Court Opinion

ID: 9556267
Source: CourtListenerOpinion
Date Created: 2023-08-16 19:02:55.299882+00
Date Added: 2024-06-11T16:42:09.491578
License: Public Domain

United States Tax Court

                            T.C. Memo. 2023-106

          DANIEL E. LARKIN AND CHRISTINE L. LARKIN,
                          Petitioners

                                       v.

             COMMISSIONER OF INTERNAL REVENUE,
                         Respondent

           DANIEL E. LARKIN AND CHRISTINE LARKIN,
                          Petitioners

                                       v.

             COMMISSIONER OF INTERNAL REVENUE,
                        Respondent 1

                                 —————

Docket Nos. 14886-08, 19940-09.                       Filed August 16, 2023.

                                 —————

Daniel E. Larkin and Christine L. Larkin, pro sese.

Briseyda Villalpando, Sarah E. Sexton Martinez, Anthony T. Sheehan,
and Mayah Solh-Cade, for respondent.

             SUPPLEMENTAL MEMORANDUM OPINION

       GALE, Judge: These consolidated cases, concerning deficiencies
in petitioners’ federal income tax for the taxable years 2003, 2004, 2005,
and 2006, are before us for disposition pursuant to the mandate of the
U.S. Court of Appeals for the District of Columbia Circuit. The court of

        1 This Opinion supplements our previously filed opinion Larkin v.

Commissioner (Larkin I), T.C. Memo. 2017-54, aff’d in part, vacated in part, and
remanded, Larkin v. Commissioner (Larkin II), No. 17-1252, 2020 WL 2301462 (D.C.
Cir. Apr. 21, 2020), cert. denied, 141 S. Ct. 1072 (2021).

                              Served 08/16/23
                                         2

[*2] appeals affirmed the decisions we previously entered under
Rule 155 2 in these cases “except as to four discrete errors acknowledged
by the Commissioner” affecting the correct amounts of the deficiencies,
additions to tax, and penalties due from petitioners for the years at
issue. See Larkin II, 2020 WL 2301462, at *1, *3. The court of appeals
accordingly vacated our decisions in part and remanded the cases for
entry of corrected decisions. See id. at *3. Notwithstanding petitioners’
objections, we will enter revised decisions based on respondent’s now
twice-revised Rule 155 computations.

                                    Background

       In our previous opinion in these cases, we stated that decisions
would be entered under Rule 155. Larkin I, T.C. Memo. 2017-54, at *83.
The parties disagreed as to the correct computation of the amounts due
from petitioners for the years at issue. Pursuant to Rule 155(b), we
adopted respondent’s Computation for Entry of Decision, as
supplemented, in the case at Docket No. 14886-08, and his Computation
for Entry of Decision, as supplemented, in the case at Docket
No. 19940-09. See Order and Decision, T.C. Dkt. No. 14886-08 (Sept. 14,
2017); Order and Decision, T.C. Dkt. No. 19940-09 (Sept. 14, 2017).

       The Order and Decision we entered in the case at Docket
No. 14886-08 determined deficiencies, a section 6651(a)(1) addition to
tax, and section 6662(a) accuracy-related penalties as follows:

                                        Additions to Tax/Penalties
               Year    Deficiency
                                      § 6651(a)(1)      § 6662(a)
               2003      $81,698        $20,424.50      $16,339.60
               2004       63,619          —              23,515.80

       The Order and Decision we entered in the case at Docket
No. 19940-09 determined deficiencies, a section 6651(a)(1) addition to
tax, and section 6662(a) accuracy-related penalties as follows:

                                       Additions to Tax/Penalties
              Year     Deficiency
                                      § 6651(a)(1)      § 6662(a)
              2005      $114,870         $11,487        $22,974.00
              2006       118,259          —              23,651.80

        2 Unless otherwise indicated, Rule references are to the Tax Court Rules of

Practice and Procedure, and statutory references are to the Internal Revenue Code,
Title 26 U.S.C., in effect at all relevant times.
                                     3

