S. FRANKLIN BURFORD, PETITIONER V. COMMISSIONER OF INTERNAL REVENUE

   No. 86-1188

   In the Supreme Court of the United States

   October Term, 1986

   On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Fourth Circuit

   Memorandum for the Respondent in Opposition

   Petitioner contends that the Tax Court lacked jurisdiction to
redetermine that portion of his tax liability attributable to an
increased deficiency asserted in an amendment to the Commissioner's
answer.

   1. On his income tax return for 1976, petitioner reported capital
gain of approximately $4 million.  In computing his tax on that gain,
petitioner claimed a deduction, pursuant to Section 1202 of the
Internal Revenue Code, /1/ equal to 50% of his capital gain, or
$2,062,853.  Because that deduction constituted an "item of tax
preference," petitioner became liable for the "minimum tax" imposed by
26 U.S.C. (1976 ed.) 56. Pet. App. 11a.  /2/

   Petitioner computed his minimum tax liability, in the amount of
$270,290, on IRS Form 4625.  He attached that Form to his return, and
he reported that liability on line 56 of his return.  Pet. App. 11a.
Petitioner did not, however, include this minimum tax liability in his
computation of the total tax liability that was due to be paid with
his return.  The Commissioner treated this omission as a clerical or
mathematical error and made an assessment against petitioner, pursuant
to Section 6213(b)(1) of the Code, in the amount of the minimum tax
due.  Pet. App. 11a.  /3/

   Subsequently, the Commissioner examined petitioner's return and
determined that his income tax liability for 1976 also was understated
for reasons apart from the minimum tax.  Accordingly, he issued a
notice of deficiency for that year.  The amount of the deficiency
asserted in that notice did not include the amount of minimum tax
liability shown on the return because, as explained above, that amount
had previously been assessed under Section 6213(b)(1).  The notice of
deficiency did refer to minimum tax liability in the calculation of
the petitioner's total tax liability.  However, the minimum-tax amount
shown on the return was then subtracted as an "amount() previously
assessed" (I.R.C. Section 6211(a)(1)(B)) in computing the amount of
the deficiency.  See C.A. App. 26.

   Petitioner filed a petition in the United States Tax Court, seeking
a redetermination of the deficiency and a determination that he had
overpaid his income tax for 1976.  The petition did not contain any
assignment of error with respect to that portion of the deficiency
notice that showed the minimum-tax amount as a component of
petitioner's total liability.  Nor did petitioner allege any facts
with respect to the determination of the minimum tax.  Pet. App.
11a-12a.

   While this case was pending in the Tax Court, petitioner brought an
action in the United States District Court for the Southern District
of West Virginia.  He contended, inter alia, that his failure to
include the minimum-tax amount on his 1976 tax return was not a mere
"mathematical or clerical error," and hence that the Commissioner had
improperly assessed that amount under Section 6213(b)(1).  See Pet.
App. 12a-13a.  Petitioner sought an injunction against collection of
the assessment, and the district court granted a preliminary
injunction to that effect.  The Commissioner thereupon abated the
Section 6213(b)(1) assessment and refunded to petitioner the amounts
that had been collected pursuant thereto.  Pet. App. 12a-13a, 15a.
/4/

   As a result of the abatement of the Section 6213(b)(1) assessment,
the Commissioner sought and obtained permission from the Tax Court to
file an amendment to his answer.  That amendment sought an increased
deficiency in tax, over and above the amount set forth in the notice
of deficiency, in order to reflect the amount of the assessment that
had been abated.  Petitioner objected on the ground that the Tax Court
lacked jurisdiction to redetermine such an increased deficiency.
Petitioner also claimed that the minimum tax, the source of the
increased deficiency, was unconstitutional.  The Tax Court rejected
both contentions and found that petitioner was liable for the asserted
deficiency, including the minimum tax owed (Pet. App. 16a-19a).  The
court of appeals unanimously affirmed in a per curiam decision (id. at
22a-25a).

   2. There is no merit to petitioner's contention that the Tax Court
lacked jurisdiction to determine a deficiency in an amount that
included his unpaid minimum tax liability.  Petitioner does not allege
(nor is there) a conflict among the circuits on any question presented
here.  There is no basis for further review.

