T.C. Mem o. 2 01 6- 11 6

UNITED STAT ES TAX COURT

ROBERT J . SQUERI, ET AL ., Pet it io ne rs v. 1 COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No s. 1 23 17 -1 3, 1 24 60 -1 3, Fi le d J un e 1 5, 2 01 6.

12 46 4- 13 , 12 46 5- 13
.
G. Mic he ll e Ferrei ra an d C ou rtn ey A. Hop le y , for

pe ti ti on ers . Lesl ey A. Hale, fo r res po nd en t.

Cas es of t he fol lo win g p et it io ne rs are co ns ol id at edhe rewi th : Pe te r G. 1 Dell an in i an d R eb eccaR. Dell an in i, d oc ke t No . 12 46 0- 13 ; Ro be rt C . Nave , do ck et No. 1 24 64 -1 3; an d Gre go ry D. Dell an in i an d C aro l A. Del la ni ni , do ck etNo. 12 46 5- 13
.- 2 -

[* 2] MEMORANDUM OPINION KERRIGAN, Ju dg e: Fortax y ears 20 09 an d 2 01 0 re sp on de ntde te rm in ed th e fo ll owi ng de fic ie nc ie s an d p en al ti es : 2 Doc ke t No . 12 31 7- 13 --Ro be rt J . Squ eri

Year Defi ci en cy Pen al ty se c. 66 63 (a) 20 09 $3 05 ,56 2 $2 29 ,17 2 20 10 69 ,48 6 52 ,11 5 Doc ke t No . 12 46 0- 13 --Pe te r G. Dell an in i an d R eb eccaR. Dell an in i

Year Defi ci en cy Pen al ty se c. 66 63 (a) 20 09 $1 44 ,82 6 $1 08 ,62 0 20 10 56 ,19 2 42 ,14 4

Fo r ta x year 20 11 res po nd en t d et erm in edov eras se ss m en ts of $ 15 3,7 97 for 2 Ro be rt S qu eri , $4 1,6 84 forPet er an d R eb eccaDell an in i, $ 13 ,90 1 fo r Ro be rt Na ve , an d $ 26 ,05 3 fo r Greg ory

an d C aro l Del lani ni . For t ax y ear 2 01 0 re sp on de nt de te rm in edanov eras se ss m en t o f $1 ,76 6 fo r Greg ory an d C aro l Del la ni ni
.- 3 -

[* 3] Dock etNo. 1 24 64 -1 3- -Ro be rt C . Nave

Year Defi ci en cy Pen al ty se c. 66 63 (a) 20 09 $5 3,9 73 $4 0,4 80 20 10 18 ,52 9 13 ,89 7 Doc ke t No . 12 46 5- 13 --Greg ory D. Dell an in i an d C aro l A. Del la ni ni
Year Defi ci en cy Pen al ty se c. 66 63 (a) 20 09 $8 2,9 65 $6 2,2 24 Unl es s o th erwi se in di cat ed , all sec ti on refe ren ces are t o t he Int ern al Rev enue Co de ineffe ctforth e y ears at i ss ue , andall Ru le refe ren ces are t o t he Tax Co urt Ru le s o f Prac ti ce an d P ro cedur e. W e ro un d a ll m on et ary am ou nt s t o th e n eare stdo ll ar. The pa rti es fil eda st ip ul at io n o f se tt le d i ss ue s. Th e rem ai ni ng is su e fo r ou r co ns id erat io n i s wh ethe r pe ti ti on ers are b ou ndun de r th e d oc tri ne of t he du ty of
co ns is te nc y

to reco gn iz e $ 1,6 34 ,72 0 i n g ro ss rece ip ts th atPrefe rredBu il di ng Serv ic es , Inc . (PBS) , recei ve d i n 2 00 8 a s i nc om e fo r ta x year 20 09 , th e y ear f or whi chitwas re po rte d.- 4 -

