DocketNumber: Docket No. 6742-78
Citation Numbers: 73 T.C. 902, 1980 U.S. Tax Ct. LEXIS 184
Judges: Dawson,Cantrel
Filed Date: 2/26/1980
Status: Precedential
Modified Date: 1/13/2023
*184 The statutory notice of deficiency upon which this case is based is solely attributable to determined income tax deficiencies resulting from the disallowance of a tentative carryback adjustment erroneously refunded pursuant to
*903 OPINION
This case was assigned to Special Trial Judge Francis J. Cantrel for the purpose of conducting the hearing and ruling on respondent's "Motion to Determine Jurisdiction," filed herein on November 14, 1979. After a review of the record, we agree with and adopt his opinion which is set forth below. 1
*190 OPINION OF THE SPECIAL TRIAL JUDGE
Cantrel,
On March 20, 1978, respondent issued the notice of deficiency upon which this case is based. In this notice, respondent determined deficiencies in petitioner's Federal income taxes for the taxable years ended July 31, 1971, and July 31, 1972, in the amounts of $ 28,769.60 and $ 4,071.60, respectively. These deficiencies are exclusively attributable to the disallowance of claimed net operating loss and investment credit carrybacks from the year ended July 31, 1974, which previously resulted in an erroneous refund from an application for a tentative carryback allowance under
Respondent issued a notice of deficiency to petitioner on September 13, 1974, for the taxable years ended July 31, 1967, July 31, 1970, July 31, 1971, and July 31, 1972, in which notice he determined deficiencies in petitioner's Federal income taxes for those years in the respective amounts of $ 27,097, $ 64,703, $ 19,140, and $ 17,381. This notice was petitioned and assigned docket No. 9667-74. *192 A stipulated decision was entered on December 22, 1976, which became final on March 22, 1977. Sec. 7481 and 7483. The decision in docket No. 9667-74 contains no reference to the net operating loss and investment credit carrybacks from the year ended July 31, 1974. Nowhere did respondent expressly reserve the right to make any further assessments for the taxable years ended July 31, 1971 and 1972, in the event that the net operating loss and investment credit carrybacks should be reduced upon audit of the loss year.
On or about June 30, 1975, petitioner filed its tax return for the taxable year ended July 31, 1974, together with an application for a tentative allowance based on carrybacks of both a net operating loss and an investment credit from the taxable year ended July 31, 1974, to the taxable years ended July 31, 1971 and 1972, pursuant to
Subsequent to the entry of the Court's decision in docket No. 9667-74, respondent completed an examination of petitioner's tax return for the year ended July 31, 1974. Respondent notified petitioner by letter in February 1977 of *193 his determination that the net operating loss and investment credit carrybacks to 1971 and 1972 should be disallowed, and petitioner executed a timely consent (Form 872) extending the period of assessment for the year ended July 31, 1974, until June 30, 1978.
Respondent filed his "Motion to Determine Jurisdiction" in order to prevent a recurrence of the situation faced in
The present deficiencies for the years ended July 31, 1971 and 1972, resulted because, upon audit of petitioner's return for the year ended July 31, 1974, respondent determined that the tentative allowance of the carryback loss and investment credit under
*197 Thus, upon discovering that a tentative carryback adjustment was erroneously allowed under
*198 *907 The jurisdiction of this Court is governed by statute. Sec. 7442. In general, Tax Court jurisdiction exists only if there has been issued a valid statutory notice of deficiency (respondent's third option for an erroneous allowance of a tentative carryback adjustment) and a timely petition filed therefrom.
*199
(c) Further Deficiency Letters Restricted. -- (1) General Rule. -- If the Secretary or his delegate has mailed to the taxpayer a notice of deficiency as provided in subsection (a), and the taxpayer files a petition with the Tax Court within the time prescribed in
*201
Once a taxpayer has filed a petition in the Tax Court, respondent is precluded from determining an additional deficiency for the same taxable year; finality was the end sought with
the taxpayer's right to claim and sue for refund shall be barred only if he takes the case to the Board [Board of Tax Appeals], thus preserving to him the option of paying the tax and then proceeding before the Department and the courts to recover any excess payments by a claim or suit for refund.
