t c memo united_states tax_court stephen hunt howell petitioner v commissioner of internal revenue respondent docket no 6633-13l filed date stephen hunt howell pro_se christopher r moran for respondent memorandum opinion lauber judge in this collection_due_process cdp case petitioner seeks review pursuant to sec_6330 of the determination by the internal all statutory references are to the internal_revenue_code in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure revenue service irs or respondent to uphold a notice_of_intent_to_levy respondent has moved for summary_judgment under rule contending that there are no disputed issues of material fact and that his action in sustaining the levy was proper as a matter of law we agree and accordingly will grant the motion background petitioner did not respond to the motion for summary_judgment the fol- lowing uncontroverted facts are derived from the petition the exhibits attached to the summary_judgment motion and respondent’s other filings in this case see eg ulloa v commissioner tcmemo_2010_68 petitioner resided in west virginia when he petitioned this court petitioner did not file a federal_income_tax return for the irs pre- pared a substitute for return that met the requirements of sec_6020 and on date mailed petitioner a notice_of_deficiency for the notice_of_deficiency was addressed to petitioner at a martinsburg west virginia address this was his last_known_address and is also his current address as shown in this court’s records respondent attached to his summary_judgment motion a copy of u s postal service usps form_3877 showing that an article with a tracking number matching that on the notice_of_deficiency was mailed to petitioner at this address petitioner does not dispute that he received the notice_of_deficiency and he did not contest the deficiency by filing a petition with this court on date the irs assessed the tax and certain penalties for on date having received no payment from petitioner the irs sent him a final notice_of_intent_to_levy and notice of your right to a hearing with respect to his tax_liability petitioner timely submitted form request for a collection_due_process or equivalent_hearing he stated in this request i don’t disagree with the amount of taxes i just disagree with the interest and fees when my medical_condition adversely affects filing on date a settlement officer so from the irs appeals_office mailed petitioner a letter acknowledging receipt of his form and scheduling a telephone cdp hearing for date the so informed petitioner that in order for her to consider a collection alternative he needed to provide a copy of a completed form 433-a collection information statement for wage earners and self-employed individuals together with supporting financial information and signed income_tax returns for petitioner provided no documentation and proposed no collection alterna- tive before the scheduled cdp hearing he failed to participate in that hearing and did not request that it be rescheduled on date the so mailed peti- tioner a last chance letter stating that if she did not hear from him within days she would make her decision on the basis of the administrative file petitioner submitted no information and did not contact the so regarding his case at this point the so reviewed the administrative file and confirmed that the tax for had been properly assessed that all other requirements of applicable administrative procedure had been met and that petitioner did not qualify for any collection alternative because he had failed to submit the required financial infor- mation she accordingly closed the case and on date sent petition- er a notice_of_determination sustaining the levy petitioner timely sought review in this court on date respon- dent moved for summary_judgment and the court ordered petitioner to file a response to this motion by date the order advised petitioner that under tax_court rule d judgment may be entered against a party who fails to respond to a motion for summary_judgment petitioner has not responded either to respondent’s motion or to the court’s order discussion a summary_judgment and standard of review the purpose of summary_judgment is to expedite litigation and avoid unnecessary and time-consuming trials fla peach corp v commissioner t c the court may grant summary_judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law rule b 98_tc_518 aff’d 17_f3d_965 7th cir where the moving party properly makes and supports a motion for summary_judgment an adverse_party may not rest upon the mere allegations or denials of such party’s pleading but must set forth specific facts by affidavit or otherwise showing that there is a genuine dispute for trial rule d sec_6330 does not prescribe the standard of review that this court should apply in reviewing an irs administrative determination in a cdp case the general parameters for such review are marked out by our precedents where the validity of the underlying tax_liability is at issue the court reviews the irs’ determination de novo 114_tc_176 where the underlying tax_liability is not properly at issue the court reviews the irs determination for abuse_of_discretion id pincite abuse_of_discretion exists when a determination is arbitrary capricious or without sound basis in fact or law see 125_tc_301 aff’d 469_f3d_27 1st cir sec_6330 permits a taxpayer to challenge the existence or amount of his underlying liability in a cdp proceeding only if he did not receive a notice_of_deficiency or otherwise have a prior opportunity to contest that liability a notice_of_deficiency for was mailed to petitioner’s last_known_address but he failed to petition this court moreover he failed properly to raise the issue in his cdp hearing and would thus be precluded from challenging his underlying liability in any event see 140_tc_173 a taxpayer is precluded from disputing the underlying liability if it was not properly raised in the cdp hearing sec_301_6330-1 q a-f3 proced admin regs we accordingly review the so’s actions with respect to only for abuse_of_discretion because petitioner failed to respond to the motion for summary generally a taxpayer must actually receive the notice_of_deficiency for the preclusion under sec_6330 to apply see tatum v commissioner tcmemo_2003_115 but see onyango v commissioner t c __ __ slip op pincite date holding that preclusion applies despite lack of receipt where taxpayer declines to retrieve mail despite multiple reasonable opportunities to do so 114_tc_604 same the irs sent a notice_of_deficiency for to petitioner’s last_known_address which is verified on the usps form_3877 and petitioner does not dispute receiving it because we conclude that petitioner is precluded from challenging his underlying tax_liability for because he presented no evidence at the cdp hearing we need not decide whether he actually received the notice_of_deficiency and would also be precluded from challenging his tax_liability for that reason judgment the court could enter a decision against him for that reason alone see rule d we will nevertheless consider the motion on its merits we conclude that there are no material facts in dispute and that this case is appropriate for summary adjudication b analysis in deciding whether the so abused her discretion in sustaining the levy we consider whether she properly verified that the requirements of any applicable law or administrative procedure have been met considered any relevant issues petitioner raised and determined whether any proposed collection action balances the need for the efficient collection_of_taxes with the legitimate concern of petitioner that any collection action be no more intrusive than necessary see sec_6330 from our review of the record we conclude that the so verified that the requirements of applicable law and administrative procedure were followed petitioner proposed no collection alternative and the so in sustaining the levy properly balanced the need for the efficient collection_of_taxes with the legitimate concern of petitioner that any collection action be no more intrusive than necessary see id the only issue left for us to decide is whether petitioner at his cdp hearing raised any issue that has merit in his request for a cdp hearing petitioner stated i don’t disagree with the amount of taxes however he appeared to contest the imposition of interest and penalties stating that medical problems prevented him from timely filing his federal_income_tax return this is a challenge to his underlying tax_liability for see 122_tc_1 the underlying tax_liability consists of the amount that petitioners reported due on their tax_return along with statutory interest and penalties as explained previously petitioner cannot now challenge his underlying tax_liability because he did not participate in the cdp hearing and submitted no evidence that would have enabled the so to consider waiving the penalty for failure_to_file on time petitioner has therefore failed to present any claim that we can review see 129_tc_107 118_tc_488 once a taxpayer has been given a reasonable opportunity for a hearing but fails to avail himself of it the commissioner may proceed to make a determination based on the case file see eg oropeza v commissioner tcmemo_2008_94 in his petition to this court petitioner asserts tax stated by irs based on spouse working in spouse did not work in the meaning of these words is not entirely clear to the extent that petitioner thereby seeks to challenge his underlying tax_liability for we cannot consider that challenge for the reasons discussed in the text aff’d 402_fedappx_221 9th cir taylor v commissioner tcmemo_2004_25 aff’d 130_fedappx_934 9th cir sec_301_6330-1 q a-d7 proced admin regs the irs scheduled a telephone cdp hearing for petitioner and when he failed to call in gave him a final opportunity to contest the levy by mailing him a last chance letter on the record before us we find that petitioner was given a reasonable opportunity for a hearing but failed to avail himself of it finding no abuse_of_discretion in any respect we will grant summary_judgment for respondent and affirm the proposed collection action to reflect the foregoing an appropriate order and decision will be entered