[* 4] Bac kg ro un d The se fou r co ns ol id at edcas es were s ub m it te d fu ll y st ip ul at edun de r Ru le 12 2. Th e st ip ul at edfact s ar e in co rp or at edinour fi nd in gs by thi s re fere nc e. At the ti m e o f fi li ng th e co ns ol id at edpe ti ti on s, al l p et it io ne rs res id edinCal ifo rn ia
. PBS i s a f ul l-s erv ic e jani to ria l b us in es s o rg an iz edas aCal ifo rn iasubc hapt er S co rp or at io n. Pe ti ti on ers Ro be rt S qu eri an d Gre go ry Dell an in i o rg an iz edPBS i n 19 92 . Pete r Del la ni ni joi ne d P BS i n 1 99 5. Pe te r is th e so n o f Greg ory . Rob ert Nav e joi ne d P BS i n o r ab ou t 1 99 8. Rob ertSque ri g radua te d fr om Cal ifo rn ia 3 St at e Uni ve rs it y

Haywardwith ade gr ee i n h is to ry an d i s the ch ie f ex ecu ti ve of fic er o f PBS. Greg ory

Dell an in i i s the pre si de ntof P BS. Pet er Del la ni ni is th e vi ce p res id en t o f PBS. Ro be rt Na ve is th e g en eral m an ag er o f PBS. Ro be rt S qu eri , Greg ory

Dell an in i, Pe te r Del la ni ni , andRo be rt Na ve are sh areh ol de rs of P BS. Dur in g 2 00 9, 2 01 0, an d 2 01 1 (t ax y ears at i ss ue ) th e sh ares of st oc k o f PBS we re h el d a s fo ll ows :

Sh areh ol de r Sh ares (pe rcen t) Ro be rt S qu eri 51 Greg ory

Dell an in i 15

The st ip ul at io n o f fac ts st at es 19 89 , whi chwe be li ev e is a typo gr ap hi cal 3 erro r an d s ho ul d b e 1 99 8.- 5 - [* 5] Pet er Del la ni ni 24 Ro be rt Na ve 10 Dur in g t he tax y ears at i ss ue an d i n 2 00 8 P BS was a cas h b as is tax pa y er. PBS d et erm in edth e g ro ss rece ip ts rep orte d o n i ts Fo rm s 1 12 0S , U.S. Inco m e Tax Return fo r anS Co rp or at io n, u si ng th e d ep os it s m ad e in to it s b an k a cco un ts du rin g th e cal en da r y ear. Durin g t he tax y ears at i ss ue an d i n 2 00 8 P BS m ai nt ai ne d t wo ba nkacco un ts . Bot h R ob ertSque ri a ndGreg ory Dell an in i h adsi gn at ory

au th or it y ov er b oth a cco un ts durin g t he tax y ears at i ss ue . PBS d ep os it edch eck s tha t wer e p ro babl y rece iv edin20 08 to ta li ng $1 ,63 4,7 20 in to it s b an k a cco un t i n J anua ry 20 09 . PBS d ep os it edch eck s tha t were p ro babl y

rece iv edin20 09 to ta li ng $1 ,89 3,8 51 in to it s b an k a cco un t i n Ja nu ary 20 10 . PBS d ep os it edch eck s tha t wer e p ro babl y rece iv edin20 10 to ta li ng $2 ,27 1,1 75 in to it s b an k a cco un t i n J anua ry 20 11 . PBS d ep os it edch eck s tha t were p ro babl y

rece iv edin20 11 to ta li ng $1 ,56 4,6 02 in to it s b an k a cco un t i n Ja nu ary 20 12
. PBS t im el y

fil ed20 09 , 20 10 , and20 11 Fo rm s 1 12 0S . On it s Fo rm s 1 12 0S PBS re po rte d i ts gro ss rece ip ts as f ol lo ws: Year Gro ss rece ip ts 20 09 $7 ,21 7,3 62- 6 - [* 6] 20 10 7,93 4,3 76 20 11 8,71 6,1 94 PBS d et erm in edth e rep orte d g ro ss rece ip ts onth e b as is of t he de po si ts
m ad e in to it s b an k a cco un ts du rin g t he cal en dar y ear. Th e rep orte d g ro ss rece ip ts di d n otin cl ud e th e ch eck s tha t wer e rec ei ve d i n e ach y ear a t i ss ue bu t d ep os it edin Ja nu ary of