[*3] Petitioners appealed. See Larkin II, 2020 WL 2301462, at *1. On
appeal, respondent acknowledged four errors affecting the amounts of
the deficiencies, additions to tax, and penalties we had determined:
(1) the inclusion of self-employment tax in the computation of
petitioners’ tax liabilities for each year; (2) the inclusion, due to a
computational error, of a $27 increase to petitioners’ income for 2003;
(3) the inclusion, due to a computational error, of an excess $10,792 in
the section 6662(a) penalty for 2004; and (4) the inclusion, due to a
computational error, of a $1,948 increase to petitioners’ income for 2006.
See id. at *3. The court of appeals granted respondent’s request for “a
limited remand to correct those errors and recalculate the Larkins’
assessments and penalties,” but otherwise affirmed our decisions. Id.

       To recalculate the amounts due from petitioners as the court of
appeals instructed, we directed the parties to file revised Rule 155
computations. After obtaining an extension of time to do so, respondent
timely filed revised computations proposing corrected deficiencies,
additions to tax, and penalties for all of the years at issue. Petitioners
did not timely file computations of their own, nor did they file any
objection to respondent’s revised computations when we directed them
to do so. Counsel thereafter entered an appearance for petitioners and
moved the Court for an extension of time to respond to respondent’s
revised computations.

       Upon reviewing the revised computations, we were unable to
reconcile the adjustments underlying the revised deficiency and section
6662(a) penalty that respondent proposed for 2004 with the amounts we
had previously determined for that year. We therefore directed
respondent to supplement or further revise his computations to address
the discrepancies we had identified. In addition, solely because of the
possibility of error in respondent’s revised computations, we granted an
extension of time for petitioners to file objections to respondent’s revised
computations, as thereafter supplemented.

      As directed, respondent filed a First Supplement to his
Computation for Entry of Decision in the case at Docket No. 14886-08
(Supplement), which explained his computation for 2004 and included,
among other documents, Forms 3623, Statement of Account, for both
2003 and 2004.

      With respect to 2003, the Form 3623 attached to respondent’s
Supplement indicated that, while petitioners’ appeal was pending,
respondent assessed a deficiency, addition to tax, and penalty in
                                           4

[*4] accordance with the amounts determined in our prior Order and
Decision. See § 7485(a) (providing that a deficiency determined by the
Tax Court may be assessed during the pendency of an appeal unless the
taxpayer posts a bond). The Form 3623 further indicated that those
assessments reflected petitioners’ total assessed tax liability for that
year. After accounting for adjustments to correct the errors he
acknowledged on appeal with respect to 2003, respondent proposed that
we enter a decision reflecting a revised deficiency of $65,390, along with
a corresponding section 6651(a)(1) addition to tax of $16,347.50 and a
section 6662(a) penalty of $13,078. Respondent’s Form 3623 showed
that these amounts would represent petitioners’ total revised liability
for 2003.

       For 2004, respondent took the position in his Supplement, in
short, that we should enter a revised decision finding petitioners liable
for a deficiency equal to their total tax due for that year, which he
calculated as $99,399, along with a corresponding section 6662(a)
penalty equal to 20% of the tax due, or $19,879.60. 3 Respondent
explained that, in his view, the total amount of the deficiency should
include $53,961 of tax assessed on June 18, 2007, 4 pursuant to a
“defaulted AUR notice,” 5 plus the $63,619 deficiency we previously
determined 6 (which was assessed while petitioners’ appeal was

