SCOTUS Reports

Tag: United States Tax Court

  • 23rd Chelsea Associates, L.L.C. v. Commissioner, 162 T.C. No. 3 (2024): Eligible Basis and Financing Costs in Low-Income Housing Credits

    23rd Chelsea Associates, L. L. C. v. Commissioner, 162 T. C. No. 3 (2024)

    The U. S. Tax Court ruled that financing costs, including bond fees, are includible in the eligible basis of a low-income housing project under Section 42 of the Internal Revenue Code, affirming their inclusion in calculating low-income housing credits. This decision impacts how developers finance and calculate tax benefits for affordable housing projects.

    Parties

    23rd Chelsea Associates, L. L. C. , with Related 23rd Chelsea Associates, L. L. C. , as the tax matters partner (TMP), was the petitioner. The respondent was the Commissioner of Internal Revenue. The case was heard in the United States Tax Court, docketed as No. 22382-19.

    Facts

    23rd Chelsea Associates, L. L. C. (23rd Chelsea) constructed a 313-unit residential rental property called the Tate in New York City between 2001 and 2002. The construction was financed through a $110 million loan from the New York State Housing Finance Agency (HFA), which raised the funds via bond issuances, including both taxable and tax-exempt bonds. 23rd Chelsea claimed low-income housing credits (LIHCs) under I. R. C. § 42 for tax years 2003 through at least 2009, including in its eligible basis a portion of the financing costs associated with the HFA loan. The Commissioner of Internal Revenue challenged the inclusion of these financing costs in the eligible basis for tax year 2009, proposing adjustments that would reduce the LIHC and impose a credit recapture under I. R. C. § 42(j).

    Procedural History

    The Commissioner issued a notice of final partnership administrative adjustment (FPAA) on September 30, 2019, for tax year 2009, determining that 23rd Chelsea should not have included the financing costs in the eligible basis of the Tate. 23rd Chelsea timely filed a petition for readjustment of partnership items under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). The case was submitted fully stipulated without trial, with the Commissioner conceding the inclusion of union dues and pension contributions in the eligible basis. The Tax Court had jurisdiction to determine partnership items for tax year 2009, including the allowable LIHC and any recapture amount under I. R. C. § 6226(f) and § 6231(a)(3).

    Issue(s)

    Whether, for purposes of the LIHC under I. R. C. § 42, the eligible basis of a qualified low-income residential building includes financing costs related to the issuance of bonds (whether taxable or tax-exempt) whose proceeds were used for the construction of the building?

    Rule(s) of Law

    Under I. R. C. § 42(d)(1), the eligible basis of a new building is its adjusted basis at the end of the first taxable year of the credit period. The adjusted basis is determined under I. R. C. § 1011(a), which includes the costs capitalized under I. R. C. § 263A. Treasury Regulation § 1. 263A-1(e)(3)(i) defines indirect costs as those incurred by reason of the performance of production activities, requiring their capitalization into the basis of the produced property.

    Holding

    The Tax Court held that the financing costs, including bond fees, incurred by reason of the construction of the residential rental property and before the end of the first year of the credit period, are includible in the eligible basis for purposes of the LIHC under I. R. C. § 42(d)(1) and § 263A.

    Reasoning

    The court reasoned that the term “adjusted basis” in I. R. C. § 42(d)(1) must be understood in light of I. R. C. § 1011(a) and § 263A, which require the capitalization of direct and indirect costs incurred in the production of property. The financing costs were deemed indirect costs incurred by reason of the construction of the Tate, as they were necessary for obtaining the HFA loan used for construction. The court rejected the Commissioner’s arguments that these costs should be capitalized into the loan itself and not the building, and that the legislative history of I. R. C. § 42 and § 103/142 suggested a different treatment of such costs. The court emphasized that the uniform capitalization rules under I. R. C. § 263A supersede prior law and that the legislative history did not support excluding financing costs from the eligible basis. The court also noted that Congress had already addressed tax-exempt bond financing by reducing the applicable percentage for the LIHC under I. R. C. § 42(b)(2)(B)(ii), and thus did not need to further exclude financing costs from eligible basis.

    Disposition

    The Tax Court entered a decision for the petitioner, 23rd Chelsea Associates, L. L. C. , sustaining its inclusion of the financing costs in the eligible basis for calculating the LIHC.

    Significance/Impact

    This decision clarifies that financing costs related to bond issuances used for construction can be included in the eligible basis for calculating LIHCs under I. R. C. § 42, potentially affecting how developers finance and calculate tax benefits for affordable housing projects. It aligns with the uniform capitalization rules of I. R. C. § 263A and may encourage the use of bond financing for low-income housing projects by affirming the inclusion of related costs in the tax credit calculation. The decision also reinforces the importance of statutory text and the uniform application of tax rules, impacting how courts interpret and apply the Internal Revenue Code in future cases involving similar issues.

  • Estate of James E. Caan v. Commissioner, 161 T.C. No. 6 (2023): IRA Distributions and Rollover Contributions

    Estate of James E. Caan v. Commissioner, 161 T. C. No. 6 (United States Tax Court 2023)

    The U. S. Tax Court ruled that a partnership interest held in an IRA was distributed to the late actor James Caan in 2015, triggering taxable income. The court determined that Caan failed to roll over the interest within the required 60-day period, and his subsequent liquidation of the interest into cash did not qualify for tax-free treatment. This decision underscores the strict rules governing IRA distributions and the necessity of adhering to the “same property” rule for rollovers.

    Parties

    Estate of James E. Caan, deceased, represented by the Jacaan Administrative Trust, with Scott Caan as Trustee and Special Administrator, was the Petitioner. The Commissioner of Internal Revenue was the Respondent.

    Facts

    James E. Caan, a successful actor, maintained two Individual Retirement Accounts (IRAs) at Union Bank of Switzerland (UBS). One of the IRAs held a partnership interest in the P&A Multi-Sector Fund, L. P. , a hedge fund (P&A Interest). Under the custodial agreement with UBS, Caan was responsible for providing UBS with the P&A Interest’s yearend fair market value (FMV) annually. In 2015, Caan failed to provide the 2014 yearend FMV, leading UBS to distribute the P&A Interest to Caan and issue a Form 1099-R, valuing the interest at its 2013 FMV of $1,910,903. More than a year later, Caan’s financial advisor liquidated the P&A Interest and transferred the cash proceeds to a new IRA at Merrill Lynch. Caan reported the distribution on his 2015 tax return but claimed it as a nontaxable rollover contribution. The IRS disagreed, asserting that the distribution was taxable.