th e fo ll owi ng y ear. Ra th er, eac h year’s rep orte d g ro ss rece ip ts in cl ud ed th e ch eck s tha t wer e d ep os it edinth e y ear a t i ss ue bu t re cei ve d i n t he pri ory ear. Pet it io ne rs all fil edti m el y Fo rm s 1 04 0, U.S. In di vi du al Inc om e Tax Return, th atrep orte d t he ir p ro po rti on at e sh ares of i nc om e fro m PBS o n t he ir S ch edul es E, Supp le m en ta l In co m e an d Lo ss . Peti ti on ers Greg ory Dell an in i an d P et er Del la ni ni fil edjoi ntreturns with t he ir s po us es , Caro l Del la ni ni an d R eb eccaDell an in i,
res pe ct iv el y . Res po nd en t i ss ue d p et it io ne rs no ti ces of d efi ci en cy on Marc h 6 , 20 13 . In th e n ot ic es res po nd en t d et erm in edth atPBS h adim pr op erl y co m pu te d i ts gro ss rece ip ts by excl ud in g t he ch eck s tha t wer e rec ei ve d dur in g t he las t qua rte r of each ta x year atis su e. Incal cu la ti ng th e ad jus tm en t t o P BS’ gro ss rece ip ts for each tax y ear a t i ss ue ex cep t 2 00 9, re sp on de nt : (i ) in cl ud edth e ch eck s tha t wer e rec ei ve d in th e y ear a t i ss ue bu t d ep os it edby PBS inJan ua ry of the fol lo win g year an d (i i)
ex cl ud edth e ch eck s tha t wer e d ep os it edinJan ua ry of t he tax y ear a t i ss ue , bu t- 7 -

[* 7] rece iv edinth e p rio r y ear. To il lu st rat e: res po nd en t ad jus te d t he 20 10 gro ss rece ip ts by excl ud in g t he ch eck s tha t h adbe enrece iv edin20 09 bu t d ep os it edin Ja nu ary 20 10 an d b y

in cl ud in g t he ch eck s tha t h adbe enrece iv edin20 10 bu t de po si te d i n J anua ry

20 11 . For 2 00 9, h owe ve r, res po nd en t d idno t d o the sec on d ad jus tm en t an d d idno t ex cl ud e th e ch eck s tha t h adbe enrece iv edinth e p rio r y ear, 20 08 , bu t d ep os it edinJan ua ry 20 09
. Dis cu ss io n The pa rti es do no t d is pu te th atPBS i nc orrect ly com pu te d i ts gro ss rece ip ts by usi ng bankacco un t d ep os it s. Re sp on de ntco nt en ds th atun de r th e dut y of
co ns is te nc y , pet it io ne rs sh ou ldbe requi redto in cl ud e o n t he ir 2 00 9 re tu rn s am ou nt s o f 20 08 in co m e, as th ey ori gi na ll y

rep orte d. Pe ti ti on ers co nt en d t ha t gr os s re cei pt s o f $1 ,63 4,7 20 sh ou ldbe ex cl ud edfro m th ei r 20 09 in co m e b ecau se th ey were ac tu al ly recei ve d i n 2 00 8 a ndth atres po nd en t d oe s n otha ve au th or it y to
m ak e ad jus tm en ts forpe ti ti on ers ’ 20 08 tax y ear. Pe ti ti on ers furth er co nt en d, an d
res po nd en t d oe s n otdi sp ut e, th atth e Tax Co urt d oe s n otha ve juri sd ic ti on to m ak e ad jus tm en ts forth ei r 20 08 tax y ear a ndth atth e p eri odof l im it at io ns fortax y ear 20 08 is clo se d. Se e se cs . 62 14 (b ), 65 01 (a). Sect io n 4 41 (a) re qu ire s tha t t ax ab le in co m e b e co m pu te d o n t he ba si s o f th e ta xp ay er’s t ax ab le y ear. Se ct io n 4 41 (b )(1 ) de fin es a “ ta xabl e y ear” as atax pa y er’s- 8 -

