Volume 126 — Tax Court Reports

In her original petition, P challenged R's notice of determination sustaining a proposed levy to collect P's 1992 income tax. Held: Inasmuch as R agrees that there is no unpaid 1992 tax liability upon which a levy could be based and that no further collection action should be taken, P's challenges to the proposed levy are moot.

P filed a Motion Pursuant to Rule 261 to Redetermine Interest on Overpayment. Held: We hold that the GATT rate applies to the accrued interest owed P as of Dec. 31, 1994. Held, further, the entire overpayment of tax remaining is subject to the GATT rate since an amount in excess of the $ 10,000 threshold was refunded to P on the due date of P's return for the taxable year in question.

Held: Under secs. 6611, 6621(a)(1) and 6622, petitioners' outstanding Dec. 31, 1994, cumulative accrued overpayment interest balance of $ 1.6… Held: Under secs. 6611, 6621(a)(1) and 6622, petitioners' outstanding Dec. 31, 1994, cumulative accrued overpayment interest balance of $ 1.6 billion relating to the years involved herein accrues further compound interest after Dec. 31, 1994, at the reduced interest rate applicable to large corporate overpayments, not at the regular…

P resides in a community property State. P and H filed joint tax returns for 1982, 1983, and 1984. P and H paid the reported tax liabilities. Held: P is not entitled to a refund of amounts from community property used to pay H's understatements.

P is a U.S. citizen who earned wage income while working in Antarctica. P excluded this wage income on his 2001 Federal income tax return. Held: The wage income P earned in Antarctica is not excludable from income under sec. 911, I.R.C.

P is a foreign corporation whose only substantial asset is unimproved land in the United States. Held: A timely filing requirement is not found in a plain reading of sec. 882(c)(2), I.R.C. Held, further, the timely filing requirement in the regulations is invalid in that it is unreasonable under a plain reading of sec. 882(c)(2), I.R.C., and an application of the considerations set forth in Natl.

R filed a Federal tax lien in Florida (Florida lien) and mailed to P a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 (lien notice) regarding P's unpaid taxes for 1980,… Held: Sec. 301.6320-1(b)(1) and (2), Proced. & Admin. Regs., is a reasonable interpretation of sec. 6320, I.R.C., and is valid and controlling in this case.

On Feb. 14, 2005, P, a corporation, petitioned the Court to redetermine R's determination of Federal income tax deficiencies, additions to tax under sec. 6651(a)(1), I.R.C., and accuracy-related… Held: Pursuant to Rules 60(c) and 123(b), Tax Court Rules of Practice and Procedure, the Court will dismiss this case in full in that applicable State law precludes P from prosecuting any part of this case.

Ps and R executed a closing agreement covering specific matters relating to the treatment of certain partnership items on Ps' returns. Held: R may not proceed with collection because R failed to issue a deficiency notice before assessing Ps' taxes. The requirement to issue a deficiency notice before assessment is not altered by the closing agreement covering the treatment of certain items on Ps' returns for the years at issue.

P exercised incentive stock options on Dec. 21, 2000, acquiring    46,125 shares of E stock. As a result, under I.R.C. secs.    55(b)(2), 56(b)(3), and 83(a), P was required to include   $ 1,066,064, the spread between the exercise price and the fair    market value of the shares of E stock on the date of exercise,    in his alternative minimum taxable income in 2000. Instead, P    included only $ 452,025, the spread between the exercise price    and the fair market value of the shares of E stock on Apr. 15,    2001.   In 2001, E filed for bankruptcy, and P's shares of E stock    became worthless. Under I.R.C. sec. 165(g)(1), P realized a    capital loss for alternative minimum tax purposes of $ 1,075,289    in 2001.    R determined a deficiency of $ 169,510 in P's 2000 Federal income    tax. P maintains that the capital loss limitations of I.R.C.   secs. 1211 and 1212 do not apply for purposes of the alternative    minimum tax. As a result, P argues that he may use his capital    losses realized in 2001 to reduce his alternative minimum    taxable income in 2000.    Held: The capital loss limitations of I.R.C. secs. 1211    and 1212 apply for purposes of calculating alternative minimum    taxable income.    Held, further: P's capital losses realized in 2001    do not create an ATNOL that can be carried back to reduce his    alternative minimum taxable income in 2000.

R moved for reconsideration of our Opinion reported in Zapara v. Commissioner, 124 T.C. 223 (2005) (Zapara I). Held: Ps' citation of sec. 6335(f), I.R.C., on reply brief did not raise a new issue but appealed to the correct application of law.

P, an S corporation, is due an overpayment that exceeds $ 10,000. Held: The lower corporate rate set forth in the flush language of sec. 6621(a)(1), I.R.C., applies to C corporations, and P is entitled to the higher rate of overpayment interest set forth in sec. 6621(a)(1)(B), I.R.C., for corporations (the Federal short-term rate, plus 2 percentage points).

