TAX COURT OPINION

Case: Estate of Frank D. Streightoff, Deceased, Elizabeth Doan Streightoff, Executor
Docket Number: 4379-15
Judge: Carluzzo
Opinion Type: bench
Filed: 10/11/2016
Pages: 7

21 UNITED STATES TAX COURT WASHINGTON, DC 20217 ESTATE OF FRANK D. STREIGHTOFF, DECEASED, ELIZABETH DOAN STREIGHTOFF, EXECUTOR, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) Docket No. 4379-15 ) ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the hearing in the above case before Special Trial Judge Lewis R. Carluzzo at Houston, Texas, containing his oral fimdings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, an appropriate Order denying petitioner's motion will be entered. (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. October 11, 2016 SERVED Oct 13 2016 Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 Bench Opinion by S.T. Judge Lewis R. Carluzzo September 15, 2016 Estate of Frank D. Streightoff, Deceased, Elizabeth Doan Streightoff, Executor v. Commissioner Docket No. 4379-15 The Court has decided to render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion (bench opinion). Section references made in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period, and rule references are to the Tax 13 Court Rules of Practice and Procedure. This bench 14 15 16 17 18 19 20 21 22 opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. The order to be entered in this case shall not be treated as precedent for any other case and, except as provided in Rule 152(c), this bench opinion shall not be cited as authority. This case for the redetermination of a deficiency is before the Court on Petitioner's motion for summary judgment filed June 19, 2015. 23 Respondent's objections to Petitioner's motion are 24 25 embodied in his response, filed August 12, 2015. By order dated May 11, 2016, Petitioner's 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 motion was assigned to me for disposition. See 2 3 4 5 6 Section 7443A(b)(7), Rule 180. By order dated July 5, 2016, Petitioner's motion was set for hearing on September 13, 2016, in Houston, Texas, which is the place of trial in this case. The hearing was conducted as scheduled. 7 Harold A. Chamberlain and Michael C. Riddle appeared 8 on behalf of Petitioner and argued in support of the 9 motion. Christina D. White and Gordon P. Sanz 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 appeared on behalf of Respondent and opposed it. As it turned out, Petitioner's presentation at the hearing was directed more towards the court jurisdiction in the matter and not so much towards entry of decision in Petitioner's favor. In order to avoid the later submission of a jurisdictional motion by Petitioner, the Court proposed that the matter proceed as though the Court's jurisdiction, as well as the relief actually sought in the motion, be considered at the hearing. Respondent agreed to proceed as the Court suggested. In a notice of deficiency dated January 9, 2015 (notice), Respondent determined a substantial deficiency in Petitioner's federal estate tax. A copy of the notice is attached to the petition, as is 25 a copy of a letter of the same date (letter) 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 addressed to Michael C. Riddle, who apparently held 2 Petitioner's power of attorney at the time. 3 4 5 6 7 8 The explanation for the adjustment giving rise to the deficiency is clearly set forth in the letter. There is some question whether the letter was sent to Petitioner and/or Mr. Riddle as an attachment to the notice or whether the letter was sent separately from the notice and only to Mr. 9 Riddle. 10 According to Respondent, it was sent along 11 with the notice, as an attachment to it. 12 Petitioner's position on the point is less than 13 14 15 16 17 18 clear. Nevertheless, our rejection of the legal positions advanced by Petitioner, as explained below, allows us to proceed without resolving the apparent dispute between the parties on what materials constitute the notice of deficiency. According to Petitioner, the Court is 19 without jurisdiction in this case because Respondent 20 21 22 23 24 25 has failed to issue a valid notice of deficiency. See, e.g., Rule 13(a), Monge v. Commissioner, 93 T.C. 22, 27 (1989). Petitioner's position is premised upon the fact that the letter was not an attachment to or part of the notice. Although we have serious reservations 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 about Petitioner's position in that respect, we'll proceed as thought Petitioner is correct, without, as noting, making a finding on the point. According to Petitioner, the notice is invalid for at least one of two reasons. First, the notice fails to satisfy the requirements of Section 7522, which provides, as relevant here, that a notice of deficiency "shall describe the basis for the tax due." If the notice is defined as Petitioner would like, then Respondent has failed to comply with that statutory requirement. At the hearing Petitioner at times relied upon Section 7522 as a ground for arguing the notice is invalid and, at times, acknowledged that the section would not support such a finding, recognizing that the second sentence of Section 7522(a) expressly states, "An inadequate description under the preceding sentence shall not invalidate the notice." Suffice it to note and, simply put, the statute is clear: Respondent's failure to satisfy the provisions of Section 7522(a), if there was such a failure, does not operate to invalidate the notice. See, e.g., Cadwell v. Commissioner, 136 T.C. 38, 49 (2011). Next, and with far more urgency, Petitioner 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 argues that the notice is invalid because Respondent has in some manner or another violated the 3 Administrative Procedure Act (APA). 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Taking Petitioner's arguments into account, we are aware of no case in this court or any other federal court that has invalidated an otherwise valid notice of deficiency upon the ground that the Commissioner, in the issuance of that notice of deficiency, failed to comply with the APA. Moreover, and perhaps more importantly, the reasons Petitioner advances for the application of APA to proceedings for the redetermination of a deficiency, such as this one, have been soundly rejected in Ax v. Commissioner, 146 T.C. (April 11, 2016). In reaching our conclusion, we could repeat in this bench opinion the Court's analysis in Ax, but we see no benefit in doing so, as we could hardly improve upon it. Ignoring the application of the APA to the deficiency proceedings before us, as Ax compels us to do, requires the rejection of 22 Petitioner's position that relies upon the APA in 23 24 25 support of its argument that the notice is invalid. All things considered, we are satisfied that the notice, however ultimately defined, is 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 valid. Because there is nothing in the record that otherwise calls into question the Court's jurisdiction in matter, we are further satisfied that the Court has jurisdiction to redetermine 5 Petitioner's estate tax deficiency here in dispute. 6 7 8 To the extent that Petitioner's motion is construed as a motion to dismiss for lack of jurisdiction, it will be denied. Otherwise, given 9 Petitioner's presentation at the hearing, it would not be unfair to consider that Petitioner has abandoned its claim for decision upon summary judgment as the motion originally proceeded. To reflect the foregoing and for reasons set forth more fully in a transcript of the proceedings, an appropriate order will be issued denying Petitioner's motion. This concludes the Court's bench opinion in this matter. (Whereupon, at 6:05 p.m., the above- entitled matter was concluded.) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.Capita1ReportingCompany.com