[* 8] an nu al acco un ti ng pe rio d i n t he cas e o f a cal en da r y ear o r a fi sc al y ear. A ta xp ay er’s “ an nu al acco un ti ng pe rio d” is th e an nu al pe rio d o n t he ba si s o f whi ch th e ta xp ay er re gu la rly com pu te s h is in co m e inm ai nt ai ni ng hi s ac co un ti ng bo ok s. Sec. 4 41 (c). Fo r pu rp os es of c al cu la ti ng tax ab le in co m e, se ct io n 4 51 (a) p ro vi de s tha t al l it em s o f in co m e rec ei ve d i n atax ab le y ear m us t b e rep orte d a s i nc om e fo r th at ta xabl e y ear u nl es s the m etho d o f acc ou nt in g re qu ire s tha t the it em be acco un te d fo r in a di ffer en t t ax pe rio d. We hav e h el d t ha t i nc om e p ro pe rly accru ab le foron e y ear i s n otde em edin co m e fo r so m e o th er y ear, ev enif i t was no t re po rte d fo r th e pr op er y ear. Se e Po li cy

Hol de rs Agen cy , Inc . v. Co m m is si on er, 4 1 T.C. 4 4, 4 8 (1 96 3) ; s ee al so Co m

m is si on er v . Mn oo ki n’s Es ta te , 18 4 F .2d89 (8t h C ir. 1 95 0) , aff’g 1 2 T.C. 7 44 (19 49 ). Becaus e PBS is a cas h m etho d t axpa y er, al l o f th e ch eck s re cei ve d i n 2 00 8 s ho ul d h av e b een in cl ud edinPBS’ gro ss rece ip ts fortax y ear 2 00 8. The du ty of co ns is te nc y , or qua si -es to pp el , is anequi tabl e d oc tri ne whi ch pr ev en ts a ta xp ay er fro m be ne fit in g i n alat er y ear f ro m anerro r orom is si on inan earl ie r y ear wh ic h c an no t b e co rrec te d b ecau se th e li m it at io ns pe rio d fo r th e ear li er y ear h as ex pi red . Esta te of Let ts v. Co m mis si on er, 1 09 T.C. 29 0, 2 96 (19 97 ), aff’d witho utpubl is he d o pi ni on , 21 2 F .3d60 0 (1 1t h C ir. 2 00 0)
.- 9 -

[* 9] The Co urt o f App eal s fo r th e Nin th Cir cu it , to whi chanap pe al of t he se cas es wou ldli e ab se nta st ip ul at io n t o t he co nt rary, see s ec. 7 48 2( b) (1 )(A), an d wh os e la w we th eref

or e fo ll ow wh enitis squa rel y on po in t, s ee Go ls env. Co m m is si on er, 54 T.C. 74 2, 7 57 (19 70 ), aff’d, 4 45 F.2d98 5 (1 0t h C ir. 1 97 1) , has he ld : Whe n a ll is sai d a nddo ne , we are o f th e o pi ni on th atth e dut y of co ns is te nc y

no t o nl y refl ect s b as ic fai rn es s, b utals o s ho ws a p ro pe r reg ardforth e adm in is tra ti on of ju st ic e an d t he di gn it y of t he law. Th e la w sh ou ldno t b e su cha[n ] id io t tha t i t ca nn otpre ve nta ta xp ay er fro m ch an gi ng th e h is to ric al fact s fr om y ear t o year in ord er t o e sc ap e a fai r sh are o f th e b ur de ns of m ai nt ai ni ng ou r go ve rn m en t. Our ta x s y st em de pe nd s upo n s el f as se ss m en t an d h on es ty, rathe r th anup on hi di ng of th e p ea o r fo rg et fu l t erg iv ers at io n. Ja ni s v . Comm is si on er, 4 61 F.3d10 80 , 10 85 (9t h C ir. 2 00 6) (qu ot in g Es ta te of Ash m anv. Co m