t c summary opinion united_states tax_court melissa a simonetta petitioner v commissioner of internal revenue respondent docket no 24002-14s filed date melissa a simonetta pro_se john d ellis for respondent summary opinion chiechi judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pur- hereinafter all section references are to the internal_revenue_code in effect at all relevant times all rule references are to the tax_court rules_of_practice and procedure suant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case petitioner filed the petition in this case in response to a so-called final appeals determination notice_of_determination concerning her request for relief under sec_6015 for each of the taxable years and we must decide whether petitioner is entitled to relief under that section for each of those years we hold that she is findings_of_fact some of the facts have been stipulated and are so found at the time petitioner melissa a simonetta sometimes ms simonetta filed the petition in this case she resided in virginia from around until around the end of ms simonetta worked as a salaried full-time_employee at the american federation of state county mu- nicipal employees afscme a labor_union in washington d c around the time she ceased working for afscme her salary was approximately dollar_figure annually on date ms simonetta and christopher simonetta mr simonetta married in virginia we shall sometimes refer collectively to ms simonetta and mr simonetta as the simonettas ms simonetta and mr simon- etta were married throughout and the simonettas have two children both of whom had health problems during at least the years and around date the simonettas purchased certain real_property in virginia virginia property for dollar_figure the simonettas resided at the virginia property until date when washington mutual bank fore- closed on that property on date shirley t grooms ms grooms mr simonetta’s mother and john e grooms mr grooms ms grooms’ spouse purchased certain real_property in arizona arizona property for dollar_figure we shall refer collectively to ms grooms and mr grooms as the groomses when the groomses purchased the arizona property they intended the simonettas to reside there and to make the payments on the note arizona property note that they had signed in order to finance the purchase of that property around date the simonettas moved to the arizona property the simonettas resided at the arizona property throughout and at certain times while they were residing at the arizona property the si- monettas failed to make certain payments due on the arizona property note as a result the noteholder twice scheduled the arizona property for sale in foreclosure foreclosure sale the first foreclosure sale which was scheduled to take place on date was avoided because the groomses made a payment of approximately dollar_figure on the total amount of the arizona property note that was due and not paid at that time the second foreclosure sale which was scheduled to take place on date was avoided when the groomses made a pay- ment of approximately dollar_figure on the total amount of the arizona property note that was due and not paid at that time during ms simonetta received wage income of dollar_figure from take charge america inc take charge america and a distribution of dollar_figure from prudential retirement retirement distribution ms simonetta trans- ferred the retirement distribution to mr simonetta during ms simonetta who received a general equivalency degree in that year received no wage or other income during ms simonetta received wage income of dollar_figure dollar_figure and dollar_figure from manpower international inc the howroyd wright employment agency and the u s department of commerce respectively ms simonetta received the retirement distribution in connection with her resigning from afscme around the end of throughout at least and mr simonetta owned and oper- ated aerosystems plus llc aerosystems a sole_proprietorship ms simonetta was not involved in the operation of aerosystems ms simonetta believed on the basis of statements that mr simonetta had made to her sometime after the end of that aerosystems’ most successful year since he began operating that busi- ness was ms simonetta further believed on the basis of statements that mr simonetta had made to her sometime after the end of that aerosystems was even more successful during than it had been during during at least and mr simonetta controlled all of the finances of the simonettas’ household during at least those years mr simonetta maintained in his sole name two bank accounts one personal bank account and one business bank account for aerosystems in order to make certain household purchases petitioner was required to ask mr simonetta to sign a personal check or to let her use one of his credit cards for those purchases at certain times while they were living in arizona mr simonetta locked petitioner out of an office in their house where he kept their household financial documents and documents relating to aerosystems the simonettas signed and filed jointly form sec_1040 u s individual_income_tax_return return for their taxable years joint_return joint_return and joint_return that a certified_public_accountant return preparer whom mr simonetta retained had prepared we shall sometimes refer collectively to those joint returns as the joint returns in question included with each of the joint returns in question was a schedule c profit or loss from busi- ness relating to mr simonetta’s sole_proprietorship aerosystems it was mr simonetta not ms simonetta who provided the return preparer with certain information in order to assist him in the preparation of the joint re- turns in question and who met with him at the return preparer’s office regarding that preparation except for signing each of the joint returns in question ms simonetta’s involvement in the preparation and filing of each of the joint returns in question was limited to her giving mr simonetta any form_w-2 wage and tax statement form_w-2 that she received for each of her taxable years and which mr simonetta then provided to the return preparer for use in the preparation of each of the joint_return and the joint_return after the return preparer had completed his preparation of each of the joint returns in ques- tion and mr simonetta had reviewed each of them mr simonetta placed each of the record does not establish whether ms simonetta gave mr simonetta form 1099-r distributions from pensions annuities retirement or profit- sharing plans iras insurance contracts etc that she received from prudential retirement that was attached to the joint_return and that showed the retirement distribution that she received we presume that she did those returns in front of petitioner and directed her to sign each of them at the time ms simonetta signed each of the joint returns in question she had no mental or physical health problems which prevented her from being able to understand the contents of each of those returns had mr simonetta allowed her to review each of those returns before after or when he directed her to sign each of them ms simonetta was not the victim of spousal abuse or domestic violence during and in the joint_return the simonettas showed inter alia wages of dollar_figure from take charge america taxable pensions and annuities of dollar_figure from the retirement distribution and business income of dollar_figure from aerosystems in that joint_return they claimed a withholding_tax credit of dollar_figure but did not claim any estimated_tax payments because they had not made any esti- mated tax_payments with respect to their taxable_year in the joint re- turn the simonettas showed tax due of dollar_figure the simonettas failed to pay the tax due shown in the joint_return at the time ms simonetta signed the joint_return she was aware that that return showed tax due when ms simonetta signed the joint_return she the simonettas claimed a withholding_tax credit of dollar_figure in the joint_return because prudential retirement had withheld that amount from the retirement distribution understood on the basis of discussions with mr simonetta that he intended to pay the tax due shown in that return at a time not established by the record after the simonettas filed the joint_return mr simonetta told petitioner that he was making payments to and was in good standing with the internal_revenue_service irs in the joint_return the simonettas showed only business income of dollar_figure from aerosystems in that joint_return they claimed no withholding_tax credits because they had none and no estimated_tax payments because they had not made any estimated_tax payments with respect to their taxable_year in the joint_return the simonettas showed tax due of dollar_figure the simon- ettas failed to pay the tax due shown in the joint_return at the time ms simonetta signed the joint_return she was aware that that return showed tax due when ms simonetta signed the joint_return she understood on the basis of discussions with mr simonetta that he intended to pay the tax due shown in that return in the joint_return the simonettas showed inter alia wages of dollar_figure and business