Volume 130 — Tax Court Reports

H was the only legatee of her mother's will. Held: No deduction is allowed for any of the property passing to the trust because the partial disclaimer of that property is not a qualified disclaimer under sec. 2518, I.R.C. Held, further: The entire value of the property passing to the foundation -- including the increased amount passing to the foundation because of the increased…

Held: For purposes of the liquidity test of sec. 2057(b)(1)(C), I.R.C. (relating to estate tax deductions under sec. 2057(a), I.R.C., for certain qualified family-owned business… Held: For purposes of the liquidity test of sec. 2057(b)(1)(C), I.R.C. (relating to estate tax deductions under sec. 2057(a), I.R.C., for certain qualified family-owned business interests), decedents' loans to their family-owned corporation are not treated as interests in the corporation.

For 2003, Ps submitted Form 1040, U.S. Individual Income Tax Return, and Form 843, Claim for Refund and Request for Abatement, to R. R assessed a frivolous return penalty under sec. 6702, I.R.C., on… Held: Under sec. 6330(d)(1), I.R.C., as amended by the Pension Protection Act of 2006, Pub. L. 109-280, sec. 855, 120 Stat. 1019, we have jurisdiction to review R's notice of determination when the underlying tax liability consists of frivolous return penalties.

MI is an accrual basis taxpayer with a fiscal year ending Jan. 31. S is a cash basis taxpayer who was the president, CEO, and 89-percent shareholder of MI during MI's TYE 1998. Held: Where, as here, the Court has original jurisdiction to redetermine a deficiency pursuant to sec. 6213(a), I.R.C., the Court may apply the equitable recoupment doctrine even if the Court lacks subject matter jurisdiction over the type of tax to which the equitable recoupment claim is directed.

In 2001, two farming partnerships received Federal crop insurance proceeds relating to sugar beet crops destroyed by excess moisture in 2001. Held: The partnerships and the partners thereof may not, under sec. 451(d), I.R.C., defer until 2002 reporting as income the crop insurance proceeds received in 2001.

Ps petitioned this Court for review of a notice of determination issued under sec. 6330, I.R.C. Thereafter, the case was remanded to R's Appeals Office three times; each time a supplemental notice of… Held: Under sec. 6330, I.R.C., the Court reviews the position taken by R's Appeals Office in the last supplemental notice of determination, not each notice separately.

P filed a complaint with District Court seeking review of R's determination to proceed with collection of a trust fund recovery penalty. Held: We lack jurisdiction to review R's determinations in the supplemental determination notice. The supplemental notice relates back to the original notice and is not a new determination for purposes of the effective date of amended sec. 6330(d), I.R.C.

In 1994 and 1996, Ps, the sole shareholders of AG, a controlled foreign corporation as defined in sec. 957, I.R.C., transferred to AG United States real property and notes secured by such property in… Held: Because the transactions that gave rise to the private annuity agreements constituted capital expenditures by AG and because AG's accruals under those agreements constituted reserves for future contingencies, those accruals did not reduce AG's earnings and profits. 2.

Held: The period of limitations in sec. 6501(h), I.R.C., applies with respect to the deficiency for each of Ps' taxable years 1999 and 2000 that is attributable to the carryback to each of those… Held: The period of limitations in sec. 6501(h), I.R.C., applies with respect to the deficiency for each of Ps' taxable years 1999 and 2000 that is attributable to the carryback to each of those years of a claimed net operating loss for alternative minimum tax purposes.

R denied P's application for relief from joint income tax liability under sec. 6015, I.R.C. P petitioned this Court to seek our determination whether she is entitled to… Held: We will continue to follow our holding in Ewing v. Commissioner, 122 T.C. 32 (2004). Therefore, our determination whether P is entitled to relief under sec. 6015(f), I.R.C., is made in a trial de novo and we may consider evidence introduced at trial which was not included in the administrative record.

Ps' subsidiaries, Capital One Bank (COB) and Capital One, F.S.B. (FSB), issuers of Visa and MasterCard credit cards, earn income from late fees charged to cardholders who do not timely pay at least… Held: COB and FSB were required to obtain consent to change their treatment of credit card receivables to comply with sec. 1272(a)(6)(C)(iii), I.R.C. Held, further: Neither COB nor FSB received consent to change its treatment of late-fee income on Ps' 1998 or 1999 return.

Ps transferred D stock of substantial value to a newly formed family limited partnership and then made gifts of limited partnership units (LP units) to a custodian for one of their… Held: The limited partnership was formed and the shares of D stock were transferred to it almost 1 week in advance of the 1999 gift, so that, on the facts before us, the transfer cannot be viewed as an indirect gift of the shares to the donees under sec. 25.2511-1(a) and (h)(1), Gift Tax Regs. 2.

R assessed income tax deficiencies, additions to tax, penalties, and interest against PW and her husband (H) for 1983, 1984, 1986, and 1987 (Ps' unpaid… Held: R did not abuse his discretion in determining that (1) Ps' unpaid tax liabilities were excepted from discharge in bankruptcy by reason of PW's conviction for attempted evasion of payment of Ps' unpaid tax liabilities and that (2) it was appropriate to proceed with collection by serving the jeopardy levies in dispute.

On Nov. 24, 2000, P filed a request for equitable relief from joint and several liability with respect to her and her ex-spouse's 1997 tax underpayment. Held: P's second claim for relief was essentially duplicative of her first claim for relief and was not a qualifying request for relief pursuant to sec. 1.6015-1(h)(5), Income Tax Regs.

Respondent moves for summary judgment on a procedural issue as to whether petitioners' allegation that a fraud on this Court occurred during the trial of a tax… Held: The typical and proper method to raise an allegation that a fraud on this Court occurred during the trial of a tax deficiency case is by filing a motion to vacate the decision entered in the specific tax deficiency case in which the alleged fraud occurred. Rule 162, Tax Court Rules of Practice and Procedure.

P was the common parent of a life-nonlife consolidated group from 1996 through 2002. Held: P must calculate its ACE and ACE adjustment on a consolidated basis. Held, further, P must use consistent preadjustment AMTIs when calculating its ACE and ACE adjustment.

P used the percentage depletion method to calculate depletion deductions for its mine, M, which was placed in service on or before Dec. 31, 1989. Held: Sec. 56(g)(4)(F)(i), I.R.C., does not preclude the sec. 56(g)(4)(C)(i), I.R.C., ACE adjustment from applying to depletion. Held, further, unamortized sec. 56(a)(2), I.R.C., costs are not included in M's adjusted basis for purposes of calculating sec. 56(g)(4)(C)(i), I.R.C., ACE adjustments for depletion.

Petitioner wife lent funds to a corporation in which petitioner husband was a shareholder. The corporation used the borrowed funds to develop a working model of Web-based video conferencing software. Held: No portion of the payments petitioner wife received from the second corporation are also taxable to petitioner husband as constructive corporate distributions.