m is si on er, 2 31 F.3d54 1, 5 44 (9t h C ir. 2 00 0) , aff’g T.C. Mem o. 19 98 -1 45 ), aff’g T.C. Me m o. 2 00 4- 11 7. The Co urt o f App eal s fo r th e Nin th Cir cu itha s h el d t ha t fo r th e dut y of
co ns is te nc y

to ap pl y , th e fo ll owi ng requi rem en ts m us t b e m et : (i ) a rep res en ta ti on orrep ort b y

th e ta xp ay er, (i i) r el ia nc e b y th e Co m m is si on er, an d (i ii ) anatt em ptby th e ta xp ay er af

te r th e st atut e o f li m it at io ns ha s ru n t o c ha ng e th e p rev io us rep res en ta ti on or t o re ch arac te riz e th e si tu at io n i n s uc h away as t o h arm

th e Co m mis si on er. Est at e o f Ash m anv. Co m m is si on er, 2 31 F.3dat 5 45 . If all th os e el em en ts are p res en t, the Co m m is si on er m ay

actas i f th e p rev io us rep res en ta ti on ,- 10 -

[* 10 ] onwhi chhe rel ie d, co nt in ue s t o b e true , eve n i f itis no t. Id . The t axpa y er i s es to pp edto ass ertth e co nt rary. The du ty of co ns is te nc y

is anaffi rm at iv e d efen se . Esta te of As hm anv. Co m mis si on er, T.C. Mem o. 1 99 8- 14 5. Th eref or e, th e p arty

ass ert in g t he du ty of
co ns is te nc y

be ars th e b ur de n o f pr ov in g t ha t i t ap pl ie s; th us res po nd en t b ears th e bu rd en . See Ru le 14 2( a). A. Rep res en ta ti on or R ep ort b y th e Tax pa y er Inap pl y in g t he fir stele m en t o f th e duty of c on si st en cy , th e Co urt o f App eal s fo r th e Nin th Cir cu itrequi res th ata ta xp ay er m ak e a rep res en ta ti onor r ep ort. Pet it io ne rs co nt en d tha t wh il e th ey m ad e a m is take n re pr es en ta ti on , itwas co ns is te nt , andth ey

rel y up on Riv ers v. Co m

m is si on er, 4 9 T.C. 6 63 (19 68 ). In Ri ve rs th e ta xp ay er tran sf erre d a ss et s t o t wo co rp or at io ns inex ch an ge for sh ares of st oc k a ndpro m is so ry

no te s. Th e co rp or at io ns m ad e p aym en ts on th e n ot es , bu t the ta xp ay er d idno t i nc lu de an y po rti on of t he pri nc ip al pay m en ts on th e n ot es inhi s ta x re tu rn s fo r 19 51 th ro ug h 1 96 0. Th e Co m mis si on er ar gu edth atth e ta xp ay er sh ou ldbe requi redto rep ort the in co m e und er the du ty of co ns is te nc y an d t he pa y m en ts sh ou ldbe co ns tru edsu chth atall of t he earl y pa ym en ts , m ad e dur in g y ears th atwere n otat i ss ue inth e cas e, were p aym en ts forth e rec ov ery of ba si s i n th ei r en ti rety , rathe r th anpro rat in g t he ba si s among all of t he pa ym en ts . Id. at66 7.- 11 -

