Volume 127 — Tax Court Reports

P rolled over a distribution from her deceased husband's individual retirement account (IRA) into her separate IRA upon her husband's death. Held: P received an early distribution from her own IRA subject to the sec. 72(t), I.R.C.,additional tax. The amount received from P's deceased husband's IRA lost its character as a distribution made to a beneficiary upon a decedent's death once P transferred the funds to her separately owned IRA. 2.

P's wife did not report embezzlement income on their joint 1999 return. After she was caught, P and she filed an amended tax return that reported the embezzlement income. Held: Upon reconsideration, we no longer adhere to our prior holding that sec. 6015(e) gives us jurisdiction over such nondeficiency stand-alone petitions. Ewing v. Commissioner, 118 T.C. 494, 118 T.C. No. 31 (2002), revd. 439 F.3d 1009 (9th Cir. 2006), no longer followed.

P-H, president and CEO of MGC Communications, Inc. (MGC), received incentive stock options (ISOs) from MGC between April 1996 and March 1999. Held: P-H's rights to theMGC shares he acquired upon the exercise of his ISOs were not subject to a substantial risk of forfeiture within the meaning of sec. 83, I.R.C., and sec. 16(b) of the Securities Exchange Act of 1934.

R issued P a notice of federal tax lien for the taxable years 1996-2000. P then requested a CDP hearing to review R's proposed collection action for the years 1990-2000. Held: under sec. 6330(a)(3)(B), a taxpayer has the right to request a hearing during the 30-day period before the day of the first levy for a particular tax period, and premature requests for a CDP hearing cannot lead to a valid notice of determination and jurisdiction in this Court under sec. 6330(d).

A TEFRA partnership claimed losses from an investment. See Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub. Held: The notice adjusts both partnership and affected items. We have jurisdiction to review those adjustments to the extent that they are for affected items. Held, further, under sec. 6229(b)(3), I.R.C., the notice of deficiency is untimely because the Forms 872 did not reference adjustments for partnership or affected items.

P is a foreign national. A member of P's family was kidnapped several years ago and held for ransom. Held: The significant risk of physical harm to P and P's family outweighs the public interest in access to court proceedings under these circumstances. P's motion to seal the record shall be granted, and P is permitted to proceed anonymously.

Ps operated paratransit services during the taxable years in question. Ps used sedans and vans to provide transportation to their clients. Held: Ps fail to meet the requirements under section 6421, I.R.C. Ps' sedans do not qualify as a bus. Even though Ps' vans may potentially qualify, Ps were unable to produce any evidence that quantifies how many gallons of gasoline are attributable to each type of vehicle. Held, further, Ps' service was not scheduled along regular routes.

On Mar. 13, 2006, the Court entered an order of dismissal for    lack of jurisdiction because of P's failure to file a proper    amended petition and pay the filing fee as previously ordered.    On June 8, 2006, 87 days after the Court's order was entered, P    mailed a document to the Court requesting an order to vacate the    order of dismissal. On June 13, 2006, 92 days after the Court's    order of dismissal was entered, the Court received and filed P's    document as a motion for leave to file motion to vacate    embodying motion to vacate. The Court also received P's amended    petition and filing fee on June 13, 2006.    Held: Absent the filing of a notice of appeal or a motion    to vacate, the Court's order of dismissal for lack of    jurisdiction would become final after the 90day period for    appeal. See secs. 7481(a), 7483, I.R.C.; Fed. R. App. P. 13(a).    Our jurisdiction to consider the substantive merits of P's    motion for leave depends on whether it is deemed to have been    filed within the 90-day appeal period following the Court's    order of dismissal.    Held, further: Whether P's motion for leave was    filed within the 90-day appeal period depends on whether the    timely-mailing/timely-filing provisions of sec. 7502, I.R.C.,    apply to P's motion for leave. In   Manchester Group v. Commissioner, T.C. Memo. 1994-604, revd. 113 F.3d 1087 (9th    Cir. 1997), we held that the timely-mailing/timely-filing    provisions of sec. 7502, I.R.C., did not apply to a motion for    leave to file a motion to vacate. Upon reconsideration, we now    hold that sec. 7502, I.R.C., applies to P's motion for leave.    P's motion for leave is deemed filed on June 8, 2006, the date    it was mailed, which was before the date on which the order of    dismissal would otherwise have become final.    Held, further: P's motion for leave to file a    motion to vacate the Court's order of dismissal will be granted.    As a result, P's motion to vacate the order of dismissal also    will be deemed filed on June 8, 2006. P's motion to vacate will    be granted. P's amended petition will be filed, and we continue    to have jurisdiction in this case.