    Procedural History

    The Commissioner issued a notice of deficiency determining a tax deficiency and an accuracy-related penalty for tax year 2015. Caan filed a petition with the U. S. Tax Court for redetermination of the deficiency. During the pendency of the case, Caan requested a private letter ruling to waive the 60-day rollover period, which was denied by the IRS. The Tax Court reviewed the case, considering whether a distribution occurred, whether it qualified as a nontaxable rollover, the FMV of the P&A Interest at the time of distribution, and the IRS’s denial of the waiver request.

    Issue(s)

    1. Whether the P&A Interest was distributed to James E. Caan in tax year 2015 within the meaning of I. R. C. § 408(d)(1)?
    2. Whether the P&A Interest was contributed to Merrill Lynch in a manner that would qualify as a rollover contribution under I. R. C. § 408(d)(3)?
    3. What was the value of the P&A Interest at the time of the distribution?
    4. Does the Tax Court have jurisdiction to review the IRS’s denial of a request for a waiver of the 60-day period for rollover contributions under I. R. C. § 408(d)(3)(I)? If so, what is the standard of review, and did the IRS abuse its discretion in denying the waiver?

    Rule(s) of Law

    1. I. R. C. § 408(d)(1): Distributions from an IRA are taxable to the distributee in the year received.
    2. I. R. C. § 408(d)(3)(A)(i): A distribution from an IRA is not taxable if the entire amount received, including money and any other property, is paid into another IRA within 60 days of receipt.
    3. I. R. C. § 408(d)(3)(D): A partial distribution can be rolled over, but only the portion contributed within 60 days is nontaxable.
    4. I. R. C. § 408(d)(3)(B): Only one rollover contribution is allowed per one-year period.
    5. I. R. C. § 408(d)(3)(I): The IRS may waive the 60-day rollover requirement if failure to do so would be against equity or good conscience.
    6. Treas. Reg. § 1. 408-4(b)(1): A distribution is nontaxable only if the entire amount received, including the same amount of money and any other property, is paid into an IRA.

    Holding

    1. The P&A Interest was distributed to James E. Caan in tax year 2015 within the meaning of I. R. C. § 408(d)(1).
    2. The P&A Interest was not contributed to Merrill Lynch in a manner that would qualify as a rollover contribution under I. R. C. § 408(d)(3), as the interest was liquidated into cash, violating the “same property” rule.
    3. The value of the P&A Interest at the time of distribution was $1,548,010.
    4. The Tax Court has jurisdiction to review the IRS’s denial of a waiver under I. R. C. § 408(d)(3)(I), and the standard of review is abuse of discretion. The IRS did not abuse its discretion in denying the waiver.

    Reasoning

    The court determined that Caan’s failure to provide the P&A Interest’s 2014 yearend FMV triggered UBS’s right to distribute the interest under the custodial agreement. The court found that UBS’s letters and subsequent actions placed Caan in constructive receipt of the P&A Interest, satisfying the requirements for a distribution under I. R. C. § 408(d)(1). The court rejected the Estate’s argument that no distribution occurred, finding the testimony of Caan’s financial advisors not credible. Regarding the rollover, the court applied the “same property” rule, holding that Caan’s liquidation of the P&A Interest into cash disqualified it from being a nontaxable rollover contribution under I. R. C. § 408(d)(3)(A)(i). The court noted that the legislative history and regulations support this interpretation, and there is no statutory exception for IRAs similar to the one for qualified plans under I. R. C. § 402(c)(6). The court valued the P&A Interest at $1,548,010, the ending capital account balance reported by the P&A Fund for tax year 2015, as the Estate did not propose a different value. Finally, the court extended its holding in Trimmer v. Commissioner to find jurisdiction over the IRS’s denial of a waiver under I. R. C. § 408(d)(3)(I) and upheld the denial as not an abuse of discretion, given that granting the waiver would not have changed the outcome due to the “same property” rule violation.

    Disposition

    The court’s decision was to enter a decision under Rule 155, reflecting that the P&A Interest was distributed and taxable, and the IRS did not abuse its discretion in denying the waiver request.

    Significance/Impact

    This case reinforces the strict application of the “same property” rule for IRA rollovers and the importance of adhering to custodial agreement terms regarding non-publicly traded assets. It highlights the potential tax consequences of failing to provide required valuations and the limitations on the IRS’s ability to waive rollover deadlines. The decision may prompt increased scrutiny by taxpayers and their advisors when dealing with nontraditional IRA assets and the necessity of timely compliance with IRA rules to maintain tax advantages.

  • Liberty Global, Inc. v. Commissioner, 161 T.C. No. 10 (2023): Application of Overall Foreign Loss Recapture Rules

    Liberty Global, Inc. v. Commissioner, 161 T. C. No. 10 (2023)

    In a landmark decision, the U. S. Tax Court clarified the scope of I. R. C. § 904(f)(3), ruling that the provision only recaptures the amount necessary to offset an overall foreign loss (OFL) and does not limit or exempt the taxation of any additional gain from the disposition of controlled foreign corporation (CFC) stock. This ruling impacts how multinational corporations calculate their foreign tax credits and underscores the limited applicability of OFL recapture rules.

    Parties

    Liberty Global, Inc. (Petitioner) v. Commissioner of Internal Revenue (Respondent). Liberty Global, Inc. was the petitioner at the trial level before the United States Tax Court.

    Facts

    At the beginning of 2010, Liberty Global, Inc. had an overall foreign loss (OFL) account balance of approximately $474 million. In February 2010, Liberty Global sold all its stock in Jupiter Telecommunications Co. Ltd. (J:COM), a controlled foreign corporation (CFC), realizing a gain of more than $3. 25 billion. On its 2010 tax return, Liberty Global reported $438 million of this gain as dividend income under I. R. C. § 1248 and the remaining $2. 8 billion as foreign-source income, claiming foreign tax credits of over $240 million based on their interpretation of Treas. Reg. § 1. 904(f)-2(d)(1). The Commissioner of Internal Revenue issued a Notice of Deficiency, asserting that Liberty Global overstated its foreign-source income and, consequently, its foreign tax credit.