[* 11 ] W e st at edth atth e dut y of c on si st en cy

requi res th e ta xp ay er t o t ak e a co ns is te ntpo si ti on with re ga rdto a si m il ar tran sa ct io n fo r di ffer en t t ax y ears . W e reas on edth atth e ta xp ay er h adtak ena co ns is te ntpo si ti on with re sp ectto th e n ot es fo r al l o f th e ta x years. Id
. Ri ve rs is di st in gu is habl e fro m th e in st an t ca se s b ecau se we are n otbe in g as ke d t o re ach a co nc lu si on th atco nju res a sc en ari o. InRiv ers th e ta xp ay er fa il ed
co ns is te nt ly to re po rt i nc om e fro m th e n ot es an d t he Co m

m is si on er as ke d t ha t we di sr eg ardth e co ns is te nc y of h is rep orti ng . In the in st an t ca se s p et it io ne rs co ns is te nt ly repo rte d i nc om e o n t he ba si s o f th ei r ba nkde po si ts , andres po nd en t i s as ki ng th atwe ho ldth em to th is co ns is te ntrep orti ng . The in st an t ca se s ar e m or e an al og ou s t o Es ta te of As hm anv. Co m m is si on er, 23 1 F .3d54 1. In Est at e o f Ash m anth e ta xp ay er re po rte d t ha t an IRA ro ll ov er h ad
oc curredinanearl ie r ta x year. In t he tax y ear a t i ss ue aft er the st atut e o f li m it at io ns ha d e xp ire d fo r th e ear li er y ear, the tax pa y er ar gu edth atth e in co m e sh e ha d re cei ve d fr om

th e IRA d is tri bu ti on was n ottax ab le forth e y ear r ecei ve d be cau se th e m on ey

ha d n otbe enpro pe rly rol le d o ve r an d s o s ho ul d h av e b een ta xabl e fo r th e y ear r ecei ve d. Un de r th e duty of c on si st en cy

th e co urt h el d t he ta xp ay er t o h er ea rli er p os it io n, ev enth ou gh itwas i nc orrect . The co urt h el d t ha t sh e h adm ad e “ a cl ear r ep res en ta ti on ” whe n s he “ de cl aredas am at te r of fact ” o n- 12 -

[* 12 ] he r ta x re tu rnth atth e fu nd s h adbe enpro pe rly rol le d o ve r. Id. at54 5; see al so Est at e o f Lett s v . Comm is si on er, 1 09 T.C. at 2 99 -3 00 (“ [A] taxp ay er’s tre atm en t o f anit em

on a return c anbe a rep res en ta ti on th atfact s ex is t wh ic h a re co ns is te ntwith h ow the tax pa y er re po rts th e it em on th e return.” ). In t he in st an t cas es pe ti ti on ers m ad e a cl ear r ep res en ta ti on on th e 2 00 9 F orm 11 20 S fo r PBS whe n t he y

rep res en te d t ha t PB S h adrece iv edth e $ 1,6 34 ,72 0 o f gr os s re cei pt s i n 20 09 . This ele m en t o f th e dut y of c on si st en cy

ha s b een m et . B. Rel ia nc e b y

th e Co m m is si on er The sec on d e le m en t o f th e dut y of c on si st en cy

is rel ia nc e b y

th e Co m mis si on er o n the tax pa y er’s rep res en ta ti on . “ Cas el aw es tabl is he s tha t the
ne ces sary acqui es cen ce ex is ts wher e a t ax pa y er’s return i s ac cep te d a s fi le d;
ex am in at io n o f th e return i s n otrequi red .” Arbe rg v. Co m m is si on er, T.C. Mem o. 20 07 -2 44 , sl ip op . at 3 2. “ The Co m m is si on er m ay

rel y on a pr es um

pt io n o f
co rrec tn es s o f a return o r rep ort tha t i s g iv ento th e Co m m is si on er u nd er p en al ti es of pe rjury.” Estat e o f Lett s v . Comm is si on er, 1 09 T.C. at 3 01
. Pet it io ne rs cla im

th atres po nd en t d idno t re as on ab ly rely onpe ti ti on ers ’ rep res en ta ti on be cau se res po nd en t kne w th atth e n ot ic es of d efi ci en cy di d n ot accu rat el y

refl ectpe ti ti on ers ’ in co m e fro m 20 09 . Res po nd en t h adalr eady rel ie d up on pe ti ti on ers ’ rep res en ta ti on s b y acce pt in g t he 20 08 tax returns an d a ll owi ng- 13 -