income of dollar_figure from aerosystems in that joint re- the wages of dollar_figure that the simonettas showed in the joint_return consisted of the dollar_figure dollar_figure and dollar_figure that manpower international inc the continued turn they claimed a withholding_tax credit of dollar_figure but did not claim any esti- mated tax_payments because they had not made any estimated_tax payments with respect to their taxable_year in the joint_return the simonettas showed tax due of dollar_figure the simonettas failed to pay the tax due shown in the joint_return at the time ms simonetta signed the joint_return she was aware that that return showed tax due when ms simonetta signed the joint_return she understood on the basis of discussions with mr simonetta that he intended to pay the tax due shown in that return on date petitioner filed a petition and thereby commenced a proceeding simonettas’ divorce proceedings in the superior court in maricopa county arizona maricopa county court for a decree dissolving her marriage to mr simonetta on date a trial was held in the simonettas’ divorce pro- ceedings on date the maricopa county court issued a decree of dis- continued howroyd wright employment agency and the u s department of commerce respectively had paid to ms simonetta the simonettas claimed a withholding_tax credit of dollar_figure in the joint_return because manpower international inc and the u s department of com- merce had withheld dollar_figure and dollar_figure respectively or a total of dollar_figure from the re- spective wages that they had paid to ms simonetta during solution of marriage divorce decree the divorce decree ordered in pertinent part it is ordered that father mr simonetta shall be solely liable for indemnify and hold mother petitioner harmless from the following debts and financial obligations one-half the irs debt in the approximate amount of dollar_figure father is not entitled to a reimbursement of amount_paid since the date of service it is further ordered that mother shall be solely liable for indemnify and hold father harmless from the following debts and financial obligations one-half the irs debt father is not entitled to a reimbursement of amount_paid since the date of service on date the irs received from ms simonetta form_8857 re- quest for innocent spouse relief form in which she requested relief under sec_6015 with respect to the simonettas’ taxable years and in that form ms simonetta did not check the box that would have indicated that she had signed each of the joint returns in question under duress on date respondent’s office in covington kentucky covington office which was responsible for processing requests under sec_6015 issued a preliminary determination granting petitioner relief under sec_6015 with respect to the simonettas’ taxable years and mr simonetta the so-called nonrequesting spouse protested that preliminary deter- mination as a result respondent’s covington office transferred ms simonetta’s form_8857 to respondent’s appeals_office in covington kentucky appeals_office the appeals_office denied ms simonetta’s request for relief under sec_6015 with respect to the simonettas’ taxable years and as set forth in the notice_of_determination that that office issued to her the notice_of_determination stated in pertinent part the information we have available does not show you meet the requirements for relief as of the time of the trial in this case ms simonetta was employed as a senior executive assistant at ernst young llp a national accounting firm her annual salary at that time was approximately dollar_figure opinion petitioner bears the burden of proving that she is entitled to the relief under sec_6015 that she is seeking see rule a 132_tc_203 we apply a de novo scope and standard of review in re- viewing a requesting spouse’s request for relief see porter v commissioner t c pincite the parties agree that petitioner is not entitled to relief under sec_6015 or c they disagree over whether she is entitled to relief under sec_6015 for each of the simonettas’ taxable years and it is respondent’s position that ms simonetta is not entitled to the relief under sec_6015 that she is seeking in support of that position respondent called mr simonetta as respondent’s witness at the trial in this case we did not find mr simonetta to be credible we shall not rely on his testimony in order to establish respondent’s position and his that ms simonetta is not entitled to relief under sec_6015 with respect to each of the simonettas’ taxable years and see eg 87_tc_74 sec_6015 provides sec_6015 relief from joint_and_several_liability on joint_return f equitable relief --under procedures prescribed by the secretary if-- respondent concedes that relief is not available to petitioner under sec_6015 or c thereby satisfying sec_6015 taking into account all the facts and circumstances it is inequitable to hold the individual liable for any unpaid tax or any deficiency or any portion of either and relief is not available to such individual under sub- section b or c the secretary may relieve such individual of such liability as directed by sec_6015 and as pertinent here the commissioner of internal revenue has prescribed procedures that are applicable for the simonettas’ taxable years and and that are generally used in determining whether it would be inequitable to find the requesting spouse liable for part or all of the unpaid tax in question see revproc_2013_34 sec_4 2013_43_irb_397 while this court is not bound by irs revenue procedures we often look to them for guidance especially when we are presented with the issue of whether to grant a requesting spouse relief under sec_6015 see hollimon v com- missioner tcmemo_2015_157 at see also 136_tc_432 we shall refer collectively to the respective taxes due shown in the joint returns in question and not paid_by the simonettas as well as any additions to and or any penalties on those unpaid taxes and interest as provided by law as the simonettas’ unpaid liabilities in question those procedures include seven threshold conditions threshold conditions that must be satisfied for the requesting spouse to be eligible for equitable relief under sec_6015 see revproc_2013_34 sec_4 i r b pincite- in the instant case respondent does not address let alone dispute that those conditions are satisfied as a result we conclude that respondent has abandoned any argument in this case that the threshold conditions in revproc_2013_34 sec_4 are not met with respect to any of the simonettas’ unpaid liabilities in question where as here respondent has abandoned disputing whether the threshold conditions of revproc_2013_34 sec_4 are satisfied revproc_2013_34 sec_4 i r b pincite sets forth circumstances under which the irs will make streamlined determinations granting equitable relief to the requesting spouse under sec_6015 the requesting spouse is eligible for streamlined determinations granting equitable relief under revproc_2013_34 sec_4 only in cases in which that spouse establishes inter alia that that spouse would suffer economic hardship if relief were not granted see id sec_4 i r b pincite ms simonetta concedes that she would not suffer economic hardship if relief under sec_6015 were not granted to her as a result she does not qualify for streamlined determinations under revproc_2013_34 sec_4 where as here the requesting spouse satisfies the threshold conditions but does not satisfy all of the requirements of revproc_2013_34 sec_4 revproc_2013_34 sec_4 i r b pincite sets forth the following factors to be considered in determining whether a requesting spouse is entitled to relief under sec_6015 whether the requesting spouse is no longer married to the nonrequesting spouse marital status factor whether the requesting spouse would suffer economic hardship if not granted relief economic hardship factor whether the requesting spouse knew or had reason to know that the nonrequesting spouse would not pay the tax_liability knowledge factor whether the nonrequesting spouse has a legal_obligation to pay the outstanding tax_liability pursuant to a divorce decree or agreement legal_obligation factor whether the requesting spouse significantly benefited from the unpaid tax_liability significant benefit factor whether the requesting spouse has made a good_faith effort to comply with the tax laws for the taxable years following the taxable years to which the request for such relief relates compliance factor and whether the requesting spouse was in poor physical or mental health health factor the factors listed above are designed to serve as guides and are not intended to constitute an exclusive list no one factor or a majority of factors necessarily determines the outcome see id i r b pincite with respect to the marital status factor the parties agree that at the time re- spondent made the determination set forth in the notice_of_determination petition- er was no longer married to mr simonetta the marital status factor weighs in favor of relief see id sec_4 a i r b pincite with respect to the economic hardship factor petitioner concedes that she would not suffer economic hardship if relief were not granted the economic hardship factor is neutral see id sec_4 b i r b pincite with respect to the knowledge factor petitioner must establish that she rea- sonably expected mr simonetta to pay the tax due shown in each of the joint re- turns in question at the time each of those returns was filed or within a reasonable_time after the filing of each of those returns see revproc_2013_34 sec_4 c ii i r b pincite respondent contends that p etitioner knew or had reason to know that mr simonetta would not pay the income_tax liabilities reported on their returns for