    Procedural History

    Following the Notice of Deficiency, Liberty Global timely petitioned the United States Tax Court for a redetermination of the deficiency. The case was submitted fully stipulated under Tax Court Rule 122, and the parties agreed that I. R. C. § 904(f)(3) applied to the sale of J:COM stock. The central issue before the court was the interpretation of I. R. C. § 904(f)(3) concerning the treatment of gain beyond the amount necessary to recapture the OFL.

    Issue(s)

    Whether I. R. C. § 904(f)(3)(A) limits the gain recognized from the disposition of CFC stock to the amount necessary to recapture the taxpayer’s OFL, thus exempting any remaining gain from taxation?

    Whether I. R. C. § 904(f)(3)(A) is ambiguous and whether Treas. Reg. § 1. 904(f)-2(d)(1) requires treating the entire gain from the disposition of CFC stock as foreign-source income?

    Rule(s) of Law

    I. R. C. § 904(f)(3)(A) states that upon the disposition of certain property, “the taxpayer, notwithstanding any other provision of this chapter (other than paragraph (1)), shall be deemed to have received and recognized taxable income from sources without the United States in the taxable year of the disposition, by reason of such disposition, in an amount equal to the lesser of the excess of the fair market value of such property over the taxpayer’s adjusted basis in such property or the remaining amount of the overall foreign losses which were not used under paragraph (1) for such taxable year or any prior taxable year. “

    Holding

    The court held that I. R. C. § 904(f)(3)(A) only applies to the gain necessary to recapture the OFL and does not override any other recognition provisions under chapter 1 of the Internal Revenue Code. The court further held that I. R. C. § 904(f)(3)(A) is not ambiguous and does not recharacterize as foreign-source gain any amount in excess of that necessary to recapture the OFL. Additionally, the court ruled that Treas. Reg. § 1. 904(f)-2(d)(1) does not recharacterize as foreign-source gain any amount in excess of that necessary to recapture the OFL.

    Reasoning

    The court’s reasoning focused on the plain language of I. R. C. § 904(f)(3)(A), which specifies that the provision only mandates recognition of foreign-source income to the extent necessary to offset the remaining OFL. The court rejected Liberty Global’s argument that the provision limited the total gain recognized to the OFL amount, noting that the statute does not address the treatment of gain beyond the OFL recapture amount. The court found that the silence of the statute on this matter meant that other applicable Code sections, such as I. R. C. §§ 865, 1001, and 1248, continued to govern the treatment of the excess gain. The court also dismissed Liberty Global’s contention that the statute was ambiguous and that the regulation required all gain to be treated as foreign-source income, emphasizing that the regulation’s text and context only address the gain necessary for OFL recapture.

    The court considered the broader statutory scheme, noting that I. R. C. § 904(f)(3) was designed to limit foreign tax credits and not to exempt significant portions of gain from taxation. The court also pointed out that Liberty Global’s interpretation would lead to inconsistent and illogical results compared to taxpayers without OFLs, which the statute did not support.

    Disposition

    The court ruled in favor of the Commissioner regarding the interpretation of I. R. C. § 904(f)(3) and its application to Liberty Global’s gain from the sale of J:COM stock. The court upheld the Commissioner’s position that the statute does not limit or exempt the taxation of gain beyond the amount necessary for OFL recapture. The court allowed Liberty Global to deduct its foreign taxes for 2010 under I. R. C. § 164(a)(3), as conceded by the Commissioner.

    Significance/Impact

    This decision has significant implications for multinational corporations involved in the disposition of CFC stock, clarifying that I. R. C. § 904(f)(3) is narrowly focused on recapturing OFLs and does not provide a mechanism for limiting or exempting taxation of additional gain. The ruling reinforces the principle that statutory provisions must be read in the context of the entire Code and not interpreted to create unintended tax benefits. It also emphasizes the importance of clear statutory language and the limited scope of regulatory authority in interpreting tax statutes. Subsequent courts and practitioners will likely reference this decision when addressing similar issues related to foreign tax credits and OFL recapture.

  • Joseph Amundsen and Anna Amundsen v. Commissioner of Internal Revenue, T.C. Summary Opinion 2023-30: Deductions and Accuracy-Related Penalties in Tax Law

    Joseph Amundsen and Anna Amundsen v. Commissioner of Internal Revenue, T. C. Summary Opinion 2023-30 (United States Tax Court 2023)

    In a significant ruling, the U. S. Tax Court upheld the IRS’s denial of a certified public accountant’s claimed deductions for cost of goods sold and various business expenses, emphasizing stringent substantiation requirements. The court also sustained an accuracy-related penalty, highlighting the importance of proper tax reporting and the consequences of substantial understatements of income tax, particularly for tax professionals.

    Parties

    Joseph Amundsen and Anna Amundsen, petitioners, filed their case pro se. The respondent was the Commissioner of Internal Revenue, represented by Dillon T. Haskell, Thomas A. Deamus, and Mimi M. Wong.

    Facts

    Joseph Amundsen, a certified public accountant (CPA) licensed in California and New York, operated a sole proprietorship from his residence in Pennsylvania. His practice primarily involved preparing federal income tax returns. Amundsen was a member of the Yale Club in New York City, where he claimed to meet clients, and maintained a virtual office in downtown New York City for mail and answering services. On their 2015 federal income tax return, the Amundsens reported $66,976 in gross receipts and $69,233 as cost of goods sold, resulting in a reported loss. The IRS disallowed the cost of goods sold and assessed an accuracy-related penalty under section 6662(a).

    Procedural History

    The IRS issued a notice of deficiency on March 7, 2019, determining a deficiency in the Amundsens’ 2015 federal income tax and a section 6662(a) accuracy-related penalty. The case was heard pursuant to section 7463 of the Internal Revenue Code. Anna Amundsen’s case was dismissed for lack of prosecution on January 17, 2023, leaving Joseph Amundsen as the sole petitioner. The decision in this case is not reviewable by any other court and is not to be treated as precedent.

    Issue(s)

    Whether petitioners are entitled to the cost of goods sold reported on their Schedule C for the tax year 2015?

    Whether petitioners are entitled to any deductions for trade or business expenses for the tax year 2015?

    Whether petitioners are liable for a section 6662(a) accuracy-related penalty for the tax year 2015?