[* 13 ] th e st atut ory

pe rio d o f li m it at io ns to ex pi re. See Est at e o f Ash m anv. Co m mis si on er, 2 31 F.3dat 5 46 (ci ti ng Herri ng to n v . Comm is si on er, 8 54 F.2d75 5, 75 8 (5 th Cir . 19 88 ), aff’g Gl as s v . Comm is si on er, 8 7 T.C. 1 08 7 (1 98 6) , and Mayfair M in eral s, In c. v. Co m m is si on er, 4 56 F.2d62 2, 6 23 (5th C ir. 1 97 2) , aff’g 56 T.C. 82 (19 71 )). Thi s el em en t o f th e duty of c on si st en cy

ha s b een m et . C. Tax pa y ers ’ Ch an ge inPo si ti on Afte r Peri odof Li m it at io ns Has Ex pi red The th irdele m en t o f th e dut y of c on si st en cy

requi res anatt em

ptby the ta xp ay er af

te r th e st atut ory

pe rio d o f li m it at io ns ha s ex pi redto ch an ge th e p rev io us rep res en ta ti on or t o re ch arac te riz e th e si tu at io n i n s uc h away as t o h arm

th e Co m mis si on er. Pet it io ne rs adm itth atrep orti ng th e 2 00 8 p aym en ts for20 08 rathe r th anfor 20 09 wou ldbe in co ns is te ntwith the ir p rev io us rep orti ng . The p eri odof l im it at io ns ha s ex pi redon th e 2 00 8 t ax y ear, an d a ll owi ng pe ti ti on ers to rech arac te riz e th ei r in co m e as be lo ng in g i n 2 00 8 wo ul d h arm th e Co m m is si on er; itwou ldall ow pe ti ti on ers to av oi d t ax on $1 ,63 4,7 20
. W e fi ndres po nd en t h as est ab li sh edth atall of the ele m en ts forth e duty of
co ns is te nc y

ha ve be enm et .- 14 -

[* 14 ] D. Mi st ak e o f Fac t o r Law Pet it io ne rs ad di ti on al ly argu e th atth e dut y of c on si st en cy

do ctrin e d oe s n ot ap pl y be cau se th ei r m is take was o ne of l aw an d n otof f act . In s up po rt o f th is
co nt en ti on pe ti ti on ers po in t t o B an ks v. Co m m is si on er, 3 45 F.3d37 3, 3 88 (6t h C ir. 20 03 ), aff’g i n p art , rev ’g inpa rt T.C. M em o. 2 00 1- 48 , rev ’d on ot he r is su es 54 3 U.S. 42 6 (2 00 5) , andto LeFev er v . Comm is si on er, 1 00 F.3d77 8, 7 87 (10 th Cir
. 19 96 ), aff’g 1 03 T.C. 52 5 (1 99 4) . The Co urt o f App eal s fo r th e Nin th Cir cu itha s lo ok edto whet he r th ere was a rep res en ta ti on by the tax pa y er. See Est at e o f Ash m anv. Co m

m is si on er, 2 31 F.3dat 5 45 . In the in st an t ca se s the re was a rep res en ta ti on by pet it io ne rs . W e co nc lu de th atth e duty of c on si st en cy

requi res th atth e $ 1,6 34 ,72 0 i n gr os s re cei pt s tha t PB S rec ei ve d i n 2 00 8 b utrep orte d fo r 20 09 be reco gn iz edas in co m e fo r ta x year 20 09
. Any con te nt io ns we ha ve no t ad dr es se d a re i rrel ev an t, m oo t, o r m eri tl es s. To re fle ctth e fo reg oi ng , Deci si on s wi ll be en te red
un de r Ru le 15 5.