and the joint returns in question in support of that contention respondent maintains that the simonettas’ unpaid medical bills and various foreclosure actions brought against her residence put petitioner on notice that mr simonetta could not pay the tax_liabilities petitioner counters that a t the time the and returns were signed petitioner did not know nor have reason to know that the taxes due would not be paid on the record before us we agree with petitioner’s contentions regarding the knowledge factor on that record we have found facts that support her con- tentions with respect to that factor including the following during at least and mr simonetta controlled all of the finances of the simonettas’ household during at least those years mr simonetta maintained in his sole name two bank accounts one personal bank account and one business bank account for aerosystems in order to make certain household purchases petitioner was re- quired to ask mr simonetta to sign a personal check or to let her use one of his credit cards for those purchases at certain times while they were living in arizona mr simonetta locked petitioner out of an office in their house where he kept their household financial documents and documents relating to aerosystems it was mr simonetta not ms simonetta who provided the return preparer with certain information in order to assist him in the preparation of the joint re- turns in question and who met with him at the return preparer’s office regarding that preparation except for signing each of the joint returns in question ms si- monetta’s involvement in the preparation and filing of each of the joint returns in question was limited to her giving mr simonetta any form_w-2 that she received for each of her taxable years and which mr simonetta then provided to the return preparer for use in the preparation of each of the joint_return and the joint_return after the return preparer had completed his preparation of each of the joint returns in question and mr simonetta had reviewed each of them mr simonetta placed each of those returns in front of petitioner and directed her to sign each of them at the time ms simonetta signed each of the joint returns in question she was aware that each of those returns showed tax due when ms simonetta signed each of the joint returns in question she understood on the basis of discussions with mr simonetta that he intended to pay the tax due shown in each of those re- turns at a time not established by the record after the simonettas filed the joint_return mr simonetta told petitioner that he was making payments to and was in good standing with the irs moreover ms simonetta believed on the basis of statements that mr simonetta had made to her sometime after the end of that aerosystems’ most successful year since he began operating that busi- ness was ms simonetta further believed on the basis of statements that mr see supra note simonetta had made to her sometime after the end of that aerosystems was even more successful during than it had been during on the record before us we find that petitioner reasonably expected mr simonetta to pay the tax due shown in each of the joint returns in question at the time each of those returns was filed or within a reasonable_time after the filing of each of those returns the knowledge factor weighs in favor of relief see revproc_2013_34 sec_4 c with respect to the legal_obligation factor the parties agree that the divorce decree obligated each of the simonettas to pay one-half of the simonettas’ unpaid liabilities in question the legal_obligation factor is neutral see id sec_4 d i r b pincite with respect to the significant benefit factor the parties agree that petitioner did not significantly benefit from not paying the tax due shown in each of the joint returns in question the significant benefit factor is neutral see id sec_4 e with respect to the compliance factor the parties agree that petitioner has complied with the tax laws for the taxable years after the taxable years at issue the compliance factor weighs in favor of relief see id sec_4 f i with respect to the health factor the parties agree that petitioner was at no relevant time in poor physical or mental health the health factor is neutral see id sec_4 g i r b pincite based upon our examination of the entire record before us we find that petitioner has carried her burden of establishing that it would be inequitable to hold her liable for the simonettas’ unpaid liabilities in question on that record we further find that petitioner has carried her burden of establishing that she is en- titled to relief under sec_6015 with respect to those respective unpaid liabilities for the simonettas’ taxable years and we have considered all the contentions and arguments of the parties that are not discussed herein and we find them to be without merit irrelevant and or moot to reflect the foregoing decision will be entered for petitioner


internal_revenue_service number release date index number - ---------------------------------------- ---------------------------- --------------------- ------------------------------------------------ department of the treasury washington dc person to contact ---------------------- --------- ------------- telephone number --------------------- refer reply to cc psi - plr-116362-05 date date ---------------------- -------------------------- ---------------------------- legend x --------------------------------------------------- a ---------------------------------- date ------------------------------------------------- dear ---------------------- requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on date a x’s sole shareholder intended for x to be an s_corporation effective date however no form_2553 election by a small_business_corporation was timely filed for x this letter responds to a letter dated date submitted on behalf of x sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective sec_1362 provides that if an s election is made within the first two and one-half months of a corporation's taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made under sec_1362 however if an s election is made after the first two and one-half months of a corporation's taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed except as specifically set forth above no opinion is expressed concerning the sec_1362 provides that if -- a an election under sec_1362 is made for plr-116362-05 any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation effective date accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 effective date along with a copy of this letter with the appropriate service_center within days from the date of this letter then such election will be treated as timely made for date federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code provides that it may not be used or cited as precedent being sent to x’s authorized representative enclosures beverly katz senior technician reviewer branch associate chief_counsel passthroughs and special industries this ruling is directed only to the taxpayer who requested it sec_6110 pursuant to a power_of_attorney on file with this office a copy of this letter is sincerely yours copy of this letter copy for sec_6110


internal_revenue_service number release date index number ------------------------------- ------------------------------------------------------------ ---------- -------------------------------------- ------------------------------------------------- -------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------------- id no ----------- ---------------- telephone number -------------------- refer reply to cc ita b07 plr-142810-14 date date re --------------------------------------------------------------------------------------------------------------- -------------------------------- legend parent -------------------------------------------------------------- sec_1 ----------------------------------------------------- sec_2 ------------------------------------------------------ sec_3 ---------------------------------------------- sec_4 ------------------------------------------------------ sec_5 ----------------------------------------------------- s6 ------------------------------------------------------------------------------- s7 ------------------------------------------------------------------------------ s8 ----------------------------------------------------------------- s9 ------------------------------------ s10 ------------------------------------------------------------------- sec_11 ---------------------------------------------------- sec_12 ----------------------------------------------------------------------------- plr-142810-14 s13 -------------------------------------------------------- s14 ---------------------------------------------------------- date -------------------------- date --------------------- a ------ b ---------------------------------------------------------- dear ---------------- this letter responds to a letter dated date and subsequent correspondence submitted by parent on behalf of itself and sec_1 sec_2 sec_3 sec_4 sec_5 s6 s7 s8 s9 s10 sec_11 sec_12 s13 and s14 hereinafter collectively referred to as taxpayer requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election not to deduct the additional first year depreciation under sec_168 of the internal_revenue_code for all classes of qualified_property placed_in_service by taxpayer during the taxable_year ended date the a taxable_year facts taxpayer represents that the facts are as follows taxpayer files a consolidated federal_income_tax return on a calendar_year basis taxpayer timely filed its consolidated federal_income_tax return for the a taxable_year on date