Court Opinion

ID: 8911061
Source: CourtListenerOpinion
Date Created: 2022-11-27 03:02:15.721199+00
Date Added: 2024-06-11T17:08:32.122847
License: Public Domain

OAKES, Circuit Judge
(concurring):
I concur in Judge Mulligan’s opinion. The record does not support appellant’s contention that the Commissioner in his discretion invoked Section 482 in denying the deductions.1 Neither the Commissioner’s 30-day letter nor his 90-day letter (statutory Notice of Deficiency) cited any specific provisions of the Code, let alone Section 482. The Commissioner apparently based his decision on the principle that the corporations, as owners of the property, were the proper parties to claim the deductions; his response to interrogatories repeatedly denied a Section 482 allocation and claimed reliance instead on Sections 11, 61, and 63.
Appellants, however, make two troubling points that raise questions about the Commissioner’s consistency over time and uniformity of treatment among taxpayers. First, a District Director of the IRS explicitly made a Section 482 allocation between the corporations and partnerships, but for subsequent tax years not at issue here. Second, appellants allege that the Commissioner issued at least one private ruling to another party, in a scenario similar to the instant one, allowing the partners, not the corporation, to deduct the losses. To be sure, the IRS states in the introduction to each issue of its Cumulative Bulletin that “[unpublished rulings will not be relied on, used, or cited as precedents by service personnel in the disposition of other cases.” Nevertheless, the Supreme Court, in Hanover Bank v. Commissioner, 369 U.S. 672, 82 S.Ct. 1080, 8 L.Ed.2d 187 (1962), viewed such rulings as having some precedential value:
[Although the [taxpayers] are not entitled to rely upon unpublished private rulings which were not issued specifically to them, such rulings do reveal the interpretation put upon the statute by the agency charged with the responsibility of administering the revenue laws. And, because the Commissioner ruled, in letters addressed to taxpayers requesting them, that amortization with reference to a special call price was proper under the statute, we have further evidence that our construction of allowable bond premium amortization is compelled by the language of the statute.
Id. at 686-87, 82 S.Ct. at 1088-89 (footnotes omitted).
And there are indications that the IRS itself has relied on such private rulings to determine how to treat other similarly situated taxpayers. See K.C. Davis, Administrative Law of the Seventies § 17.07-5, at *18417-18 (1976) [hereinafter cited as Davis] (“[U]npublished rulings are commonly relied upon by Service personnel in the disposition of other cases . . . . [T]he evolution of [these] practices and [these] pretenses has in fact produced what is in fact a gigantic fraud, for every issue of the Cumulative Bulletin states falsely that unpublished rulings are not relied on . . .”) (emphasis in original). It is my view that consistency over time and uniformity of treatment among taxpayers are proper benchmarks from which to judge IRS actions. See, e. g., Sirbo Holdings, Inc., v. Commissioner, 476 F.2d 981, 987 (2d Cir. 1973) (“[T]he Commissioner has a duty of consistency toward similarly situated taxpayers; he cannot properly concede capital gains treatment in one case and, without adequate explanation, dispute it in another having seemingly identical facts which is pending at the same time.”) (citations omitted). See generally Davis §§ 17.07-1 to -8. But these appellants have not shown violations of either tenet sufficiently clearly to trigger real doubt as to the validity of the IRS actions here.

. Nor can the taxpayer compel the Commissioner to invoke Section 482: “Section 482 grants no right to a controlled taxpayer to apply its provisions at will, nor does it grant any right to compel the district director to apply such provisions.” Treas.Reg. § 1.482-1(b)(3). The general thrust of the provision, then, is to provide the Commissioner with a sword, not to give taxpayers a shield. Appellants cite Rubin v. Commissioner, 429 F.2d 650 (2d Cir. 1970), to support their position that Section 482 should be applied, but the Commissioner in that case had apparently alternatively relied on Section 482 in finding deficiencies in the taxpayer’s reported income, a factor not present here.