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August 22, 1984

ESTATE OF GEORGE C. YOUNG, HANNAH A. LAWLER, Executrix, HELEN A. YOUNG, COMMONWEALTH OF PENNSYLVANIA, Department of Revenue, and ATTORNEY GENERAL, Department of Justice, State of Pennsylvania

The opinion of the court was delivered by: LUONGO

 This is an action brought by the government to foreclose its tax lien against real property owned or transferred by the estate of George C. Young. The government has filed a motion for summary judgment, and defendant Helen A. Young (now Gallagher) has responded with a cross-motion for summary judgment and a petition for costs and attorney's fees under the Equal Access to Justice Act. For the reasons discussed below, I will grant the government's motion against all defendants, and I will deny the motions filed by Mrs. Gallagher.

 I. Background

 This litigation marks the climax of an unfortunate series of events in the disposition of the estate of George C. Young. On December 15, 1975, Mr. Young died testate, leaving his entire estate to his niece Hanna Lawler (now Ruggiero), whom he also named as his executrix. *fn1" At the time of his death, the value of Mr. Young's "total gross estate" was $ 395,986.91, resulting in a federal gross estate tax liability of $ 77,905.36, and a Pennsylvania inheritance tax of $ 52,221.22. *fn2" By far the most valuable assets in Mr. Young's estate were his one-half interests in two large tracts of real estate in Newlin Township, Chester County, Pennsylvania. It is against those parcels of land that the federal government now seeks to assert its claim.

 Before his death, Mr. Young shared ownership of the real property as tenant in common with his sister-in-law, Mrs. Gallagher. Mr. Young's testamentary disposition caused Mrs. Gallagher to contest probate of the will. Mrs. Gallagher and her daughter Mrs. Ruggiero settled the will contest. The settlement agreement, dated May 17, 1978, provided that Mrs. Gallagher would receive an undivided interest in most of one parcel referred to as the "Farm Tract;" *fn3" that Mrs. Ruggiero would receive the portion termed the "Development Tract;" *fn4" that Mrs. Ruggiero was then required to sell the Development Tract and pay to Mrs. Gallagher one-half of any proceeds in excess of $ 390,000. *fn5"

 While the probate litigation was going on, however, several changed circumstances affecting real estate in the area sharply reduced the value of the Ruggiero land. As recounted in Mrs. Ruggiero's affidavit, "the real estate market began to fall off, interest rates climbed substantially and a landfill dump began operation on a tract of ground immediately adjacent to mine." *fn6" As a consequence, Mrs. Ruggiero has been unable to dispose of the property for a price even remotely approximating the $ 304,000 value at which it was appraised at the time of Mr. Young's death.

 Meanwhile, both state and federal estate taxes have remained unpaid, and statutory interest has continued to accrue. The federal government made an initial assessment of tax liability in the amount of $ 72,764.82 on November 1, 1976, and a supplementary assessment of $ 5,140.54 on September 11, 1979. A Notice of Lien was filed on July 21, 1980. *fn7" As of September 30, 1980, the estate remained indebted to the federal government in the amount of $ 110,649.84, and subsequent charges rendered the estate liable, as of July 1, 1984, for $ 174,882.35. *fn8" The Commonwealth of Pennsylvania recorded its inheritance tax lien on May 11, 1981. The Commonwealth's tax was initially assessed at $ 52,221.22, and statutory interest charges have increased the Commonwealth's claim by an undetermined amount.

 II. Government's Motion For Summary Judgment

 In its effort to collect the overdue tax from the Young estate, the government seeks in this proceeding to foreclose its lien against the real estate which passed from the estate, via the settlement agreement, to Mrs. Ruggiero and Mrs. Gallagher. Relying on §§ 6321 and 6324 *fn9" of the Internal Revenue Code, the government argues that there are no disputed issues of material fact, and that it is entitled to judgment as a matter of law. In support of its motion, the government contends that its lien attached to all property of the estate at the time of Mr. Young's death, regardless of assessment or filing, and that the lien extends to all property derived from the estate now in the defendants' possession. Additionally, the government invokes the Commissioner's presumption of correctness with respect to the tax assessments involved in this case.

 A. Estate of George G. Young, Hanna A. Lawler (Ruggiero), Executrix

 As to defendant Hanna Ruggiero, executrix of the estate, I conclude that the government's motion must be granted. Pursuant to both the general tax lien provision (§ 6321) *fn10" and the special estate tax lien statute (§ 6324(a)), *fn11" the government has a valid lien on all interests in the Development Tract and the Farm Tract now held by the executrix. *fn12"

 The estate's answer to the government's motion does not take issue with the legal basis of the government's claim; the estate requests either a further extension of time for payment of taxes, or a re-calculation of the tax due, based on the current value of the property. I am not persuaded, however, that a further delay in payment of the tax would accomplish anything except to increase the statutory interest charges against the estate. Moreover, the estate cites no authority for its contention that I have discretion to substitute the property's current market value for its previously assessed worth, and I find no basis for shifting the risk of real estate depreciation to the government.

 B. Commonwealth of Pennsylvania

 The relative priority of debts to the federal government, whether or not secured by liens, is an issue which has long perplexed the courts. Because no federal constitutional principle accords debts to the sovereign absolute priority, "the Federal Government's claim to priority . . . rests as a matter of settled law only on statute." *fn13" United States v. Moore, 423 U.S. 77, 81, 46 L. Ed. 2d 219, 96 S. Ct. 310 (1975). Absent such legislation, the principle governing priority is "'the first in time is the first in right. '" United States v. City of New Britain, 347 U.S. 81, 85, 98 L. Ed. 520, 74 S. Ct. 367 (1954). Nevertheless, on several occasions the Supreme Court has qualified that general precept, holding federal tax liens superior to earlier state-created liens when the antecedent encumbrance was inchoate, indefinite or otherwise unperfected. See, e.g. United States v. Security Trust & Savings Bank, 340 U.S. 47, 95 L. Ed. 53, 71 S. Ct. 111 (1950). See generally Kennedy, From Spokane County to Vermont: The Campaign of the Federal Government Against the Inchoate Lien, 50 Iowa L. Rev. 724, 727-735 (1965) (hereinafter "Kennedy"). Under this "choateness" test, in order for a non-federal lienor to survive the challenge posed by a subsequent federal lien, "the identity of the lienor, the property subject to the lien, and the amount of the lien . . . [must be] established." United States v. City of New Britain, 347 U.S. at 84.

 Application of the choateness test to the case at bar mandates priority treatment of the federal government's claim for taxes. Accepting the Commonwealth's statement that its tax lien arose upon Mr. Young's death, but recognizing that evaluation of the resultant lien is a federal question, *fn14" I am persuaded that the state-created encumbrance failed to attain that degree of perfection which would protect it from federal supervention. In particular, the amount of the Commonwealth's claim was uncertain when the federal special estate tax lien attached, and it remained undetermined until administrative procedures fixed the value of the decedent's property and the amount of the tax. Although such uncertainty as to the amount of the Commonwealth's tax lien might not render Pennsylvania's lien vulnerable to subsequent private lienors, the Commonwealth's lack of a fixed encumbrance deprives its lien of the specific and perfected character needed to prime a subsequent federal tax lien. See United States v. Texas, 314 U.S. 480, 86 L. Ed. 356, 62 S. Ct. 350 (1941); New York v. Maclay, 288 U.S. 290, 77 L. Ed. 754, 53 S. Ct. 323 (1933); In re Priest, 712 F.2d 1326 (9th Cir. 1983). *fn15" Assuming, therefore, that Pennsylvania's lien became ...

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