          3Twenty percent of the $99,399 tax liability is actually $19,879.80.
Respondent’s Form 3623 for 2004 reveals that the 20-cent discrepancy between the
correct figure and the one respondent proposed resulted from respondent’s assessment
of a rounded-down penalty of $10,792 on June 18, 2007. The exact amount of that
penalty (20% of the $53,961 of tax assessed on the same date, see infra note 4) would
have been $10,792.20.
        4 During the trial of these cases we received into evidence Exhibit 21–R, which

included a copy of a Form 4340, Certificate of Assessments, Payments, and Other
Specified Matters, for petitioners’ 2004 taxable year. Absent a showing of irregularity,
a Form 4340 provides presumptive proof of its contents. See, e.g., Hansen v. United
States, 7 F.3d 137, 138 (9th Cir. 1993) (per curiam); Davis v. Commissioner, 115 T.C.
35, 40–41 (2000). The Form 4340 indicated that respondent assessed $1,464.92 of tax
reported as due on petitioners’ federal income tax return for 2004, which was filed in
2005. It further indicated that respondent later abated that assessment in favor of
new assessments made on June 18, 2007, which included $53,961 of tax and a
corresponding section 6662(a) penalty of $10,792.
          5   Respondent provided no other information in his Supplement about this
notice.
        6 Respondent’s prior computation of the deficiency for 2004, which we

incorporated in our prior Order and Decision in the case at Docket No. 14886-08,
indicated that the $53,961 assessment had been made on June 18, 2007, and excluded
                                         5

[*5] pending), minus $18,181 to correct the error respondent
acknowledged on appeal relating to self-employment tax. In addition,
respondent represented that he would abate any previously assessed tax
and penalty for 2004 in excess of $99,399 and $19,879.60, 7 respectively.

       For 2005 and 2006, respondent did not file any supplement to the
revised computation he had already filed in the case at Docket
No. 19940-09 (Revised Computation).         The Revised Computation
included Forms 3623 indicating that, while petitioners’ appeal was
pending, respondent assessed deficiencies, an addition to tax, and
penalties for 2005 and 2006 in accordance with the amounts determined
in our prior Order and Decision, representing petitioners’ total assessed
tax liabilities for those years. After accounting for adjustments to
correct the errors he acknowledged on appeal with respect to 2005 and
2006, respondent proposed that we enter a revised decision reflecting
deficiencies, a section 6651(a)(1) addition to tax, and section 6662(a)
penalties as follows:

                                        Additions to Tax/Penalties
               Year    Deficiency
                                      § 6651(a)(1)       § 6662(a)
               2005       $95,995        $9,599.50       $19,199.00
               2006        99,534         —               19,906.80

The Forms 3623 showed that these amounts would represent
petitioners’ total revised liabilities for 2005 and 2006.

       Petitioners, through counsel, timely filed a Response to
respondent’s Supplement and Revised Computation.                 Therein,
petitioners argued that we could not properly find deficiencies equal to
their total liabilities for the years at issue, as respondent proposed, if
respondent had made assessments for those years that had not been
abated. In support of their position, petitioners cited section 6211(a),

it from the amount of the deficiency. The prior computation also noted that $10,792
had previously been assessed as a section 6662(a) penalty (although instead of giving
the date of the penalty assessment, it indicated that the penalty had been shown on
petitioners’ return).
        7 Respondent indicated in his Supplement that the amount of the previously

assessed penalty for 2004, which totaled $34,307.80, should be reduced by $14,428.20.
Most of this adjustment represents a correction of the $10,792 error in the amount of
the penalty that respondent acknowledged on appeal and which he concedes he failed
to correct in his revised computation as originally filed. The remaining $3,636.20 of
the adjustment represents a reversal of the 20% section 6662(a) penalty that would
have been due on the $18,181 that was, as respondent conceded on appeal, erroneously
included in the computation of petitioners’ tax liability.
                                        6

[*6] which defines a deficiency in income tax as the amount by which
the tax imposed exceeds the excess of the sum of the tax shown on the
taxpayer’s return plus “the amounts previously assessed (or collected
without assessment) as a deficiency” over any rebates. Petitioners
interpreted that definition to preclude us, at this stage in the
proceedings, from finding a deficiency unless and until respondent
abated any amount he “previously assessed . . . as a deficiency.” 8
Petitioners therefore requested that, before entering revised decisions,
we direct respondent to prove that there are no existing assessments for
any of the years at issue.