   At the outset, we note that petitioner does not dispute that he is
liable for the full amount of the minimum tax asserted by the
Commissioner.  Petitioner's jurisdictional contention is a transparent
effort to avoid paying this clear liability.  When the Commissioner
treated petitioner's omission from his 1976 return of the computed
minimum tax liability as a clerical mistake, and accordingly made an
immediate assessment under Section 6213(b)(1), petitioner sought in
district court to enjoin collection on the ground that the assessment
was invalid.  When the Commissioner accepted petitioner's contention
and abated that assessment, petitioner then sought to defeat the Tax
Court's jurisdiction over the issue by asserting in that court that
the assessment was valid and that the Commissioner's abatement of it
should be voided as exceeding his authority.  The courts below
correctly rejected petitioner's ploy;  the Tax Court plainly had
jurisdiction to determine a deficiency in an amount that included
petitioner's unpaid minimum tax liability.

   Once a taxpayer has filed a petition with the Tax Court, the Tax
Court acquires jurisdiction to determine the correct amount of the
person's tax for that year.  Section 6214(a) explicitly provides that
"the Tax Court shall have jurisdiction to redetermine the correct
amount of the deficiency even if the amount so redetermined is greater
than the amount of the deficiency, notice of which has been mailed to
the taxpayer, and to determine whether any additional amount, or
addition to the tax should be assessed, if claim therefor is asserted
by the Secretary at or before the hearing or a rehearing" (emphasis
added).  Thus, the statute could not be clearer that the non-inclusion
of the minimum tax liability in the amount of the deficiency reflected
on the original notice sent to petitioner poses no jurisdictional bar
to the Tax Court's inclusion of the minimum tax in determining "the
correct amount of the deficiency." See, e.g., Ferrill v. Commissioner,
684 F.2d 261, 265 (3d Cir. 1982);  Henningsen v. Commissioner, 243
F.2d 954, 959 (4th Cir. 1957).  The Commissioner here -- by way of an
amended answer -- timely asserted a claim for an increased deficiency
to reflect petitioner's minimum tax liability, and accordingly the Tax
Court had jurisdiction to consider this claim under Section 6214(a).
See Pet. App. 16a-18a.

   Petitioner's contention (Pet. 6-7) that the Tax Court's
jurisdiction over the minimum-tax issue is barred by Section 6211 of
the Code is frivolous.  Section 6211(a)(1)(B) states that, in
computing the amount of a "deficiency" in tax, "the amounts previously
assessed" must be subtracted from the total tax liability as
determined by the Commissioner.  This simply reflects the obvious fact
that, to avoid double-counting, amounts that are already subject to
collection because they have been assessed are not part of the
"deficiency." Section 6211 does not remotely suggest that such amounts
may not be made part of a Tax Court proceeding if the assessment is
abated.  To the contrary, the statute says that the "deficiency"
subject to redetermination by the Tax Court shall be increased by "the
amount of rebates," which are defined to include "abatements" and
"refunds." I.R.C. Section 6211(a)(2) and (b)(2).  The cases cited be
petitioner (Pet. 7) in no way support his remarkable assertion to the
contrary.  /5/

   It is therefore respectfully submitted that the petition for a writ
of certiorari should be denied.

   CHARLES FRIED

      Solicitor General

   MARCH 1987

   /1/ Unless otherwise noted, all statutory references are to the
Internal Revenue Code (26 U.S.C.), as amended (the Code or I.R.C.).

   /2/ Section 56, as in effect for the 1976 taxable year, provided
that "(i)n addition to the other taxes imposed by this chapter, there
is hereby imposed for each taxable year, with respect to the income of
every person, a tax" measured by items of tax preference.  This
"minimum tax" was equal to 15% of the excess of the amount of tax
preference items over the greater of $10,000 or one-half of the
taxpayer's regular income tax liability (with certain adjustments).
Included among the specified items of tax preference was the deduction
for capital gain provided in Section 1202 of the Code.  See 26 U.S.C.
(1976 ed.) 57(a)(9)(A).

   /3/ Section 6213(b)(1) authorizes an assessment on the basis of
what would have been the correct amount of tax but for a mathematical
or clerical error appearing on the return.  The notice informing the
taxpayer of such an assessment is not considered a statutory notice of
deficiency, and "the taxpayer shall have no right to file a petition
with the Tax Court based on such notice." Ibid.

   /4/ The district court eventually dismissed petitioner's complaint
upon his failure to respond to an order directing him to submit a
statement indicating whether he desired to prosecute his claims.  Pet.
App. 23a na.1.

   /5/ Petitioner's assertion (Pet. 8-10) that the Commissioner
exceeded his authority in abating the assessment of minimum tax
liability is also frivolous.  Section 6404(a) generally authorizes the
Commissioner to make abatements, and Section 6213(b)(2) specifically
authorizes the Commissioner to abate assessments of clerical or
mathematical errors.  In any event, petitioner can scarcely complain
that the Commissioner, in response to petitioner's own assertion that
the assessment was invalid, abated the assessment and refunded the tax
to him.