In 2000, P acquired stock through his exercise of an incentive stock option (ISO) within the meaning of sec. 422(b), I.R.C. P realized… Held: Pursuant to secs. 56(b)(3) and 1211(b), I.R.C., Ps' 2001 AMTI is calculated by computing their 2001 AMT capital loss by using the AMT adjusted basis of the stock related to the ISO and the $ 153,625 of capital losses on the other sales, and adjusting Ps' 2001 taxable income by the difference between the 2001 regular tax capital loss…

P was a ferryboat captain for a company that carried travelers on sea voyages to destinations on Puget Sound, Washington. The company's home port was in Seattle, Washington. Held: Petitioner was away from home for purposes of sec. 162(a)(2), I.R.C., and may deduct M&IE incurred while obtaining sleep or rest during the 6-hour layovers. Held, further, P may deduct the allowable Federal M&IE rate for a full day of travel.

G created the Benjamin Gerson Trust which became irrevocable when G died in 1973. Held: Sec. 26.2601-1(b)(1)(i), GST Tax Regs., is a reasonable and valid interpretation of sec. 1433(b)(2)(A) of the Tax Reform Act of 1986 because it harmonizes with the plain language of the statute, its origin, and its purpose. Held, further: R's determination that the disputed transfer is subject to GST tax is sustained.

Ps made certain payments before filing their 2002 tax return and    intended that the payments would be applied to their 2002    taxable year. R first credited the payments to Ps' 2002 taxable    year but later credited the payments to P husband's outstanding    tax liability from 1978 after Ps filed their 2002 tax return on    which they claimed an overpayment. R subsequently determined a    deficiency in income tax and an accuracy-related penalty    pursuant to sec. 6662(a), I.R.C., for Ps' 2002 taxable year and    sent Ps a notice of deficiency. Ps timely petitioned this Court    for a redetermination of the deficiency and contended that the    Court has deficiency jurisdiction over the issue of whether R    improperly applied the payments intended for Ps' 2002 taxable    year to P husband's 1978 tax liability because the payments were    amounts "collected without assessment" within the meaning of   sec. 6211(a)(1)(B), I.R.C.    Held: This Court does not have jurisdiction over the    issue of whether R improperly applied the 2002 payments to P    husband's 1978 tax liability because R credited P husband's 1978    tax liability pursuant to sec. 6402(a), I.R.C., after Ps    reported an overpayment on their 2002 tax return. This Court    does not have jurisdiction to review any credit or reduction    made by the Commissioner pursuant to sec. 6402(a), I.R.C.   Sec. 6512(b)(4), I.R.C.; Savage v. Commissioner, 112 T.C. 46, 49-51 (1999),   .

P, as a sales assistant with Ariba Technologies, Inc. (Ariba), received incentive stock options (ISOs) subject to an employment termination restriction, whereby Ariba had the right to repurchase… Held: P's sec. 83(b), I.R.C., election required him to recognize as AMTI the excess of his vested and nonvested stock's fair market value (FMV) over its exercise price on the date of exercise.

P failed to file his Federal income tax return for 2003. Held: In order to satisfy his burden of production under sec. 7491(c), I.R.C., with respect to the sec. 6651(a)(2), I.R.C., addition to tax, R must introduce evidence that the tax was shown on a return.

P petitioned this Court for redetermination of a deficiency. Held: I, who was sent notice of trial but failed to appear at the trial of the case in which he intervened, has failed properly to prosecute any claims or defenses he may have, and, accordingly, those claims and defenses may be dismissed. Consequently, R's motion will be granted.

P filed a motion for summary judgment in this sec. 6330,    I.R.C., proceeding. In his petition, P disputed R's notice of    determination concerning collection action with respect to his    1998 tax liability on the ground that he was not permitted by    the IRS Appeals Office to make an audio recording of his sec.   6330, I.R.C., telephone hearing, in violation of sec.   7521(a)(1), I.R.C. P informed R before the telephone hearing    that he intended to audio record the hearing pursuant to sec.   7521(a)(1), I.R.C., and Keene v. Commissioner, 121 T.C. 8    (2003). R refused to permit P to audio record the telephone    hearing but did not inform him of R's post-Keene policy    that a taxpayer could audio record a face-to-face hearing. The    parties agreed to consider the scheduled telephone hearing    convened and then terminated, with no substantive issues    discussed, because P was not allowed to audio record the    hearing.    Held: Sec. 7521(a)(1), I.R.C., does not entitle P to    make an audio recording of his sec. 6330, I.R.C., telephone    hearing with the IRS Appeals Office.    Held, further, because of the uncertainty    regarding a taxpayer's ability to audio record a sec. 6330,    I.R.C., hearing existing at the time of P's sec. 6330, I.R.C.,    hearing, P's motion for summary judgment shall be granted in    that the case is remanded for further proceedings consistent    with this Opinion.