Accordingly, due to the issuance of the first notice of deficiency, which was petitioned, docketed, and on which the Court entered a final decision, respondent was without authority to assert any additional deficiency against petitioner in respect of the taxable years ended July 31, 1971 and 1972, except in the case of fraud, except as provided in
When Congress enacted the carryback provisions of
(b) Exceptions to Restrictions on Assessment. -- (1) Mathematical errors. -- If the taxpayer is notified that, on account of a mathematical error appearing upon the return, an amount of tax in excess of that shown upon the return is due, and that an assessment of the tax has been or will be made on the basis of what would have been the correct amount of tax but for the mathematical error,
If the Secretary or his delegate determines that the amount applied, credited, or refunded under
Thus, upon audit of the year in which a tentative carryback adjustment occurred, respondent may correct an erroneous allowance issued under
The provisions of
In recognition of the fact that, due to the short period of time allowed, the Commissioner necessarily will act upon an application for a tentative carry-back adjustment only after a very limited examination, subsection (c) of
*208 In the usual situation in which
In accordance with the foregoing,
1. Since this is a pretrial jurisdictional motion, the Court has concluded that the post-trial procedures of
2. All section references are to the Internal Revenue Code of 1954, as in effect for the years at issue, unless otherwise indicated.↩
3. Respondent submitted a memorandum of points and authorities setting forth arguments both for and against the existence of jurisdiction in this case, and a hearing was held thereon at Washington, D.C., on Jan. 9, 1980. Petitioner filed no objection to respondent's motion and chose not to be represented at the hearing.↩
4.
5. Assessments under both (2) and (3) must be made within the time prescribed by sec. 6501(h) and (j), which reads in relevant part as follows:
SEC. 6501(h). Net Operating Loss or Capital Loss Carrybacks. -- In the case of a deficiency attributable to the application to the taxpayer of a net operating loss carryback or a capital loss carryback (including deficiencies which may be assessed pursuant to the provisions of
SEC. 6501(j). Investment Credit Carrybacks. -- In the case of a deficiency attributable to the application to the taxpayer of an investment credit carryback (including deficiencies which may be assessed pursuant to the provisions of
6. In
7.
(a) Time for Filing Petition and Restriction on Assessment. -- Within 90 days * * * after the notice of deficiency authorized in
8. SEC. 6211. DEFINITION OF A DEFICIENCY.
(a) In General. -- For purposes of this title in the case of income, estate, gift, and excise taxes, imposed by subtitles A and B, and chapter 42, the term "deficiency" means the amount by which the tax imposed by subtitle A or B or chapter 42 exceeds the excess of -- (1) the sum of (A) the amount shown as the tax by the taxpayer upon his return, if a return was made by the taxpayer and an amount was shown as the tax by the taxpayer thereon, plus (B) the amounts previously assessed (or collected without assessment) as a deficiency, over -- (2) the amount of rebates, as defined in subsection (b)(2), made.
(b) Rules for Application of Subsection(a). -- For purposes of this section --
* * * * (2) The term "rebate" means so much of an abatement, credit, refund, or other repayment, as was made on the ground that the tax imposed by subtitle A or B or chapter 42 was less than the excess of the amount specified in subsection (a)(1) over the rebates previously made.↩
9. See H. Rept. 849, 79th Cong., 1st Sess. (1945),
10. The committee report states in pertinent part:
"Subsection (b) of
"Within such period of 90 days the Commissioner is
* * * *
"the Commissioner's action in disallowing any application in whole or in part shall be final and may not be challenged in any proceeding. The taxpayer's remedy lies in the usual claim for credit or refund as under existing law.
"In the case of any application which the Commissioner allows in whole or in part, any increase determined by the Commissioner in any tax affected by the carry-back shall be deemed to have been determined as a deficiency and shall be assessed without regard to the restrictions on assessment provided in section 272 of the Code. Thus, the taxpayer will not have a right to contest such assessment before the Tax Court. * * * [
11. This is supported by the legislative history which reads in pertinent part as follows:
"It is to be noted that the method provided in subsection (c) of
12. We note that in
Joseph T. Miller and Crystal v. Miller v. Commissioner of ... , 231 F.2d 8 ( 1956 )
F.B. Blansett and Ethel Blansett v. United States , 283 F.2d 474 ( 1960 )
donald-g-corbett-v-william-e-frank-director-of-internal-revenue-for-the , 293 F.2d 501 ( 1961 )
estate-of-louis-yaeger-deceased-judith-winters-ralph-meisels-abraham-k , 889 F.2d 29 ( 1989 )
Arc Electrical Construction Co. v. Commissioner of Internal ... , 923 F.2d 1005 ( 1991 )
Ron Lykins, Inc. v. Commissioner , 133 T.C. No. 5 ( 2009 )
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Rozin v. Comm'r , 113 T.C.M. 1230 ( 2017 )
Weros v. Comm'r , 2011 Tax Ct. Summary LEXIS 65 ( 2011 )
Brown v. Commissioner , 71 T.C.M. 2301 ( 1996 )