    Rule(s) of Law

    The burden of proof in tax cases generally rests with the taxpayer to prove the Commissioner’s determinations incorrect (Rule 142(a); Welch v. Helvering, 290 U. S. 111, 115 (1933)). Deductions are a matter of legislative grace, and taxpayers must substantiate their entitlement to any claimed deduction (INDOPCO, Inc. v. Commissioner, 503 U. S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U. S. 435, 440 (1934)). Section 162(a) allows deductions for ordinary and necessary expenses paid or incurred in carrying on a trade or business. Section 274(d) prescribes stringent substantiation requirements for certain expenses, including travel and entertainment. Section 6662(a) imposes a penalty for substantial understatements of income tax, which can be avoided if the taxpayer shows reasonable cause and good faith (section 6664(c)(1)).

    Holding

    The court held that petitioners were not entitled to the cost of goods sold reported on their Schedule C, as they failed to establish any basis for such a deduction. The court allowed deductions for substantiated trade or business expenses totaling $6,238, but disallowed all other claimed expenses due to lack of substantiation. The court sustained the section 6662(a) accuracy-related penalty, finding that the petitioners’ understatement of income tax was substantial and that they did not act with reasonable cause and good faith.

    Reasoning

    The court’s reasoning centered on the petitioners’ failure to meet the burden of proof and substantiation requirements. For the cost of goods sold, the court found that the petitioners did not establish any basis for the deduction. Regarding trade or business expenses, the court applied the Cohan rule (Cohan v. Commissioner, 39 F. 2d 540, 543-44 (2d Cir. 1930)) to estimate allowable deductions where some substantiation was provided, such as for tax preparation software and CPA licensing fees. However, the court denied deductions for travel and home office expenses due to the petitioners’ failure to meet the stringent substantiation requirements of section 274(d) and section 280A(c), respectively. The court also upheld the accuracy-related penalty, emphasizing the petitioners’ lack of reasonable cause and good faith, particularly given Joseph Amundsen’s professional background as a CPA. The court considered the petitioners’ misclassification of business expenses as cost of goods sold and their inadequate substantiation efforts as evidence of negligence.

    Disposition

    The court ordered that a decision be entered under Rule 155, reflecting the disallowance of the cost of goods sold, the allowance of specific trade or business expense deductions, and the imposition of the section 6662(a) accuracy-related penalty.

    Significance/Impact

    This case underscores the importance of proper substantiation for tax deductions, particularly for tax professionals. It reaffirms the stringent requirements of sections 274(d) and 280A(c) for travel and home office expenses, respectively. The decision also highlights the consequences of substantial understatements of income tax, emphasizing that even tax professionals are not immune to accuracy-related penalties if they fail to act with reasonable cause and good faith. This case may serve as a cautionary tale for tax practitioners about the importance of meticulous record-keeping and accurate tax reporting.

  • Piper Trucking & Leasing, LLC v. Commissioner of Internal Revenue, 161 T.C. No. 3 (2023): Automated Penalties and Supervisory Approval Requirements

    Piper Trucking & Leasing, LLC v. Commissioner of Internal Revenue, 161 T. C. No. 3 (2023)

    The U. S. Tax Court ruled that penalties automatically assessed by the IRS’s CAWR computer program do not require supervisory approval under I. R. C. § 6751(b)(1). This decision clarifies that penalties calculated through electronic means are exempt from the approval requirement, impacting how the IRS enforces tax compliance.

    Parties

    Piper Trucking & Leasing, LLC, as Petitioner, and the Commissioner of Internal Revenue, as Respondent, in a case heard before the United States Tax Court.

    Facts

    Piper Trucking & Leasing, LLC, a single-member limited liability company based in Celina, Ohio, failed to file Forms W-2 for the year 2015 with the Social Security Administration (SSA). The SSA issued two warning letters to Piper Trucking, which went unheeded, leading to the transfer of the company’s information to the IRS. The IRS’s Combined Annual Wage Reporting (CAWR) computer program then automatically assessed a penalty under I. R. C. § 6721(e) against Piper Trucking for failing to file these forms. Piper Trucking did not respond to the penalty notice, and the IRS subsequently filed a Notice of Federal Tax Lien and issued a notice of determination sustaining the lien.

    Procedural History

    The IRS assessed the penalty on March 4, 2019, and sent a Notice of Federal Tax Lien Filing on September 17, 2019. Piper Trucking requested a Collection Due Process (CDP) hearing, which was scheduled for June 24, 2020, but neither the company nor its representative attended. A second hearing was scheduled for June 30, 2020, which Piper Trucking’s representative attended but failed to submit the required documentation by the set deadline. On April 30, 2021, the IRS issued a Notice of Determination Concerning Collection Actions sustaining the lien filing. Piper Trucking timely filed a Petition with the U. S. Tax Court on June 4, 2021. The Tax Court denied the IRS’s first Motion for Summary Judgment on September 27, 2022, due to a lack of evidence regarding supervisory approval of the penalty. Both parties filed subsequent Motions for Summary Judgment on November 9, 2022, and December 5, 2022, respectively.

    Issue(s)

    Whether a penalty assessed under I. R. C. § 6721(e) through the IRS’s CAWR computer program requires supervisory approval under I. R. C. § 6751(b)(1).

    Rule(s) of Law

    I. R. C. § 6751(b)(1) mandates that no penalty shall be assessed unless the initial determination to assert such penalty is approved in writing by the immediate supervisor of the person making the determination. However, I. R. C. § 6751(b)(2)(B) exempts penalties “automatically calculated through electronic means” from this requirement.

    Holding

    The U. S. Tax Court held that a penalty assessed under I. R. C. § 6721(e) through the IRS’s CAWR computer program does not require supervisory approval under I. R. C. § 6751(b)(1) because it is “automatically calculated through electronic means. “

    Reasoning

    The court’s reasoning was grounded in the statutory language of I. R. C. § 6751(b)(2)(B), which explicitly exempts penalties calculated through electronic means from the supervisory approval requirement. The court referenced Walquist v. Commissioner, 152 T. C. 61 (2019), which established that penalties assessed without human intervention through an IRS computer program are considered automatically calculated. The court emphasized that the penalty in question was assessed entirely by the CAWR program without any human involvement, thus falling squarely within the statutory exception. The court also noted that Piper Trucking did not dispute the underlying liability during the CDP hearing, which further supported the court’s decision to review the IRS’s administrative determinations for abuse of discretion. The court concluded that the IRS’s Appeals officer met the requirements of I. R. C. § 6330(c) and did not abuse discretion in sustaining the lien.

    Disposition

    The U. S. Tax Court granted summary judgment in favor of the Commissioner of Internal Revenue, affirming the penalty assessment and the sustaining of the lien.

