues. However, like section 6651(a)(1), the addition to tax does not apply if the taxpayer can demonstrate that the failure is due to "reasonable cause" and not willful neglect. As with the addition to tax for failure to file timely, petitioner concedes that it did not timely pay its estate tax but argues that its failure1992 U.S. Tax Ct. LEXIS 28">*96 was due to reasonable cause. Also, as with the addition to tax for failure to file timely, respondent makes no argument that petitioner's failure was due to willful neglect but, instead, argues that reasonable cause is not present in this case.

Petitioner did not timely pay the estate tax shown on the return because it elected to defer payment under section 6166. The section 6166 election was invalid because it was made in a return which was not timely filed. The failure to file timely was the direct result of petitioner's reasonable reliance on its attorney's erroneous advice. It appears that respondent initially accepted the section 6166 election and only disallowed 98 T.C. 294">*325 it after she determined that the estate had improperly requested a second extension of time in which to file its estate tax return. At the time payment of the estate tax was due, petitioner reasonably believed that the section 6166 election was proper. Under these circumstances, we find that petitioner exercised ordinary business care and prudence in providing for the payment of its tax liability. ²⁶

1992 U.S. Tax Ct. LEXIS 28">*97 In section 301.6651-1(c), Proced. & Admin. Regs., a taxpayer may also demonstrate reasonable cause for failure to pay taxes by showing --

that he exercised ordinary business care and prudence in providing for payment of his tax liability and was nevertheless either unable to pay the tax or would suffer an undue hardship (as described in § 1.6161-1(b) of this chapter) if he paid on the due date.

We find that petitioner demonstrated that it "would suffer an undue hardship (as described in sec. 1.6161-1(b) of this chapter) if * * * [it] paid on the due date." Although section 1.6161-1(b), Income Tax Regs., contains a general description of situations within the meaning of the term "undue hardship", 1992 U.S. Tax Ct. LEXIS 28">*98 it contains no working examples to shed light on the meaning of terms such as "more than an inconvenience", "substantial financial loss", and "sacrifice price". However, section 20.6161-1(a)(2)(ii), Estate Tax Regs., contains examples under its definition of "undue hardship". Because these two regulations use the same language to describe the same term for purposes of the same section of the Internal Revenue Code, we find that the examples in section 20.6161-1(a)(2)(ii), Estate Tax Regs., illustrate the application of the term "undue hardship" as 98 T.C. 294">*326 defined in section 1.6161-1(b), Income Tax Regs., and used in section 301.6651-1(c), Proced. & Admin. Regs.

Section 20.6161-1(a)(2)(ii), Example (1), Estate Tax Regs., describes the following fact pattern as an example of undue hardship:

A farm (or other closely held business) comprises a significant portion of an estate, but the percentage requirements of section 6166(a) (relating to an extension where the estate includes a closely held business) are not satisfied and, therefore, that section does not apply. Sufficient funds for the payment of the estate tax when otherwise due are not readily available. The farm (or 1992 U.S. Tax Ct. LEXIS 28">*99 closely held business) could be sold to unrelated persons at a price equal to its fair market value, but the executor seeks an extension of time to facilitate the raising of funds from other sources for the payment of the estate tax.

In the instant case, petitioner's closely held businesses constituted in excess of 95 percent of the adjusted gross estate. Thus, the percentage of petitioner's assets which were closely held businesses exceeded that of the taxpayer in the example, ²⁷ and presumably petitioner had less liquidity because more of its assets were tied up in the closely held business. Similarly, the fact that the assets in the closely held businesses constituted over 95 percent of the adjusted gross estate indicates that sufficient funds with which to pay the estate tax when otherwise due were not readily available. Although not as clear, the record also indicates that the market for hotel properties, which comprised the bulk of the assets in petitioner's closely held businesses, was soft. Due principally to the economic decline with respect to the hotel properties, the net assets of the revocable trust and Beta trust declined in value from $ 25 to $ 6 million between1992 U.S. Tax Ct. LEXIS 28">*100 the date of death and May 1989. Petitioner has tried to sell a number of its properties for some time but, as a result of the depressed economy, it has not been successful. The facts presented by petitioner in this case provide a basis for finding "undue hardship".

Decision will be entered under Rule 155.