Volume 64 — Tax Court Memorandum

Petitioners transferred stock to two foreign situs trusts in exchange for lifetime private annuities. Held, the stock is not placed in a restricted state such as to secure the private annuity payments, and thereby close the annuity transactions within the meaning of 212 Corp. v. Commissioner, 70 T.C. 788, 798 (1978) and Estate of Bell v. Commissioner, 60 T.C. 469, 472-473 (1973). Held further, petitioner's control over the trusts and the trustee supports a finding that the private annuities are unsecured.

P claimed losses from an investment in a multi-party equipment leasing transaction on his Federal income tax returns for the taxable years 1984, 1985, and 1986. Held: P effectively was protected against loss as described in sec. 465(b)(4), I.R.C., with respect to the debt obligation, and therefore P is not considered at risk under sec. 465(a), I.R.C.Thornock v. Commissioner, 94 T.C. 439 (1990), followed.

Held: Partnership possessed sufficient incidents of ownership to entitle it to take deductions and credits at issue, if otherwise qualified. Held: Partnership possessed sufficient incidents of ownership to entitle it to take deductions and credits at issue, if otherwise qualified.

P is a general partnership engaged in the practice of law. Effective July 1, 1984, P adopted individual defined benefit plans for a majority of its partners. Each plan created a trust to provide for the investment and administration of the plan assets. For the taxable year at issue, 1986, all contributions to the plans were made within the time required by sec. 401(a)(1) and (6), and each of the plans and related trusts were qualified under sec. 401(a) and were exempt from taxation under sec. 501(a). The appropriate Forms 5500 and Schedules B were filed with the Service. R challenged various funding assumptions made by the plans' enrolled actuary in determining the amount of tax-deductible contributions for each plan for plan year 1986. Held: The actuarial assumptions made by the plans' enrolled actuary were reasonable in the aggregate and represented the actuary's best estimate of anticipated experience under the plans, as required by sec. 412(c)(3); accordingly, as the assumptions used were not substantially unreasonable, R is precluded from requiring a retroactive change of assumptions.

Held, the trustee of a trust which held substantially all of decedent's assets and which became irrevocable at his death is not a fiduciary entitled to institute a case on behalf of… Held: the trustee of a trust which held substantially all of decedent's assets and which became irrevocable at his death is not a fiduciary entitled to institute a case on behalf of decedent's estate and is not a proper party under Rule 60(a) and (c), Tax Court Rules of Practice and Procedure.

P held stock in two domestic corporations which were engaged in design, manufacture, and sale of electronic products. The products were manufactured or fabricated in the Far East. Held: The phrase availed of principally defined for purposes of sec. 1248(e), I.R.C.Held, further, P is taxable on a portion of the sales proceeds as dividends at ordinary income rates pursuant to sec. 1248, I.R.C.

Ps late filed their 1986 Federal income tax return on which they reported wage and interest income, but claimed that as members of the Mohawk Nation and the… Held: The language in the 1794 Treaty of the Six Nations (the Canadaiga Treaty), the 1794 Jay Treaty, and the 1815 Treaty of Ghent, as relied upon by Ps, considered in light of substantial historical and other evidence offered by Ps, cannot be reasonably construed to confer upon Ps an exemption from Federal income tax.

During the early 1980s, P owned shares of stock of a State chartered bank, a part of whose deposits were insured by the FDIC. The parties have stipulated that the bank was insolvent in 1984. Held: P has failed to meet his burden of proving that, during 1984, his shares had lost all potential value, within the meaning of Morton v. Commissioner, 38 B.T.A. 1270, 1278-1279 (1938), affd. 112 F.2d 320 (7th Cir. 1940), and were thus worthless.

Taxpayer (P) failed to file a petition in response to a deficiency notice (first notice) in which the Commissioner (R) determined a deficiency in income tax and certain additions to tax for 1986. Held: R's motion to strike the clauses in the petition's prayer for relief wherein the Court is asked to determine credits for assessed but unpaid amounts will be granted. Rule 52, Tax Court Rules of Practice and Procedure.

Ps live on a remote island in southeastern Alaska, without roads and accessible only by boat or float plane. Held: Ps are not persons outside the United States and their address is not outside the United States within the meaning of sec. 6213(a), I.R.C.Cross v. Commissioner, 98 T.C. (1992), applied.

Held: An amount received in settlement of a claim of race discrimination made pursuant to title VII of the Civil Rights Act of 1964 is not excludable from gross… Held: An amount received in settlement of a claim of race discrimination made pursuant to title VII of the Civil Rights Act of 1964 is not excludable from gross income pursuant to sec. 104(a)(2), I.R.C., as an amount received on account of personal injury. United States v. Burke, 504 U.S. , 112 S. Ct. 1867 (1992).