    Significance/Impact

    This decision clarifies the scope of I. R. C. § 6751(b)(1) by affirming that penalties automatically assessed by IRS computer systems do not require supervisory approval. It has significant implications for IRS enforcement practices, particularly in the context of automated penalty assessments. The ruling may lead to increased reliance on automated systems for penalty assessments, potentially streamlining IRS operations but also raising questions about due process and the role of human oversight in tax enforcement. The decision also underscores the importance of taxpayers engaging with the IRS during CDP hearings, as failure to do so can limit their ability to challenge underlying liabilities.

  • Larkin v. Commissioner, T.C. Memo. 2023-106: Deficiency Calculation and Abatement Procedures in Tax Law

    Larkin v. Commissioner, T. C. Memo. 2023-106 (United States Tax Court, 2023)

    In Larkin v. Commissioner, the U. S. Tax Court revised its earlier decisions on tax deficiencies for 2003-2006, following a remand from the D. C. Circuit. The court corrected specific errors in the deficiency calculations as instructed, emphasizing the importance of accurate assessments and the procedural framework for abatements in tax law. This ruling underscores the Tax Court’s adherence to appellate mandates and the necessity of precise deficiency determinations in tax disputes.

    Parties

    Daniel E. Larkin and Christine L. Larkin (Petitioners) v. Commissioner of Internal Revenue (Respondent) at both the trial level and on appeal before the U. S. Court of Appeals for the District of Columbia Circuit.

    Facts

    The case involved consolidated petitions by Daniel E. Larkin and Christine L. Larkin challenging deficiencies in federal income tax for the taxable years 2003, 2004, 2005, and 2006. The Tax Court had initially entered decisions under Rule 155 based on the Commissioner’s computations. On appeal, the D. C. Circuit affirmed the Tax Court’s decisions but identified four computational errors affecting the deficiencies, additions to tax, and penalties. The case was remanded to the Tax Court to correct these errors. The petitioners argued against the revised computations, raising issues about prior assessments, abatements, and the application of foreign tax credit carryovers.

    Procedural History

    The Tax Court initially entered decisions under Rule 155 in 2017, adopting the Commissioner’s computations for the deficiencies. The petitioners appealed to the D. C. Circuit, which affirmed the Tax Court’s decisions in part, vacated them in part due to four acknowledged errors, and remanded the case for corrected decisions. On remand, the Tax Court directed the parties to file revised Rule 155 computations. The Commissioner filed revised computations, which the petitioners objected to, leading to further revisions and supplemental filings by the Commissioner.

    Issue(s)

    Whether the Tax Court, on remand, should enter revised decisions correcting the deficiencies, additions to tax, and penalties for the years 2003-2006 based on the Commissioner’s revised computations, considering the mandate from the D. C. Circuit and the applicable procedural rules?

    Rule(s) of Law

    The court applied Rule 155 of the Tax Court Rules of Practice and Procedure, which allows the court to withhold entry of a decision to permit the parties to submit computations of the correct deficiencies resulting from the court’s opinion. Section 6211(a) of the Internal Revenue Code defines a deficiency as the amount by which the tax imposed exceeds the sum of the tax shown on the return plus any amounts previously assessed or collected without assessment. Section 7486 governs the abatement of assessments made under section 7485(a) during the pendency of an appeal.

    Holding

    The Tax Court held that it should enter revised decisions based on the Commissioner’s revised computations, correcting the deficiencies, additions to tax, and penalties for the years 2003-2006 as directed by the D. C. Circuit’s mandate. The court rejected the petitioners’ objections to the revised computations, finding them without merit and outside the scope of the mandate and Rule 155 proceedings.

    Reasoning

    The Tax Court reasoned that its role on remand was limited by the D. C. Circuit’s mandate and the procedural constraints of Rule 155. The court emphasized that the mandate rule required adherence to the appellate court’s instructions to correct the specified errors without reconsidering other issues. The court treated the assessments made in 2007 for the 2004 taxable year as lawfully assessed deficiencies, which were not part of the deficiency determined by the Tax Court and should not be included in the revised deficiency calculation. The court also found that section 7486 did not require abatement of assessments made during the pendency of the appeal before the entry of revised decisions, given the Commissioner’s representation that he would make necessary abatements. The court rejected the petitioners’ claims about prior abatements and foreign tax credit carryovers as outside the scope of the mandate and Rule 155. The court concluded that the revised computations accurately reflected the corrections required by the D. C. Circuit, and thus, it would enter revised decisions accordingly.

    Disposition

    The Tax Court entered revised decisions in accordance with the Commissioner’s revised computations, correcting the deficiencies, additions to tax, and penalties for the years 2003-2006 as required by the D. C. Circuit’s mandate.

    Significance/Impact

    This case reinforces the importance of precise deficiency calculations in tax disputes and the procedural framework for correcting errors in such calculations. It highlights the Tax Court’s adherence to appellate mandates and the limitations of Rule 155 proceedings in reconsidering issues beyond the scope of the mandate. The decision also clarifies the application of sections 6211(a) and 7486 in the context of deficiency assessments and abatements, providing guidance for future tax litigation involving similar issues. The ruling underscores the necessity for taxpayers to raise all relevant issues at appropriate stages of litigation to avoid waiving them under the mandate rule.

  • United Therapeutics Corp. v. Commissioner of Internal Revenue, 160 T.C. No. 12 (2023): Statutory Interpretation and Coordination of Tax Credits

    United Therapeutics Corp. v. Commissioner of Internal Revenue, 160 T. C. No. 12 (2023)

    In a landmark decision, the United States Tax Court ruled that expenses used for the orphan drug credit must also be considered when calculating the research credit, impacting how biotech firms like United Therapeutics Corp. can claim tax benefits. The court’s interpretation of the Internal Revenue Code clarified that the coordination rule between the two credits remains effective, despite legislative amendments, ensuring that taxpayers account for overlapping expenses in their credit calculations.

    Parties

    United Therapeutics Corporation, a biotechnology company, was the petitioner in this case. The respondent was the Commissioner of Internal Revenue, representing the Internal Revenue Service (IRS). The case was adjudicated in the United States Tax Court under Docket No. 10210-21.

