Volume 124 — Tax Court Reports

P, a closely held corporation, is the parent of an affiliated group that files consolidated Federal income tax returns. Held: Sec. 382(l)(3)(A)(i), I.R.C., which provides that an individual and all members of his family described in sec. 318(a)(1), I.R.C. (i.e., his spouse, children, grandchildren, and parents) are treated as one individual for purposes of applying sec. 382, applies solely from the perspective of individuals who are shareholders (as…

In 1997, as part of their retirement planning, Ps sold their stock in R Corp. to H Corp. H Corp. redeemed 90 percent of P- husband's stock in H Corp., and P-husband sold the remainder to his son and… Held: The sale and redemption of the H Corp. stock qualifies as a termination redemption under sec. 302(b)(3), I.R.C. None of the cross-default and cross-collateralization provisions made P- husband's post-transaction interest one other than an interest as a creditor. 2.

On Aug. 26, 2003, R issued to P separate Final Notices of Intent to Levy and Notice of Your Right to a Hearing with regard to his unpaid Federal income taxes for the taxable years 1985 to 1995 and… Held: The notices of determination underlying the petitions were issued to petitioner in violation of the automatic stay imposed under 11 U.S.C. sec. 362(a)(1) (2000), and, therefore, the Court lacks jurisdiction.

In 1995, in a series of planned transactions, P transferred    real properties to a qualified intermediary, TGE, which then    sold them to unrelated third parties. TGE used the sale    proceeds, as well as additional funds from P, to purchase like-    kind replacement properties for P from a corporation related to    P.      Held: The transactions in question were structured    to avoid the purposes of sec. 1031(f), I.R.C., governing like-    kind exchanges between related persons. Under sec. 1031(f)(4),    I.R.C., P is not entitled to defer gains realized on the    exchanges.

R's Appeals Office determined that R was warranted in filing a notice of Federal tax lien (NFTL) against P with respect to his 1996 Federal income tax liability. Held: R was dutybound to comply with the forfeiture order, which is not subject to collateral attack in this court. 2. Held, further, R had no duty to defend against the forfeiture order. 3.

At the conclusion of a collection due process hearing (hearing), R's Appeals Office (Appeals) determined to proceed by levy to collect unpaid assessments of tax. Held: The bankruptcy proceeding instituted by petitioners afforded them the opportunity to dispute the underlying liabilities within the meaning of sec. 6330(c)(2)(B), I.R.C., and, as a result, Ps were precluded from raising those liabilities during the hearing. 2.

Petitioners are pro se litigants. Held: Under sec. 7430, I.R.C., petitioners are not entitled to recover as litigation costs any amounts… Held: Under sec. 7430, I.R.C., petitioners are not entitled to recover as litigation costs any amounts representing the value of their research time. Held, further, petitioners are entitled to recover as litigation costs out-of-pocket postage and delivery costs and their mileage costs and parking fees incurred to attend a court hearing.

In 1980, D incorporated Empak, Inc. In 1986, D established an irrevocable stock accumulation trust (ISA Trust) and funded it with some of his Empak stock. Held: D's transfer of his Empak stock to WCB Holdings satisfied the bona fide sale exception because D possessed a legitimate and significant nontax reason for the transfer. Held, further, D's transfer of WCB Holdings class B membership units to BFLP did not satisfy the bona fide sale exception.

Ps incurred AMT liability as a result of their exercise of incentive stock options in 2000. The stock declined precipitously in value after the date of exercise. Held: It was not an abuse of discretion to reject Ps' offer in compromise and to continue the lien.

Petitioner (P), who was divorced, was entitled to retireand receive pension payments. Held: P's gross income from his continuedemployment, which he received in lieu of retirement benefits,does not include the amount of payments to which his formerspouse was entitled under California community property law onthe basis of the pension earned by P.

R issued to P statutory notices of deficiency for 1993, 1994, 1995, 1996, and 1997. P filed with the Court a petition for redetermination at docket No. 13410-00. Held: P's challenges to R's notice of determination are frivolous and groundless. R's notice of determination is sustained. Held, further, P is barred from challenging the existence or amount of the underlying tax liabilities for the years in issue, and R has shown good cause for lifting the suspension of the levy.

Hercules amended its defined benefit plan in 2001. Held: P did not show good cause either to commence discovery in this case or for this case to be set for trial. The case is to be decided solely on the administrative record. 2.

P filed a petition seeking relief from joint and several tax liability under sec. 6015, I.R.C., and R moved for summary judgment. R then moved to withdraw his summary judgment motion. Held: R's motion for remand will be denied. Held further: This case will be returned to the general docket for trial in due course.

In a prior District Court criminal proceeding, Ps pleaded guilty to various tax-related offenses with respect to tax years 1993-95. Held: Ps have not shown that they signed the Form 4549-CG under duress or coercion, or that it includes erroneous loss calculations; Ps may not contest their underlying tax liabilities for 1993-95. 2. Held, further, R has complied with the notice requirements of sec. 6331(a) and (d), I.R.C. 3.

P entered into a contract with American Telecommunications Co., Inc. (ATC). Held: Because P did not have the benefits and burdens of ownership with respect to the pay phones, P did not have a depreciable interest in the pay phones. Therefore, P is not entitled to claim a deduction for depreciation with respect to the pay phones in 2001. 2.

L is a longstanding nonprofit nature conservancy, the tax- exempt purposes of which include the preservation of wildlife, plants, and… Held: Each of the contributions is a qualified conservation contribution under sec. 170(h)(1), I.R.C., in that (1) the conservation easements protect a relatively natural habitat of plants or wildlife as required by sec. 170(h)(4)(A)(ii), I.R.C., and (2) L (or any subsequent holder of the conservation easements) holds (or will hold) the…

Ps claimed investment credits and losses arising out of a partnership in which they held a limited interest. By notice of deficiency, R disallowed these claimed credits and losses. Held: Ps have not substantially prevailed with respect to the most significant issue or set of issues presented, nor have they substantially prevailed with respect to the amount in controversy. Sec. 7430(c)(4)(A)(i), I.R.C. 1986.

R applied an overpayment in tax from Ps' 2002 taxable year to other taxes owed by Ps and notified Ps of that fact (the notice). Held: Motion to dismiss for lack of jurisdiction will be granted.

T is a trust established in 1967. The trustee engaged an outsidefirm to provide investment management advice for T, and the firmwas paid $ 22,241.31 for such services during the 2000 taxableyear. Held: The investment advisory fees paid by T are notfully deductible under the exception provided in sec. 67(e)(1),I.R.C., and are deductible only to the extent that they exceed 2percent of the T's adjusted gross income pursuant to sec. 67(a),I.R.C.