In connection with a computation filed under Rule 155, Tax Court Rules of Practice and Procedure, R filed a motion for leave to file amendment to answer in order to disallow a foreign tax credit… Held: R's motion for leave to file amendment to answer is denied.

Petitioners are the ostensible lessors of certain industrial shelving under an agreement whereby petitioners and the ostensible lessee exchanged reciprocal (but not… Held: The purported leasing transaction shifted the benefits and burdens of ownership of the industrial shelving and therefore constitutes a sale for tax purposes; accordingly, petitioners lack a depreciable interest in the industrial shelving. Aderholt Specialty Co. v. Commissioner, T.C. Memo. 1985-491.

Held: Value of conservation easement determined; petitioners are not liable for increased interest or additions to tax. Held: Value of conservation easement determined; petitioners are not liable for increased interest or additions to tax.

Petitioner and another purchased a residence in Los Angeles in 1975. In 1979, petitioner moved to Baltimore, Maryland. Until 1982, she returned frequently to Los Angeles. Held: Petitioner need not recognize gain on the sale of her interest in the old residence except to the extent that the adjusted sales price of her interest in the old residence exceeds the cost of her new residence. Sec. 1034, I.R.C. 2.

P applied for tax exempt status under sec. 501(c)(3), I.R.C.Held, P has failed to provide sufficient information to permit the conclusion that it will operate exclusively in furtherance of exempt… Held: P has failed to provide sufficient information to permit the conclusion that it will operate exclusively in furtherance of exempt purposes.

R requested Ps to execute a Form 872-A, Special Consent to Extend the Time to Assess Tax, restricted to specific items related to S, a partnership then being audited, including consequential changes resulting from those items. Held: The plain meaning of the consent restricts the extension of the period of limitations to matters arising out of S only, and R is prohibited from assessing tax with respect to time-barred mathematical and clerical errors which did not result from items relating to S.

Ps purchased interests in limited partnerships formed for the purported purpose of engaging in agricultural research and development through a contract with A. Ps made a small initial cash payment… Held: Ps are not entitled to a deduction for research and experimentation expenditures under sec. 174, I.R.C. since A's activities did not constitute research and experimentation. 2.

P leased certain property to his controlled corporation at a rate assumed, arguendo, to be below market. Held: P had a profit objective, within the meaning of sec. 183, I.R.C. P's objective was to achieve an economic profit, whether such profit was earned individually or through the corporation.

P was self-employed as a fisherman during 1985 and 1986. During each year he deposited a substantial portion of his net profits from his fishing business into a capital construction fund established pursuant to sec. 607 of the Merchant Marine Act, 1936, 46 U.S.C. sec. 1177 (1976). Held: P is not entitled to reduce his net earnings from self-employment by the amount deposited into the capital construction fund. Eades v. Commissioner, 79 T.C. 985 (1982), followed. Held further, the result herein will not impose double taxation of earnings from self-employment in the year in which the contributions to the capital construction fund are withdrawn and included in P's gross income.

In one afternoon in July 1988, P, a ticket seller at a New York Off-Track Betting (OTB) parlor, punched up betting tickets for himself on his computer terminal without paying for them. Held: P realized gross income from theft that did not also constitute income from wagering transactions. 2. Held, further, P's gross income from theft is equal to the fair market value of the tickets he received. The fair market value of the tickets is determined to be $ 80,280. 3.

During life, D and W placed their community property into a revocable inter vivos trust. Held: The trust satisfies the terms of sec. 2056(b)(5), I.R.C., and D's estate is entitled to a deduction for the value of D's interest in the trust under sec. 2056(a), I.R.C.

P was trustee of a trust in which she was the sole income beneficiary and possessed a general power of appointment. P, as trustee, transferred real estate owned by the trust to her three children and received in return an installment note which was due at the earlier of 120 days after demand for payment or 15 years after the date of the note. If P died prior to the due date, the note self-canceled. Every year an amount equal to 6 percent of the unpaid balance was added to the balance of the note. The note was secured by a deed of trust on the property. P and her children expected the note to be paid. The principal amount due on the note exceeded the fair market value of the real estate; however, the fair market value of the note was less than the fair market value of the real estate. Held: The transfer of the property by P was not a gift. The note executed by the children represents a valid indebtedness and provided consideration for the property transferred by P. The fact that the fair market value of the real estate exceeded the fair market value of the note does not automatically result in a taxable gift.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg. T.C. Memo. 1990-435; Stahl v. Commissioner, 96 T.C. 798 (1991).

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Respondent filed, on March 2, 1992, a motion for partial summary judgment with respect to six issues, all of which are tax accounting issues. Held: Respondent's motion for partial summary judgment filed March 2, 1992, will be granted with respect to petitioner's termination expenses for the former outside sales representatives, professional fees related in part to the termination of such representatives, and California franchise taxes. 2.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg. T.C. Memo. 1990-435; Stahl v. Commissioner, 96 T.C. 798 (1991).