the period of limitation on assessment under sec_6501 for the a taxable_year has not expired as of the date of this letter taxpayer is in the business of b taxpayer placed_in_service qualified_property as defined in sec_168 during the a taxable_year on the consolidated federal_income_tax return for the a taxable_year taxpayer did not claim the additional first year depreciation deduction for any classes of qualified_property placed_in_service by taxpayer during that taxable_year parent however inadvertently failed to attach the election statement not to claim the additional first year plr-142810-14 depreciation deduction for all classes of qualified_property placed_in_service by taxpayer as required by sec_1_168_k_-1 of the income_tax regulations to the consolidated federal_income_tax return for the a taxable_year parent’s a consolidated federal_income_tax return was prepared in house ruling requested taxpayer requests a ruling pursuant to sec_301_9100-3 of the procedure and administration regulations that it be granted an extension of time to make the election not to deduct the additional first year depreciation under sec_168 for all classes of qualified_property placed_in_service by taxpayer during the a taxable_year law and analysis sec_168 provides a 50-percent additional first year depreciation deduction for the placed-in-service year for qualified_property i acquired by a taxpayer after date and before date or acquired by a taxpayer generally after date and ii placed_in_service by the taxpayer before date or date for qualified_property described in sec_168 or c sec_168 provides that a taxpayer may elect not to deduct the additional first year depreciation for any class of property placed_in_service during the taxable_year the term class of property is defined in sec_1_168_k_-1 as meaning in general each class of property described in sec_168 for example 5-year_property see section dollar_figure of revproc_2008_54 2008_2_cb_722 rules similar to the rules in sec_1_168_k_-1 for qualified_property or for 30-percent additional first year depreciation deduction apply for purposes of sec_168 as currently in effect sec_1_168_k_-1 provides that the election not to deduct additional first year depreciation for a class of property applies to all qualified_property that is in that class of property and placed_in_service in the same taxable_year sec_1_168_k_-1 provides that the election not to deduct additional first year depreciation must be made by the due_date including extensions of the federal tax_return for the taxable_year in which the property is placed_in_service by the taxpayer sec_1_168_k_-1 provides that the election not to deduct additional first year depreciation must be made in the manner prescribed on form_4562 depreciation and amortization and its instructions the instructions to form_4562 for the b taxable_year provided that the election not to deduct the additional first year depreciation is made by attaching a statement to the taxpayer's timely filed tax_return including extensions indicating that the taxpayer is electing not to deduct the additional first year depreciation and the class of property for which the taxpayer is making the election plr-142810-14 under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the facts and representations submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied accordingly taxpayer is granted calendar days from the date of this letter to make the election not to deduct the additional first year depreciation under sec_168 for all classes of property placed_in_service by taxpayer during the a taxable_year that qualify for the additional first year depreciation deduction this election must be made by parent filing an amended consolidated federal_income_tax return for the a taxable_year with a statement indicating that taxpayer is electing not to deduct the additional first year depreciation for all classes of property placed_in_service by taxpayer during that taxable_year except as specifically set forth above we express no opinion concerning the federal_income_tax consequences of the facts described above under any other provisions of the code including other subsections of sec_168 specifically no opinion is expressed or implied on whether any item of depreciable_property placed_in_service by taxpayer during the a taxable_year is eligible for the additional first year depreciation deduction we are sending a copy of this letter to the appropriate industry director large business international division lb_i plr-142810-14 this letter_ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely yours kathleen reed kathleen reed branch chief branch office of associate chief_counsel income_tax accounting enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ----------------------------------- ------------------------------------ ------------------------------ ------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------------- id no ------------------ telephone number ---------------------- refer reply to cc psi b01 plr-135989-16 date may legend x --------------------------------------------- ----------------------------------------------------------------------------------------------- state date date date date --------- -------------------------- ---------------------- ---------------------- ---------------------- --------------------------- date trust --------------------------------------------- ----------------------------------------------------------------------------------------------- trust --------------------------------------------- ----------------------------------------------------------------------------------------------- plr-135989-16 trust --------------------------------------------- ----------------------------------------------------------------------------------------------- trust --------------------------------------------- ----------------------------------------------------------------------------------------------- trust --------------------------------------------- ----------------------------------------------------------------------------------------------- trust - ------------------------------------- dear --------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x by x's authorized representative requesting relief under sec_1362 of the internal_revenue_code the code facts according to the information submitted x was incorporated under the laws of state on date x elected to be treated as an s_corporation effective date on date stock in x was transferred to trust trust trust and trust pursuant to the terms of the will of a deceased shareholder trust trust trust and trust qualified as permissible s_corporation shareholders under sec_1361 for the two-year period beginning on date on date trust trust trust and trust became ineligible shareholders of x as a result x's election to be an s_corporation terminated in addition on date a shareholder of x transferred stock in x to trust and trust x represents that trust trust trust trust trust and trust have at all times since the transfers of x stock to the trusts met the requirements of a qualified_subchapter_s_trust qsst within the meaning of sec_1361 however the beneficiaries of trust trust trust trust trust and trust failed to timely file elections under sec_1361 for the trusts to be qssts x represents that x and trust trust trust trust trust and trust were unaware of the need to file a qsst election in order to continue to qualify as plr-135989-16 eligible s_corporation shareholders x further represents that it did not intend for its s_corporation_election to terminate and the termination was not motivated by tax_avoidance x also represents that other than the failure to timely file a qsst election for trust trust trust trust trust and trust x has qualified as a small_business_corporation at all times since its election on date x also represents that x and all its shareholders have filed consistently with x being treated as an s_corporation finally x and its shareholders agree to make any adjustments required by the secretary consistent with the treatment of x as an s_corporation law and analysis sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 defines a small_business_corporation as a domestic_corporation that is not an ineligible_corporation and that does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual c have a nonresident_alien as a shareholder and d have more than one class of stock sec_1361 provides that a_trust all of which is treated under subpart e of part i of subchapter_j of chapter as owned by an individual who is a citizen or resident_of_the_united_states may be an s_corporation shareholder sec_1361 provides that for purposes of sec_1361 a_trust with respect to stock transferred to it pursuant to the terms of a will is a permitted shareholder but only for the 2-year period beginning on the day on which such stock is transferred to it sec_1361 provides that a qsst whose beneficiary makes an election under sec_1361 will be treated as a_trust described in sec_1361 and the qsst's beneficiary will be treated as the owner for purposes of sec_678 of that portion of the qsst's s_corporation stock to which the election under sec_1362 applies sec_1361 defines a qsst as a_trust a the terms of which require that i during the life of the current income_beneficiary there shall be only one income_beneficiary of the trust ii any corpus distributed during the life of the current income_beneficiary may be distributed only to such beneficiary iii the income_interest of the current beneficiary in the trust shall terminate on the earlier of the beneficiary's death or the termination of the trust and iv upon the termination of the trust during the life of