    Facts

    United Therapeutics Corporation, a Delaware public benefit corporation, focuses on developing treatments for chronic and life-threatening conditions, including pulmonary arterial hypertension and neuroblastoma. For the tax years 2011 through 2014, the company claimed both the research credit under I. R. C. § 41 and the orphan drug credit under I. R. C. § 45C. Some expenses during these years qualified for both credits. United Therapeutics elected to claim the orphan drug credit for those expenses. In calculating the 2014 research credit, the company used the alternative simplified credit method under I. R. C. § 41(c)(5) and excluded the qualified clinical testing expenses from both the 2014 qualified research expenses and the average qualified research expenses for the preceding three years (2011-2013). The Commissioner audited the return and issued a Notice of Deficiency, asserting that United Therapeutics had overstated its research credit by improperly excluding the qualified clinical testing expenses from its computations.

    Procedural History

    Following the issuance of the Notice of Deficiency by the Commissioner, United Therapeutics timely petitioned the United States Tax Court for redetermination. The case proceeded under Rule 122 of the Tax Court Rules of Practice and Procedure, and the parties submitted the case fully stipulated. The Tax Court reviewed the statutory interpretation issues de novo.

    Issue(s)

    Whether the expenses used to determine the orphan drug credit under I. R. C. § 45C must also be taken into account in determining the research credit under I. R. C. § 41, particularly when calculating the alternative simplified credit under I. R. C. § 41(c)(5)?

    Rule(s) of Law

    The relevant statutory provisions are I. R. C. § 41, governing the research credit, and I. R. C. § 45C, governing the orphan drug credit. I. R. C. § 45C(c) provides the coordination rule between the two credits, stating: “(1) In general. —Except as provided in paragraph (2), any qualified clinical testing expenses for a taxable year to which an election under this section applies shall not be taken into account for purposes of determining the credit allowable under section 41 for such taxable year. (2) Expenses included in determining base period research expenses. —Any qualified clinical testing expenses for any taxable year which are qualified research expenses (within the meaning of section 41(b)) shall be taken into account in determining base period research expenses for purposes of applying section 41 to subsequent taxable years. “

    Holding

    The Tax Court held that the text and structure of I. R. C. §§ 41 and 45C(c)(2) as they existed for 2014 require that qualified clinical testing expenses used to determine the orphan drug credit must be taken into account in calculating the average qualified research expenses for the three preceding years when determining the research credit under the alternative simplified credit method.

    Reasoning

    The Tax Court’s reasoning centered on statutory interpretation. It emphasized that the starting point for interpretation is the ordinary meaning and structure of the law itself. The court rejected United Therapeutics’ argument that the phrase “base period research expenses” should be read as a defined term from a predecessor statute, noting that Congress had removed the relevant definition from the Code in 1989. The court interpreted “base period” according to its ordinary meaning as a period used as a standard of comparison. Applying this interpretation to I. R. C. § 45C(c)(2), the court concluded that the provision required the inclusion of qualified clinical testing expenses in the calculation of the average qualified research expenses for the three years preceding the credit year. The court also dismissed United Therapeutics’ reliance on the consistency rule of I. R. C. § 41(c)(6)(A), clarifying that the rule applies only to the definition of qualified research expenses and does not conflict with the coordination rule of I. R. C. § 45C(c)(2). The court emphasized that policy arguments could not override the clear statutory directive and that Congress’s repeated amendments to the relevant provisions without modifying the coordination rule indicated an intent to maintain its effect.

    Disposition

    The Tax Court entered a decision in favor of the Commissioner, upholding the Notice of Deficiency and requiring United Therapeutics to include its qualified clinical testing expenses in the calculation of its average qualified research expenses for the years 2011 through 2013 when determining its 2014 research credit under the alternative simplified credit method.

    Significance/Impact

    This decision clarifies the interaction between the research credit and the orphan drug credit, ensuring that taxpayers claiming both credits account for overlapping expenses in their credit calculations. It underscores the importance of statutory text and structure in tax law interpretation and reaffirms the principle that Congress’s legislative choices should be respected unless there is clear evidence of legislative intent to change them. The ruling has significant implications for biotechnology companies and other taxpayers claiming multiple tax credits, as it may affect their tax planning and the calculation of their tax liabilities. The decision also highlights the need for careful statutory drafting and the challenges of interpreting tax laws that have been repeatedly amended over time.

  • Growmark, Inc. & Subsidiaries v. Commissioner of Internal Revenue, 160 T.C. No. 11 (2023): Calculation of Cost of Goods Sold (COGS) and Excise Tax Credits under I.R.C. § 6426

    Growmark, Inc. & Subsidiaries v. Commissioner of Internal Revenue, 160 T. C. No. 11 (United States Tax Court 2023)

    In a ruling affirming the IRS’s position, the U. S. Tax Court in Growmark, Inc. & Subsidiaries v. Commissioner of Internal Revenue clarified that fuel blenders can only include in their cost of goods sold (COGS) the actual excise tax they paid, not their gross excise tax liability before applying credits. This decision impacts how fuel blenders calculate their taxable income, reinforcing that excise tax credits under I. R. C. § 6426 reduce the tax liability, not merely offset it for COGS purposes. The ruling ensures consistency in tax treatment between excise tax credits and income tax credits, upholding the legislative intent of the American Jobs Creation Act of 2004.

    Parties

    Growmark, Inc. & Subsidiaries, the petitioner, is an affiliated group of corporations involved in the production and sale of fuel products. The Commissioner of Internal Revenue, the respondent, represents the Internal Revenue Service (IRS) in this dispute.

    Facts

    Growmark, Inc. & Subsidiaries (Growmark) is an agricultural cooperative involved in the sale of various fuel products, including gasoline, diesel fuel, renewable fuels, alcohol fuel mixtures, and biodiesel mixtures. During the tax years 2009 and 2010, Growmark claimed excise tax credits under I. R. C. § 6426(b) and (c) for fuel mixtures it produced and sold. These credits were used to reduce its excise tax liability under I. R. C. § 4081. Growmark originally calculated its cost of goods sold (COGS) by including the actual excise tax expense, which was its gross excise tax liability reduced by the credits claimed. However, in its petition to the Tax Court, Growmark argued that it should have been allowed to include its gross excise tax liability, unreduced by the credits, in its COGS calculation. The IRS maintained that Growmark’s calculation of COGS should only reflect the excise tax actually paid after applying the credits.

    Procedural History

    The IRS issued a notice of deficiency to Growmark on July 16, 2014, determining deficiencies for tax years 2009 and 2010 related to issues other than the COGS calculation. Growmark timely filed a petition challenging these adjustments and raised an affirmative allegation regarding the inclusion of gross excise tax liability in its COGS. The Tax Court had previously addressed other issues in the case in Growmark, Inc. & Subs. v. Commissioner, T. C. Memo. 2019-161. The specific issue regarding the COGS calculation was subsequently considered in the present opinion. The standard of review applied was that the taxpayer must meet its burden of proof with respect to its affirmative allegations.

