dissenting: I respectfully dissent because I believe the majority subjects petitioners to tax liability to an extent greater than the limit explicitly provided by section 6324(a)(2).
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The language of section 6324(a)(2) is clear. It provides that a transferee of an estate is personally liable for unpaid estate taxes of the transferor to the extent of the value at the time of the decedent’s death of property received by the transferee which was included in the gross estate. Section 6324(a)(2) provides in pertinent part:
(2) Liability of transferees and others. — If the estate tax imposed by chapter 11 is not paid when due, then the spouse, transferee * * * [or certain others] * * * who receives * * * property included in the gross estate * * *, to the extent of the value, at the time of the decedent’s death, of such property, shall be personally liable for such tax. * * *
A similar rule extends gift tax liability to a transferee of a gift to the extent of the value of the gift. Sec. 6324(b).
The estate in this case had an estate tax deficiency (not including interest) of $62,378.48. Majority op. p. 253. As of October 6, 1989, that liability, plus interest thereon, remained unpaid. Majority op. p. 253. On that date, respondent mailed separate notices of transferee liability to petitioners, each of whom had received proceeds of $50,000 from an insurance policy on the decedent’s life. Majority op. p. 253. The first step in statutory construction is an analysis of the statutory language. Reiter v. Sonotone Corp., 442 U.S. 330, 337 (1979). Omitting language not relevant here, section 6324(a)(2) plainly says that, if estate tax “is not paid when due, * * * the * * * transferee * * * who receives * * * property included in the gross estate, * * * to the extent of the value * * * of such property, shall be personally liable for such tax.”
Section 6324(a)(2) does two things. First, it makes a transferee of an estate personally liable for the transferor’s tax. Liability for tax includes liability for interest. Sec. 6601(e)(1). Therefore, section 6324(a)(2) makes the transferee personally liable for interest applicable to the tax deficiency of the transferor. That liability for interest runs from the due date of the return until the date the tax is paid. Sec. 6601(a).
Second, section 6324(a)(2) imposes a limit on the transferee’s liability. Specifically, the transferee’s liability is limited to the value of the property included in the decedent’s gross estate and received by the transferee. Sec. 6324(a)(2). The limit on the transferee’s liability plainly applies to the transferee’s liability for interest. Sec. 6324(a)(2). Thus, the limit on liability applies to both taxes and interest, including interest arising after the transfer, for which the transferee is liable under section 6324(a)(2).
II.
The majority recognizes that personal liability of a transferee exists because of section 6324(a)(2), and that the transferee’s liability includes liability for interest until the deficiency is paid. However, the majority sees the liability imposed by section 6324(a)(2) as two separate liabilities. The first is liability for the transferor’s tax and interest until the later of the time of the transfer or the due date of the return. Majority op. note 8. The majority applies the limit on liability in section 6324(a)(2) only to that liability. The second liability the majority sees in section 6324(a)(2) is the transferee’s liability for interest arising after that time. The majority does not believe the second liability is subject to the section 6324(a)(2) limit on liability, in spite of the fact that the statute juxtaposes personal liability on the transferee with the limit.
Section 6324(a)(2) does not enunciate the two liabilities the majority sees; it provides for only one liability, limited to the value of property received by the transferee. The majority concludes that the limit on the transferee’s liability ceases to apply at the later of the due date of the return or the time of the transfer. Majority op. p. 255. This differs from the Court of Appeals for the Third Circuit’s opinion in Poinier v. Commissioner, 858 F.2d 917 (3d Cir. 1988), revg. in part 86 T.C. 478 (1986) (interpreting section 6324(b), which provides limited transferee liability for gift tax, consistently with this dissent’s interpretation of section 6324(a)(2)). In our opinion in Poinier v. Commissioner, 86 T.C. at 488-490, however, we held that the limit does not apply to interest arising after issuance of the notice of transferee liability. This confusion in identifying the point at which the limit purportedly does not apply is understandable because no such point is provided by section 6324(a)(2). In fact, section 6324(a)(2) provides an absolute limit on transferee liability.
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I agree with the majority s analysis that section 6324(a)(2) imposes liability for the transferee of an estate, which, under section 6601(e)(1), includes interest. This imposition of liability for interest is consistent with the concept that tax underpayments should bear interest. The limit on transferee liability provided in section 6324(a)(2) may have less effect on this interest liability than appears at first because it would be “comparatively rare” for transferred property to be exhausted by the tax liability of the transferor. Poinier v. Commissioner, 858 F.2d 917 at 923. This would occur where the Commissioner issues notices of transferee liability which are at least equal in value to the estate tax deficiency and interest that later applies. It could also occur if the case is quite old, causing the interest on the transferor’s liability to grow large in proportion to the deficiency.
The estate tax deficiency in the instant case is $62,378.48, not including interest. Respondent issued two notices of transferee liability, each to individuals who received $50,000 which was included in the estate. Under the interpretation in this dissent, respondent may collect up to $50,000 from each transferee, which would represent all of the deficiency and up to $37,621.52 in interest. Interest may exceed $37,621.52 because it has been running since the due date of the return, probably in 1982. There are no “equities favoring a creative rewriting” of section 6324(a)(2) in these circumstances. Poinier v. Commissioner, 858 F.2d at 923. It is fully appropriate for us to apply the limitation on transferee liability in section 6324(a)(2) as written.
It was not patently unreasonable for Congress to limit the total liability of transferees to the value of the property received. Poinier v. Commissioner, 858 F.2d at 922. It is “both consistent with [its] plain language * * * and sensible” to give the limitation on the transferee’s liability as broad a scope as the liability itself. See id. at 920. The limitation is plainly stated in the statute, and we should give it full effect.
Hamblen, Clapp, Wells, Whalen, and Beghe, JJ., agree with this dissent.