the current income_beneficiary the trust shall distribute all of its assets to that beneficiary and b all of the income with the meaning of sec_643 of which is distributed or plr-135989-16 required to be distributed currently to one individual who is a citizen or resident_of_the_united_states sec_1362 provides that an election under sec_1362 shall be terminated whenever the corporation ceases to be a small_business_corporation sec_1362 provides in relevant part that if an election under sec_1362 by any corporation was terminated under paragraph or of sec_1362 the secretary determines that the circumstances resulting in such termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in termination steps were taken so that the corporation is once more a small_business_corporation and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make any adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to the period then notwithstanding the circumstances resulting in the termination the corporation will be treated as continuing to be an s_corporation during the period specified by the secretary conclusion based solely on the information submitted and the representations made we conclude that x's s election terminated on date when trust trust trust and trust became ineligible s_corporation shareholders and that the termination was inadvertent within the meaning of sec_1362 moreover had x's s election not already terminated it would have terminated on date when trust and trust became ineligible shareholders similarly this terminating event would have been an inadvertent termination within the meaning of sec_1362 therefore x will be treated as continuing to be an s_corporation from date and thereafter provided that x's s_corporation_election was otherwise valid and was not otherwise terminated under sec_1362 within days from the date of this letter the beneficiaries of trust trust trust and trust must file elections to treat trust trust trust and trust as qssts effective date with the appropriate service_center in addition within days from the date of this letter the beneficiaries of trust and trust must file elections to treat trust and trust as qssts effective date with the appropriate service_center a copy of this letter should be attached to the elections if these conditions are not met then this ruling is null and void except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically no opinion is expressed concerning whether x is plr-135989-16 otherwise eligible to be treated as an s_corporation or whether trust trust trust trust trust and trust are eligible to be treated as qssts this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent pursuant to the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative sincerely joy c spies ________________________________ joy c spies senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes


internal_revenue_service number info release date index number ------------------------ ---------------------------- ---------- ----------------------------- department of the treasury washington dc person to contact --------------------- id no ------------ telephone number --------------------- refer reply to cc psi b1 - genin-128288-04 date aug taxpayer ----------------------- this responds to your letter dated date in which it was requested that we recognize taxpayer’s election to be an s_corporation effective for the tax_year a corporation which meets the definition of a small_business_corporation under sec_1362 of the internal_revenue_code may elect to be treated as an s_corporation in order for an s_corporation_election to be effective for the taxable_year in which it is made it must be made within the first two and one-half months of the corporation’s taxable_year sec_1362 if an s election is made after that time then the corporation will not be treated as an s_corporation until the taxable_year following the one in which the s election was filed sec_1362 an election made after the first two and one-half months of the taxable_year in which it is intended to be effective may be treated as effective if the secretary determines that there was reasonable_cause for the corporation’s failure to make a timely election sec_1362 unfortunately we cannot grant relief under revproc_97_48 because our records indicate that notification of a problem with your s_corporation_election was sent within six months of the attempted election relief for your late s_corporation may be obtained through a letter_ruling announcement copy enclosed provides guidance on seeking relief for late s_corporation elections generally to request relief for a late s_corporation_election you must request a private_letter_ruling from the national_office the procedures for requesting a private_letter_ruling are set out in revproc_2004_1 copy enclosed in addition revproc_2004_1 requires taxpayers to submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their tax_return for the most recent 12-month taxable_year qualify for a reduced user_fee in the amount of dollar_figure if you qualify for the reduced fee you must include a statement certifying your gross_income for the last 12-month taxable_year otherwise the higher fee will apply if you decide to submit a formal request for a private_letter_ruling please review appendix b of revproc_2004_1 and be certain to include all required procedural statements also include the proper user_fee and any documents that substantiate your intent to be an s_corporation from inception please refer your request to our office by adding the following to the address attn cc pa lpd du p o box ben franklin station washington dc direct to cc psi room please contact --------------------- at --------------------- not a toll-free call we hope that this information is helpful to you if you have additional questions sincerely dianna k miosi chief branch office of the associate chief_counsel passthroughs and special industries enclosures announcement revproc_2004_1


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date number release date conex-100778-19 uil 1400z -------------------- he asked about designations of opportunity zones under the new ------------------------ the honorable tom graves member u s house of representative sec_702 south thornton avenue dalton ga attention dear representative graves i am responding to your inquiry dated date on behalf of your constituent -------------------------- sec_1400z-1 of the internal_revenue_code code you asked if georgia is designated as an opportunity zone the department of the treasury’s treasury_department list of designated qualified opportunity zones can be found on the treasury department’s website or notice_2018_48 2018_28_irb_9 opportunity zone as the law permits each state nominated the maximum number of eligible tracts these designations are final the law and legislative_history of the opportunity zone designations under sec_1400z-1 do not provide for additional or revised designations after a state or territory designates the maximum number of zones allowable in date congress passed the tax cuts and jobs_act pub_l_no which amended the code to add sec_1400z-1 and sec_1400z-2 sec_1400z-1 provides procedural rules for designating qualified opportunity zones in certain low- income communities and communities adjoining the low-income communities under sec_1400z-1 states excluding puerto rico and including the district of columbia and other u s possessions had until date to nominate up to percent of the low-income_community census tracts to be qualified opportunity zones the law also permitted states to request a 30-day extension of the qualified_opportunity_zone nomination period revproc_2018_16 2018_9_irb_383 provided guidance is not listed as a designated tract in an ------------------------ conex-100778-19 to state ceos on the procedure for making these nominations based on the state ceos’ nominations of eligible census tracts the treasury_department completed its designation of qualified opportunity zones as noted above you can find the list on the treasury department’s website or notice_2018_48 2018_28_irb_9 i hope this information is helpful if you have any questions please call ------------------------------- -------------------- at sincerely scott dinwiddie associate chief_counsel income_tax accounting