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg. T.C. Memo. 1990-435; Stahl v. Commissioner, 96 T.C. 798 (1991).

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg. T.C. Memo. 1990-435; Stahl v. Commissioner, 96 T.C. 798 (1991).

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg. T.C. Memo. 1990-435; Stahl v. Commissioner, 96 T.C. 798 (1991).

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg. T.C. Memo. 1990-435; Stahl v. Commissioner, 96 T.C. 798 (1991).

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg. T.C. Memo. 1990-435; Stahl v. Commissioner, 96 T.C. 798 (1991).

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

P's now deceased husband (H), with whom she filed joint returns for the years before the Court, had investments in certain partnerships, including… Held: the Court has jurisdiction to determine P's innocent spouse claim under sec. 6013(e), I.R.C., and any overpayment under sec. 6512(b), I.R.C., resulting from her innocent spouse claim as to the underlying undisputed deficiencies, such jurisdiction arising under the Court's general deficiency and overpayment jurisdiction.

Held: The evidence is insufficient to make a finding that the estate's payment of $ 4 million to decedent's two children constituted payment of an indebtedness of decedent to them. Held: The evidence is insufficient to make a finding that the estate's payment of $ 4 million to decedent's two children constituted payment of an indebtedness of decedent to them.

Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income… Held: The period of limitations upon assessment applicable to a partner's distributive share of partnership items is controlled by the filing of the partner's individual income tax return, as extended by any agreements relating thereto. See Siben v. Commissioner, 930 F.2d 1034 (2d Cir. 1991), affg.

Decedent died testate in 1986. His will provides a marital bequest as the minimum amount, which after taking into consideration, all deductions, exclusions, exemptions and credits (other than the… Held: The $ 13,000 of attorney's fee that was deducted on the income tax returns does not reduce the amount of the marital bequest.

Respondent (R) determined over $ 8 million of deficiencies in, and additions to, the income, estate, and gift taxes of petitioners -- Mrs. Dooley and the estate of her deceased husband. Prior to trial, R conceded most of the factual issues and settled the three cases for a total of $ 143,787 in gift tax. Petitioners (Ps) moved for an award of litigation costs pursuant to sec. 7430, I.R.C. 1954, arguing, inter alia, that R was not substantially justified in adhering to her litigating positions on the substantive tax issues. Held: Given the complex and convoluted nature of these cases, R was substantially justified in taking protective positions until the ownership and devolvement of the property being valued was clear and petitioners had submitted the necessary documentation to prove their contentions in each case. Held, further: Ps failed to exhaust the administrative remedies available to them with the IRS, a prerequisite to an award of litigation costs. Sec. 7430(b)(1). Held: Ps' motion for litigation costs is denied.

Petitioner is a corporation whose income is taxable in the United States. Held: respondent abused her discretion under sec. 482 by allocating additional fee income to petitioner because the fees which petitioner charged Nestec clearly reflected income within the meaning of sec. 482, I.R.C. 1954.

On June 14, 1990, a decision was entered in accordance with stipulations agreed to by the parties. The decision became final on Sept. 12, 1990. Held: The commencement of a proceeding to redetermine interest pursuant to sec. 7481(c) requires the advance payment of the entire amount redetermined as a deficiency by a decision of this Court, plus the entire amount claimed by the Secretary of the Treasury as interest on the redetermined deficiency.

Decedent died testate. On decedent's estate tax return, the executor allocated amounts between Fund A and Fund B, and elected to treat Fund B as qualified terminable interest property (QTIP) for the… Held: petitioner's motion for reconsideration is denied. This Court will not consider issues which could have been raised before the case was tried and submitted and before the opinion was issued.

Held: As between petitioners and their wholly owned corporation, corporation is entitled to sec. 174, I.R.C., deduction for research and experimental… Held: As between petitioners and their wholly owned corporation, corporation is entitled to sec. 174, I.R.C., deduction for research and experimental expenditures and sec. 44F, I.R.C., credit for increasing research activities since research activities of corporation were not undertaken on behalf of petitioner husband.