    Issue(s)

    Whether a taxpayer that claims a credit against fuel excise tax under I. R. C. § 6426(b) or (c) may also claim as part of its COGS its gross excise tax liability, unreduced by the amount of the credit it received?

    Rule(s) of Law

    The Internal Revenue Code allows excise tax credits under § 6426(b) and (c) to be applied against the excise tax imposed by § 4081. Section 164(a) provides that federal excise taxes paid or accrued in connection with the acquisition or disposition of property shall be treated as part of the cost of the acquired property or as a reduction in the amount realized on the disposition. Treasury Regulation § 1. 61-3(a) states that in calculating gross income, the taxpayer may subtract the cost of goods sold. Expenses may only be deducted if actually incurred (Affiliated Foods, Inc. v. Commissioner, 128 T. C. 62 (2007); Treas. Reg. § 1. 461-4(g)(6)).

    Holding

    The Tax Court held that Growmark may only include in its COGS the excise tax it actually incurred or paid, which is reduced by the amount of the tax credits claimed under I. R. C. § 6426(b) and (c). The court further held that legislative history confirms that the actual excise tax expense, rather than the gross excise tax liability, must be used for calculating COGS.

    Reasoning

    The court’s reasoning focused on the plain meaning of the statutory text and legislative intent. The court emphasized that the phrase “allowed as a credit against the tax imposed” in § 6426(a)(1) indicates a reduction of the tax liability, not an independent payment. This interpretation was supported by the structure of the statute, particularly § 9503(b)(1), which specifies that taxes received under § 4081 are determined without reduction for credits under § 6426, indicating that these credits reduce the liability before being considered for COGS. The court also considered the legislative history of the American Jobs Creation Act of 2004 (AJCA), which aimed to provide an equivalent benefit to replace reduced excise tax rates for fuel mixtures while protecting the Highway Trust Fund. The AJCA’s intent was to ensure that the tax treatment of excise tax credits was consistent with that of income tax credits, and the court found that allowing the gross excise tax liability to be included in COGS would provide an enhanced benefit not intended by Congress. The court was persuaded by prior judicial decisions, including Exxon Mobil Corp. v. United States, 43 F. 4th 424 (5th Cir. 2022), Delek US Holdings, Inc. v. United States, 32 F. 4th 495 (6th Cir. 2022), and Sunoco, Inc. v. United States, 908 F. 3d 710 (Fed. Cir. 2018), which supported the IRS’s interpretation of the statute.

    Disposition

    The Tax Court’s decision was entered under Rule 155, affirming the IRS’s position that Growmark’s COGS should only include the excise tax actually paid after applying the credits under I. R. C. § 6426.

    Significance/Impact

    This case has significant implications for fuel blenders and taxpayers claiming excise tax credits. It clarifies that such credits must first be applied to reduce the excise tax liability before any remaining amount can be considered for refunds or other uses. This ruling ensures consistency in tax treatment between excise tax credits and income tax credits, aligning with the legislative intent of the AJCA. It may influence future interpretations of similar tax provisions and could affect how businesses calculate their COGS and overall taxable income. The decision also supports the integrity of the Highway Trust Fund by ensuring that the full excise tax, as imposed, is credited to the fund, even when partially offset by credits.

  • Stanojevich v. Commissioner, 160 T.C. No. 7 (2023): Frivolous Tax Return Penalties Under IRC § 6702(a)

    Stanojevich v. Commissioner, 160 T. C. No. 7 (United States Tax Court 2023)

    In a significant ruling on frivolous tax return penalties, the U. S. Tax Court upheld the IRS’s imposition of penalties under IRC § 6702(a) against a trustee who filed frivolous returns on behalf of a trust. The court clarified that a trustee can be personally liable for such penalties, reinforcing the IRS’s authority to enforce tax compliance and deter frivolous filings.

    Parties

    Srbislav B. Stanojevich, as the petitioner and trustee of the Source Financial Trust (SFT), challenged the Commissioner of Internal Revenue, the respondent, regarding the filing of a Notice of Federal Tax Lien (NFTL) for assessed frivolous return penalties for tax years 2009 through 2012. Stanojevich appeared pro se, while the Commissioner was represented by Alexander N. Martini and John T. Arthur.

    Facts

    Srbislav B. Stanojevich, acting as the trustee of the Source Financial Trust (SFT), filed income tax returns for the trust for the years 2009 through 2012. These returns reported interest income as the sole source of income for SFT, with the interest income matching the amount of withheld federal income tax. The returns claimed that SFT’s total tax was zero and requested refunds equal to the withheld tax amounts. The IRS determined these returns to be frivolous under IRC § 6702(a) due to the obviously false claims of withheld taxes, leading to the assessment of a $5,000 penalty against Stanojevich for each year. Stanojevich contested these penalties, arguing he was not personally liable as they related to the trust’s returns, not his own.

    Procedural History

    The IRS sent Stanojevich a notice of the NFTL filing and his right to a Collection Due Process (CDP) hearing. Following the hearing, the IRS Office of Appeals sustained the NFTL filing. Stanojevich timely petitioned the Tax Court to challenge the notice of determination. The case was remanded to Appeals for clarification on verification requirements, after which Appeals issued a supplemental notice again upholding the NFTL filing. The Tax Court then considered the case under summary adjudication, applying a de novo review for the underlying liability issue and an abuse of discretion standard for other determinations by Appeals.

    Issue(s)

    Whether a trustee can be held personally liable for frivolous return penalties under IRC § 6702(a) when the frivolous returns were filed on behalf of a trust?

    Rule(s) of Law

    IRC § 6702(a) imposes a $5,000 penalty on any person who files a return that does not contain sufficient information for the IRS to judge the substantial correctness of the self-assessment or contains information indicating the self-assessment is substantially incorrect, if the filing is based on a position identified as frivolous by the IRS or reflects a desire to delay or impede federal tax laws. The court interpreted the term “person” under § 7701(a)(1) to include a trustee, and § 6012(b)(4) mandates that a trust’s return be filed by its fiduciary.