t c no united_states tax_court larry w and cynthia j van wyk petitioners v commissioner of internal revenue respondent docket no filed date p and l each own percent of the stock in w an s_corporation engaged_in_the_business_of_farming p and his wife borrowed funds from l and his wife on the same day p transferred to w funds equal in amount to the loan from l and his wife part of the funds p transferred to w paid off preexisting debts p owed to w and the remainder represents a new debt from w to p the loan r determined that p is not at risk with respect to the loan to w and disallowed p’s share of w’s losses held pursuant to sec_465 i r c p is not at risk with respect to the loan the at-risk treatment of amounts borrowed by a taxpayer and contributed to an activity is governed by sec_465 b i r c p is not considered to be at risk with respect to the loan because sec_465 a i r c bars at-risk treatment with respect to amounts that are borrowed from a person with a prohibited_interest in the activity and l’s equity_interest is such an interest sec_465 b i r c dealing with amounts borrowed by a corporation from its shareholders does not apply to except p from sec_465 b a sec_2 held further p is not liable for penalties under sec_6662 i r c burns mossman steven j roy and angela l watson for petitioners deanna r kibler and albert b kerkhove for respondent opinion wells judge respondent determined deficiencies in petitioners' income taxes of dollar_figure dollar_figure dollar_figure and dollar_figure for their and taxable years respectively and additions to tax pursuant to sec_6662 of dollar_figure dollar_figure and dollar_figure for their and taxable years respectively in the instant case after concessions we must decide the following issues whether petitioner larry van wyk is at risk with respect to a loan he made to an s_corporation in which he own sec_50 percent of the stock where the source of the funds constituting the loan is the other 50-percent_shareholder and unless otherwise noted all section and code references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure that shareholder's wife and whether petitioners are liable for substantial_understatement penalties under sec_6662 background the parties submitted the instant case fully stipulated pursuant to rule the facts stipulated by the parties are incorporated herein by reference and are found as facts in the instant case when they filed their petition petitioners resided in monroe iowa during the years in issue petitioner larry van wyk petitioner and his brother-in-law keith roorda each owned percent of the stock of west view of monroe iowa inc west view an s_corporation engaged_in_the_business_of_farming on date petitioners borrowed dollar_figure from keith roorda and his wife linda roorda to evidence their debt to keith and linda roorda the roordas petitioners executed a promissory note bearing interest pincite percent per annum the note was unsecured also on date petitioners transferred dollar_figure to west view of that amount dollar_figure retired debts petitioners owed to west view with the remaining dollar_figure constituting indebtedness owed by west view to petitioners the loan on their tax returns for through petitioners reported one-half of the profits and losses from west view respondent determined that petitioners' income should be increased in the amounts of dollar_figure dollar_figure dollar_figure and dollar_figure for the taxable years and respectively on account of the disallowance of petitioners' deductions of west view's losses for those years additionally respondent determined that for petitioners' income should be increased by dollar_figure on account of the disallowance of petitioners' deduction of west view's loss for the taxable_year which petitioners carried forward to finally respondent determined that petitioners are liable for a substantial_understatement_penalty pursuant to sec_6662 for taxable years and discussion we have been asked to resolve whether petitioner is at risk with respect to the loan petitioners argue that petitioner should be considered at risk with respect to the loan pursuant to sec_465 a additionally petitioners argue that petitioner should be considered to be at risk with respect to the loan pursuant to sec_465 b specifically the parties have stipulated the losses which petitioners will be entitled to deduct in accordance with our decision as to whether petitioner is at risk with respect the loan accordingly other than the penalty issue discussed below this is the only issue which we are called upon to decide the parties also agree that the at-risk determination is to be made at the shareholder level and not at the s_corporation level petitioners maintain that sec_465 b applies to the instant case the relevant portions of sec_465 provide as follows sec_465 deductions limited to amount_at_risk a limitation to amount_at_risk -- in general --in the case of-- a an individual and b a c_corporation with respect to which the stock ownership requirement of paragraph of sec_542 is met engaged in an activity to which this section applies any loss from such activity for the taxable_year shall be allowed only to the extent of the aggregate amount with respect to which the taxpayer is at risk within the meaning of subsection b for such activity at the close of the taxable_year bo amounts considered at risk -- in general ---for purposes of this section a taxpayer shall be considered at risk for an activity with respect to amounts including---- a the amount of money and the adjusted_basis of other_property contributed by the taxpayer to the activity and b amounts borrowed with respect to such activity as determined under paragraph borrowed amounts ----for purposes of this section a taxpayer shall be considered at risk with respect to amounts borrowed for use in an activity to the extent that he-- a is personally liable for the repayment of such amounts or b has pledged property other than property used in such activity as security for such borrowed amount to the extent of the net fair_market_value of the taxpayer's interest in such property certain borrowed amounts excluded --- a in general --except to the extent provided in regulations for purposes of paragraph b amounts borrowed shall not be considered to be at risk with respect to an activity if such amounts are borrowed from any person who has an interest in such activity or from a related_person to a person other than the taxpayer having such an interest b exceptions -- interest as creditor ---subparagraph a shall not apply to an interest as a creditor in the activity interest as shareholder with respect to amounts borrowed by corporation ---- in the case of amounts borrowed by a corporation from a shareholder subparagraph a shall not apply to an interest as a shareholder c activities to which section applies ---- types of activities --this section applies to any taxpayer engaged in the activity of-- b farming as defined in sec_464 xk kek sec_465 b a petitioners' first argument is that petitioner should be considered at risk with respect to the loan pursuant to sec_465 a petitioners contend that sec_1 d example proposed income_tax regs fed reg date clearly illustrates this principle the example provides as follows a is the single shareholder in x an electing small_business_corporation engaged in an activity described in sec_465 a contributed dollar_figure to x in exchange for its stock under sec_351 in addition a borrowed dollar_figure for which a assumed personal liability a then loaned the entire amount to x for use in the activity x at the close of the taxable_year without reduction for any loss of x a's amount_at_risk is dollar_figure dollar_figure plus dollar_figure as we read the foregoing example it does not contemplate a situation where the amounts a contributed to x are borrowed by a from a person who has an interest in x the source of the contributed amounts is critical because it is sec_465 b and its related provisions discussed below rather than sec_465 a that govern at-risk treatment for amounts that are borrowed with respect to the activity petitioners additionally argue that sec_1 c proposed income_tax regs fed reg date supports their argument that petitioner should be considered at risk with respect to the loan the proposed regulation provides that the amount_at_risk of a shareholder of an electing small_business_corporation shall be adjusted to reflect any increase or decrease in the adjusted_basis of any indebtedness of the corporation to the shareholder id petitioners' reliance on sec_1 c proposed income_tax regs supra is flawed for the same reason we reject petitioners' argument concerning sec_1 d example proposed income_tax regs supra i1 e the proposed regulation just does not contemplate the source of the funds an issue governed by sec_465 b and its related provisions as to what is meant by money contributed by the taxpayer to the activity within the meaning of sec_465 b a the proposed_regulations provide a taxpayer's amount_at_risk in an activity shall be increased by the amount of personal funds the taxpayer contributes to the activity sec_1 a proposed income_tax regs fed reg date according to the proposed_regulations personal funds of a taxpayer are those owned by the taxpayer and are not those acquired through borrowing sec_1 f proposed income_tax regs fed reg date petitioners acknowledge the proposed_regulations regarding personal funds but note that they are over years old and still in proposed form petitioners also note that the personal funds requirement is not mentioned in either the statute or the legislative_history accordingly petitioners claim that the proposed_regulations carry little weight as to the personal funds requirement we think it anomalous that petitioners embrace the proposed_regulations as support for their argument yet argue that the proposed_regulations do not apply when they present contrary authority nonetheless proposed_regulations are given no greater weight than a position advanced by the commissioner on brief see eg 54_tc_1233 yet proposed_regulations can be useful as guidelines where they closely follow the legislative_history of the act see 95_tc_525 affd 965_f2d_1038 11th cir we have previously cited the sec_465 proposed_regulations for that purpose see 88_tc_63 affd 894_f2d_1072 9th cir to read sec_465 a as petitioners suggest would be inconsistent with sec_465 b accordingly we conclude that congress did not intend such a result and that such a construction of the statute would be inappropriate see eg 412_us_609 interpreting a statute in such a manner offends the well-settled rule_of statutory construction that all parts of a statute if at all possible are to be given effect in re 7_f3d_127 8th cir 94_tc_126 affd 992_f2d_1132 11th cir respondent also points to statements by the staff of the joint_committee on taxation as an explanation of how congress -- - intended sec_465 to operate when there is an overlap in coverage between sec_465 a and b the amounts borrowed by the taxpayer and then contributed to the activity or used to purchase property which is contributed to the activity are amounts