Ps' 1999 and 2000 taxable years became the subject of IRS collection activity through issuance of notices of intent to levy. Held: The administrative record and notices of determination underlying these cases are sufficient to support meaningful judicial review.

A partnership exchanged operating gold mines, including realty,    for operating coal mines. The coal mines were subject to two    coal supply contracts that obligated the mine owner to provide    electric utilities with coal. The benefits and obligations under    the contracts were governed by New Mexico law. The gold mines    were not subject to supply contracts. The partnership treated    the entire exchange as "tax free" under sec. 1031, I.R.C. R    determined that the coal supply contracts were not real property    and/or like-kind property and constituted "boot" so that the    value of the supply contracts would be taxable in the year of    the exchange.    Held: The coal supply contracts were covenants running    with and appurtenant to the real property under New Mexico law.    Held, further, amplifying the holding in   Koch v. Commissioner, 71 T.C. 54 (1978), the coal supply    contracts are "like-kind" property within the meaning of sec.   1031, I.R.C., and are not taxable as part of the exchange.

P, a lawyer for over 34 years, settled a class action law suit    during 1999 and received compensation for his legal services. P    received approximately half of the compensation in taxable year    1999 and half in taxable year 2000 and reported it as ordinary    income for the respective taxable years. P decided to leave the    practice of law and begin a business of trading securities.    After P failed to cover a margin call, P's brokerage accounts    were liquidated on Apr. 14, 2000, resulting in a short-term    capital loss. Throughout his career, P relied on accountants for    tax advice. When P filed for an extension of time to file his    1999 tax return on Apr. 17, 2000, P did not elect the mark-    to-market method of accounting pursuant to sec. 475(f), I.R.C.,    because P's accountant was not aware of the mark-to-market    election for securities traders or any related revenue    procedure. In June 2000, P learned of the mark-to-market    election for securities traders from a friend, obtained the    citation of sec. 475(f), I.R.C., and learned that   Rev. Proc. 99-17, 1999-1 C.B. 503, required the election to be filed no later    than the due date for the previous year's tax return; i.e., Apr.    17, 2000. P then employed a law firm to file the election and a    request for relief pursuant to sec. 301.9100-3(c), Proced. &    Admin. Regs. On July 21, 2000, the law firm submitted the    election on P's behalf. P did not trade any securities, realize    any further gains, or suffer any further losses between Apr. 17    and July 21, 2000. P's losses were exactly the same on July 21,    2000, as they were on Apr. 17, 2000. In a Private Letter Ruling,    dated Dec. 5, 2001, R denied P's request for an extension of    time to file the election pursuant to sec. 301.9100-3(c),    Proced. & Admin. Regs. Subsequently, R determined deficiencies    in tax for P's taxable years 1999 and 2000.    Held: P is entitled to an extension of time to file his   sec. 475(f), I.R.C., election pursuant to sec. 301.9100-3,    Proced. & Admin. Regs. P is entitled to relief because he acted    reasonably and in good faith and the interests of the Government    will not be prejudiced. Accordingly, P is entitled to the    benefits of sec. 475(f), I.R.C., for the taxable year 2000 as if    he had timely filed the election.

P, a real estate investor, purchased 29.3 acres of unimproved land in a historical overlay district, 15.04 acres of which were located… Held: P did not make a contribution of a qualified conservation easement under sec. 170(h)(1), I.R.C., because the attempted grant did not satisfy the conservation purposes required under sec. 170(h)(4)(A), I.R.C. Specifically, the deed did not preserve open space or a historically important land area or certified historical structure. 2.

The sole issue for decision is whether a correction to the inventory method employed by S corporations owned by certain of the petitioners constitutes an accounting… Held: R's revaluations of the corporations' inventories, to correct for the accountant's omissions, constituted changes in a method of accounting employed by the corporations, requiring adjustments pursuant to sec. 481, I.R.C., to prevent amounts of income from being omitted solely on account of the changes.

R issued P a notice of intent to levy relating to P's 1997 tax liability. Held: P, after the first notice of determination was issued, had the opportunity to file a petition with this Court and dispute the 1997 liability. Thus, R did not abuse his discretion, and P was precluded from subsequently challenging the underlying liability. Sec. 6330(c)(2)(B), I.R.C.

P is a limited liability company (LLC) owned and operated by H and W. When P filed this action for redetermination of employment status, H and W were debtors in bankruptcy. Held: Because this proceeding concerns P's employment tax liabilities and not the tax liabilities of H and W, the automatic stay provision of 11 U.S.C. 362(a)(8) (2000) does not apply to this proceeding.