P, a manufacturer of various automotive parts and accessories, collected from its customers excise taxes arguably imposed by sec. 4061, I.R.C., on certain items sold to its customers (disputed items). Awaiting clarification of the applicability of the excise tax, P retained the excise taxes collected on the disputed items in its bank account, rather than remitting those funds to the Internal Revenue Service. Beginning in 1971, P used unremitted excise taxes to purchase marketable securities in its own name. In 1971 or 1972, the IRS made clear, through revenue rulings and otherwise, that the excise tax did not apply to the disputed items. Subsequent to that clarification, P's policy and practice was to refund improperly collected excise taxes to any customer requesting the same. After the 10-year limitations period for bringing actions for refund against P expired in 1982, P reported the unremitted excise taxes (excluding the portion previously refunded) on its return for the 1982 taxable year. Both parties have requested partial summary judgment, pursuant to Rule 121, Tax Court Rules of Practice and Procedure, on the issue of when the unremitted excise taxes are includable in P's income. R argues that P held the unremitted excise taxes under a claim of right in 1971 or 1972 and therefore had unreported income in one of those years. North American Oil Consolidated v. Burnet, 286 U.S. 417 (1932). P argues that the unremitted excise taxes were not held under a claim of right until 1982 and therefore are includable only in that year. Held: The claim of right doctrine does not apply, as to 1971 or 1972, because P did not then claim a right to the collected and unremitted excise taxes. At all times before 1982, P acknowledged that those funds belonged to its customers. Consequently, the unremitted excise taxes are includable in P's income in 1982 and not before. Petitioner's motion will be granted; respondent's motion will be denied.

The envelope containing the petition filed herein was postmarked by a private postage meter stamp bearing a timely but admittedly incorrect date. Held: P failed to prove he met the requirements of sec. 301.7502-1(c)(1)(iii)(b), Proced. & Admin. Regs.; accordingly, under secs. 7502(b) and 6213(a), I.R.C. as in effect in 1990, the petition was not timely filed. R's Motion to Dismiss for Lack of Jurisdiction will be granted.

Petitioner wife (W) performed daycare services in petitioners' home. Held: W was not H's employee. Rather, W was self-employed and consequently petitioners are liable for self-employment taxes. Sec. 1401, I.R.C. 1954.

Held: Petitioner's predecessor is bound by allocation of purchase price set forth in Asset Sale Agreement where both buyer and seller were controlled by the same individuals. Held: Petitioner's predecessor is bound by allocation of purchase price set forth in Asset Sale Agreement where both buyer and seller were controlled by the same individuals.

R determined deficiencies in income tax and additions to tax for 1986 and 1987 using the net worth plus expenditures method. Held: R's determination of deficiencies as amended is sustained. Held further: Additions to tax under secs. 6653(b) and 6661 as amended are sustained.

On May 3, 1991, at the time the notice of deficiency was mailed, P had filed neither a tax return for 1988 nor a claim for credit or refund of 1988 tax. Held: the 2-year period for filing a claim for credit or refund of the overpayment of tax applies. Secs. 6511 and 6512, I.R.C.; Allen v. Commissioner, 99 T.C. (Oct. 6, 1992), followed.

The two partnerships at issue purchased and leased certain energy conservation equipment, at prices grossly exceeding the market prices for identical or similar equipment. Held: Each of the partnerships at issue lacked a profit objective, as required by sec. 183, I.R.C. Respondent's deficiencies are therefore sustained.

R determined several Federal income tax deficiencies regarding a particular transaction and taxable period. The cases were petitioned and resulted in settlement by R and all Ps. Held: Under these circumstances, neither sec. 6212, I.R.C., nor the doctrines of res judicata or collateral estoppel would preclude R from making separate income and gift tax determinations. The period for assessment of income tax for Ps' taxable years had otherwise expired.

R determined deficiencies against corporations related to a disqualified DISC, which deficiencies arose on account of such disqualification. Held: The item in question represents a nonqualified export asset and results in the disqualification of the DISC. 2. Held, further, under sec. 482, I.R.C., the items of income and deduction of the DISC for the year of disqualification are reallocated to a related corporation. 3.

P, an engineer and long-time resident of Florida, was employed on a full-time basis from 1983 until some time in 1990 by a company in Maryland. Held: P's home for purposes of the sec. 162(a)(2), I.R.C., deduction for travel away from home is in Maryland.

Petitioner pleaded guilty to conspiracy to import into the United States multi-ton quantities of marijuana from before March 1977 until August 1981. Held: Petitioner fails to carry his burden of proving respondent's determinations to be in error. 2. Held, further, petitioner is liable for the additions to tax for fraud under sec. 6653(b), I.R.C.

Ps were moderate income investors, most of whom had neither a college education nor training in business, financial, and income tax matters. Held: Ps are liable for additions to tax for negligence because they invested in sham transactions and did not seek or reasonably rely on the advice of independent financial or tax advisers. Sec. 6653(a), I.R.C. 2.

Petitioners made payments to Pre-Paid Legal Services, Inc. (Pre-Paid), to buy the right to receive 5 years' premium income on legal service contracts issued by Pre-Paid to… Held: Petitioners did not have substantial authority for the positions taken on their tax returns. 2. Held, further: Petitioners did not adequately disclose their positions, except that they did adequately disclose their position regarding depreciation expense on their 1983 and 1984 tax returns. 3.