borrowed with respect to the activity as referred to in sec_465 b and therefore are subject_to the rules of sec_465 even though amounts or property are also described in sec_465 a staff of the joint comm on taxation general explanation of the tax reform act of pincite ndollar_figure j comm print the general explanation is in accord with our own conclusion as to the operation of the statute in short petitioners fail to marshal any meaningful support for their argument under sec_465 a accordingly we hold that the loan does not without consideration of sec_465 b constitute money contributed to an activity under sec_465 a sec_465 b petitioners additionally contend that the loan should be considered at risk pursuant to sec_465 b petitioners argue that the loan is not subject_to the general prohibition of sec_465 a against borrowing from parties with an interest in the activity because of the exception provided by sec_465 b petitioners argue van wyk loaned funds to west view thus fulfilling the first clause of sec_465 b in the case of amounts borrowed by a corporation from a shareholder because this requirement is met roorda's status as a shareholder is disregarded and sec_465 does not apply since van wyk was personally liable to repay the loan to roorda sec_465 has been satisfied and van wyk has amounts at risk under sec_465 b in essence petitioners argue that sec_465 b is meant to allow at-risk status for a shareholder who borrows money from another shareholder and then lends it to a corporation owned by both of the shareholders respondent contends that sec_465 b b bears only upon the at-risk status of a corporation not its shareholders we agree with respondent that the proper interpretation is that sec_465 b applies only to allow at-risk status for a corporate borrower not to an individual shareholder merely because he made the loan in question to his corporation sec_465 b and speaks to amounts borrowed by a taxpayer---in the instant case the reference to a taxpayer is to petitioner sec_465 a prohibits at-risk treatment for those amounts ie the amounts borrowed by the taxpayer in the instant case petitioner if those amounts are borrowed from a person with an interest in the activity or from a person related to such a person sec_465 b excepts those borrowed amounts ie allows at-risk treatment where the only interest in the activity possessed by the lender the person from whom the taxpayer borrowed the money is a creditor's interest that exception does not apply to the instant case because keith roorda's interest in the activity is an equity_interest which is a prohibited_interest moreover linda roorda as the wife of keith roorda is a related_person to a person with an interest in the activity within the meaning of sec_465 a as we read sec_465 b it excepts borrowed amounts only where the borrower that is claiming to be at risk on those amounts is a corporation in the instant case because the in 86_tc_492 affd 864_f2d_1521 10th cir we held that a prohibited_interest is a capital interest in the activity or an interest in the net profits of the activity we have applied the holding in jackson in later cases see levy v commissioner 1t c 89_tc_1229 affd in part and revd on another issue sub nom 909_f2d_1360 9th cir 88_tc_684 in these cases we defined a capital interest as an interest in the assets of the activity which is distributable to the owner of the capital interest upon liquidation of the activity ‘ related_person includes a spouse see sec_465 c b and c put more technically the following analysis was set forth in respondent's brief taxpayer in paragraph b is the antecedent to which amounts borrowed by a corporation found in subparagraph b b refers the clause amounts borrowed by a corporation found in subparagraph b b relates back to the phrase amounts borrowed found in subparagraph b a the phrase amounts borrowed found in subparagraph b a relates back to the phrase amounts borrowed found in subparagraph b b the phrase amounts borrowed found in subparagraph b b relates back to the term taxpayer found in both paragraph b and paragraph b this syntactical analysis reveals the clause by a corporation to be a term of continued taxpayer claiming to be at risk for the borrowed amounts is an individual sec_465 b does not apply the house report accompanying the enactment of the deficit_reduction_act_of_1984 defra publaw_98_369 98_stat_494 the act which added sec_465 b b to the code supports our reading of sec_465 the house report states borrowing from related parties the bill provides that recourse borrowing from related parties including family members and entities controlled by the taxpayer may be considered at risk for purposes of the loss limitation and investment_tax_credit at-risk_rules except as otherwise provided by regulations recourse borrowing will be considered not at risk when the related_party has an interest other than as a creditor in the activity or when the taxpayer is otherwise protected against loss the bill also specifies that a corporation may be considered at risk with respect to amounts borrowed from its shareholders to finance participation in an activity h rept part pincite5 emphasis added continued limitation to the more general taxpayer found in sec_465 to which sec_465 b refers respondent's analysis comports with our own analysis above the staff of joint_committee on taxation general explanation of the revenue provisions of the deficit_reduction_act_of_1984 pincite j comm print contains nearly identical language the act further provides that except to the extent provided in regulations recourse borrowing will not be considered at risk where the lender has an interest continued the quoted passage indicates that a corporation may be at risk for amounts borrowed from its shareholders by reason of sec_465 b b yet we can find no legislative_history suggesting that the shareholders will be deemed at risk with respect to such amounts by reason of that provision of the statute petitioners contend that if congress intended the exception of sec_465 b to apply only to corporations ie only at the corporate level it would have expressly provided that the exception applied only for purposes of calculating corporate-level at risk amounts petitioners further contend that because there is no express language in sec_465 b b limiting its application only to corporations the statute should be construed to afford them relief indeed if the statute contained such language our task would have been simpler the failure of the statute to contain such language however does not persuade us that our interpretation is incorrect continued other than as a creditor in the activity or is related to a person other than the taxpayer having such an interest however the act specifies that a corporation may be considered at risk with respect to amounts borrowed from its shareholders to finance participation in an activity -- - additionally we note that years after sec_465 was amended to eliminate the at-risk limitations for s_corporations ’ sec_465 b ii was added to the code by defra sec_432 the logical inference therefore is that because the at-risk status of an s_corporation is no longer relevant where sec_465 b addresses the at-risk status of a corporation borrowing from its shareholders the statute must refer only to c corporations that are subject_to sec_465 for the reasons stated above we simply are not persuaded by petitioners' arguments or their interpretation of the statute accordingly we hold that because the source of the funds constituting the loan is not excepted by sec_465 b 6b petitioner pursuant to sec_465 a is not considered to be at risk with respect to the loan previously with respect to s_corporations the at-risk limitations of sec_465 applied at both the corporate and the shareholder level sec_5 a of the subchapter_s_revision_act_of_1982 publaw_97_354 96_stat_1669 however amended sec_465 by eliminating the at-risk limitations for s_corporations see also h rept part pincite in the case of a n s_corporation the at- risk rules apply at shareholder level ndollar_figure the at-risk provisions no longer apply at the corporate level as a result of an amendment made by the subchapter_s_revision_act_of_1982 pub l sec_6662 a the final issue is whether petitioners are liable for a penalty under sec_6662 sec_6662 imposes a 20-percent penalty on the portion of an underpayment_of_tax that is attributable to inter alia any substantial_understatement_of_income_tax a substantial_understatement of tax is defined as the amount which exceeds the greater of percent of the tax required to be shown on the return for the taxable_year or dollar_figure see sec_6662 a an understatement is reduced to the extent it is based upon substantial_authority adequately disclosed in the tax_return or in a statement attached to the return and there was a reasonable basis for the treatment of the item see sec_6662 b petitioners must establish error in respondent's determination that they are liable for the penalty provided by sec_6662 see rule a the sec_6662 penalty does not apply to any portion of an underpayment where it is shown that there was reasonable_cause and that the taxpayer acted in good_faith sec_6664 the decision as to whether the taxpayer acted with reasonable_cause and in good_faith depends upon all pertinent facts and circumstances sec_1_6664-4 income_tax regs under the circumstances of the instant case we believe that the complexity of sec_465 and the lack of express guidance in the regulations led petitioners to an honest mistake of law for which it is inappropriate to penalize them accordingly we do not sustain the sec_6662 determination by respondent to reflect the foregoing decision will be entered under rule