    Holding

    The Tax Court held that Stanojevich, as the trustee of SFT, was liable for the penalties assessed under IRC § 6702(a) for filing frivolous returns on behalf of the trust. The court ruled that the plain language of § 6702(a) extends liability to any person who files a frivolous return, including a trustee filing on behalf of a trust.

    Reasoning

    The court’s reasoning centered on the interpretation of IRC § 6702(a) and the definition of “person” under § 7701(a)(1), which includes a trustee. The court emphasized that § 6012(b)(4) assigns the responsibility for filing a trust’s return to its fiduciary, thereby supporting the imposition of § 6702(a) penalties on a trustee for frivolous filings. The court found that Stanojevich’s filings met the criteria for frivolous returns under § 6702(a)(1) and (2), as they contained false information and were based on positions identified as frivolous by the IRS. The court rejected Stanojevich’s argument that he should not be personally liable because the returns were for the trust, asserting that the statute’s language does not condition liability on the type of return filed. Additionally, the court found no abuse of discretion by the IRS Office of Appeals in upholding the NFTL filing, as the settlement officer had properly verified the assessments and followed procedural requirements.

    Disposition

    The Tax Court sustained the IRS’s determination and upheld the NFTL filing, affirming Stanojevich’s liability for the frivolous return penalties.

    Significance/Impact

    This ruling clarifies that trustees can be held personally liable for filing frivolous tax returns on behalf of trusts, reinforcing the IRS’s ability to enforce tax compliance and deter such filings. The decision underscores the broad interpretation of “person” under the tax code, extending liability to fiduciaries and potentially affecting how trustees approach their tax filing responsibilities. The case also affirms the IRS’s procedural integrity in handling CDP hearings and assessments, likely influencing future cases involving similar issues.

  • Hallmark Research Collective v. Commissioner of Internal Revenue, 159 T.C. No. 6 (2022): Jurisdictional Nature of the 90-Day Filing Deadline for Deficiency Cases

    Hallmark Research Collective v. Commissioner of Internal Revenue, 159 T. C. No. 6 (2022) (United States Tax Court, 2022)

    In a significant ruling, the U. S. Tax Court upheld the jurisdictional nature of the 90-day deadline for filing deficiency petitions, rejecting equitable tolling and affirming dismissal for untimely filings. Hallmark Research Collective sought to reopen its case after missing the filing deadline by one day, arguing for equitable tolling post-Boechler. The court, however, maintained that the deadline is non-negotiable, impacting taxpayers’ ability to challenge IRS deficiency determinations.

    Parties

    Hallmark Research Collective, Petitioner, sought to challenge the IRS’s deficiency determination against it. The Commissioner of Internal Revenue, Respondent, defended the dismissal of the case for lack of jurisdiction due to the late filing of the petition by Hallmark.

    Facts

    The IRS issued a notice of deficiency to Hallmark Research Collective on June 3, 2021, determining deficiencies, additions to tax, and penalties for tax years 2015 and 2016. The notice specified that the last day to file a petition with the U. S. Tax Court was September 1, 2021. Hallmark filed its petition electronically on September 2, 2021, one day late, attributing the delay to its CPA’s illness due to COVID-19. The Tax Court had previously dismissed Hallmark’s petition for lack of jurisdiction because it was filed late. Following the Supreme Court’s decision in Boechler, P. C. v. Commissioner, Hallmark moved to vacate the dismissal, arguing that the 90-day deadline in I. R. C. § 6213(a) is non-jurisdictional and subject to equitable tolling.

    Procedural History

    The Tax Court initially dismissed Hallmark’s petition on April 1, 2022, for lack of jurisdiction due to the late filing. Hallmark then moved to vacate this order on May 2, 2022, following the Supreme Court’s decision in Boechler, which held that a similar deadline in a different context was non-jurisdictional. The Commissioner opposed the motion, arguing that the 90-day deadline under § 6213(a) remains jurisdictional. The Tax Court reviewed the motion and denied it, reaffirming its previous dismissal.

    Issue(s)

    Whether the 90-day deadline for filing a deficiency petition under I. R. C. § 6213(a) is a jurisdictional requirement that precludes equitable tolling?

    Rule(s) of Law

    I. R. C. § 6213(a) provides that “Within 90 days, or 150 days if the notice is addressed to a person outside the United States, after the notice of deficiency authorized in section 6212 is mailed. . . the taxpayer may file a petition with the Tax Court for a redetermination of the deficiency. ” The court must assess whether this deadline is jurisdictional using the “text, context, and relevant historical treatment” of the statute as per Reed Elsevier, Inc. v. Muchnick, 559 U. S. 154, 166 (2010).

    Holding

    The Tax Court held that the 90-day filing deadline under I. R. C. § 6213(a) is jurisdictional and not subject to equitable tolling. Therefore, Hallmark’s late filing deprived the court of jurisdiction, and the dismissal of the case was proper.

    Reasoning

    The court’s reasoning was rooted in the statutory text, its context within the Internal Revenue Code, and a century of judicial and legislative history. The court found that the language of § 6213(a) clearly states that a petition must be filed within 90 days to confer jurisdiction, reinforced by the statutory scheme’s intent to balance taxpayer rights with governmental interests in timely tax collection. The court analyzed the legislative history and consistent judicial interpretation, noting that Congress has repeatedly reenacted § 6213(a) without altering its jurisdictional character despite opportunities to do so. The court distinguished Boechler by emphasizing that the statute at issue there, § 6330(d)(1), lacked the historical and statutory context that supports § 6213(a)’s jurisdictional nature. The court also considered the implications of § 7459(d), which treats a dismissal for lack of jurisdiction differently from other dismissals, further supporting the jurisdictional reading of § 6213(a). The court concluded that the uniform treatment of the 90-day deadline as jurisdictional by the Tax Court and circuit courts of appeals, coupled with Congress’s acquiescence, firmly established its jurisdictional character, precluding equitable tolling.

    Disposition

    The Tax Court denied Hallmark’s motion to vacate the dismissal order and affirmed the dismissal of the case for lack of jurisdiction.

    Significance/Impact

    This decision reaffirms the strict enforcement of the 90-day filing deadline under § 6213(a) as jurisdictional, impacting taxpayers’ ability to challenge IRS deficiency determinations in the Tax Court. It underscores the importance of timely filing and the lack of flexibility for equitable exceptions, which may influence taxpayers’ strategies in contesting IRS actions. The ruling maintains the balance intended by Congress between taxpayer rights and the government’s need for efficient tax collection, and it continues the long-standing judicial interpretation of the statute.