       To aid us in resolving the conflict between the parties’ positions,
we directed them to submit memoranda addressing several issues.
First, we asked the parties to explain the nature of the “defaulted AUR
notice” that resulted in the assessments for the 2004 taxable year that
respondent made in 2007. We also requested that they explain whether
the tax assessed in 2007 should be excluded from the calculation of the
revised deficiency for 2004 in accordance with Heasley v. Commissioner,
45 T.C. 448, 457–58 (1966), where we held that for purposes of
computing a taxpayer’s deficiency under Rule 50 (the predecessor to
Rule 155), section 6211(a) required the exclusion of a prior, unabated,
and presumptively lawful deficiency assessment from the amount of the
deficiency to be determined for the year at issue. In addition, we
requested that the parties analyze how these cases are affected by
section 7486, which provides for the abatement of amounts assessed
pursuant to section 7485(a) but later disallowed on appeal, and Estate
of Smith v. Commissioner, 115 T.C. 342, 345–47 (2000), where we
explained that section 7486 generally does not require the
Commissioner to abate an assessment made under section 7485(a) until
the Tax Court, on remand, enters a final order revising the amount of
the deficiency. Finally, we directed respondent to further supplement
or revise his Rule 155 computations in the event that his analysis of the
foregoing issues indicated that such supplementation or revision was
appropriate.

      After obtaining an extension of time to do so, respondent filed a
Response to Order, together with further revised Rule 155
computations, as directed. In his Response to Order, respondent
represents that although the administrative file for petitioners’ 2004
taxable year has been destroyed, transcripts for their account indicate

      8 With certain exceptions, additions to tax and penalties are assessed in the

same manner as taxes and thus are subject to deficiency procedures. See § 6665.
                                            7

[*7] that petitioners’ 2004 return was selected for review through
respondent’s automated underreporter, or AUR, program, which
identifies returns for review by comparing them with information
reported by third parties. According to respondent, the transaction
codes listed in the transcripts indicate that he selected petitioners’
return for review and thereafter issued them a Notice CP 2000
proposing adjustments to certain items they had reported on the return.
Respondent further represents that the transcripts indicate that he
subsequently revised the proposed adjustments on the basis of
information that petitioners provided in response to the Notice CP 2000,
and later issued them a notice of deficiency in which he determined that
they were liable for a deficiency of $53,961. Respondent states that the
transcripts further reflect that the deficiency was assessed on June 18,
2007, after petitioners failed to timely file a petition for redetermination
with the Tax Court.

      With respect to the amounts of the deficiencies, additions to tax,
and penalties to be included in our revised decisions, respondent
contends that all assessments and abatements are accurately reflected
in the Forms 3623 included in his Supplement and in his Revised
Computation. 9 But in a reversal of his prior position, respondent now
contends that in view of section 6211(a) and our holding in Heasley, our
revised decisions in these cases must determine deficiencies, additions

        9 For clarity, our discussion of the specific amounts to be included in our revised

decisions will refer to respondent’s Supplement and Revised Computation. The figures
reflected therein are substantially identical to those set forth in respondent’s most
recently revised Forms 3623, which were included with the further revised
computations that he subsequently submitted to the Court.
        The sole exception is an obvious clerical or mathematical error. Respondent’s
most recently revised Form 3623 for 2004 indicates that the total assessed section
6662(a) penalty for that year is $10,792 and that he will need to assess an additional
$9,087.60 to reflect petitioners’ total correct penalty liability of $19,879.60. But it
includes other entries, along with a detailed explanation in a footnote, indicating that
respondent has actually already assessed $34,307.80 of section 6662(a) penalties
against petitioners for 2004, consisting of $10,792 assessed in 2007 in connection with
the deficiency determined through the AUR program, and $23,515.80 assessed in 2017
following the entry of our prior Order and Decision. The footnote makes clear that the
amount assessed in 2017 included an inadvertent second assessment of the $10,792
that had already been assessed, plus a $12,723.80 penalty corresponding to the
deficiency we determined in our prior Order and Decision. Moreover, the assessments
described in the footnote are consistent with those shown in an accompanying
summary of the computation, as well as with those shown in the Supplement that
respondent previously submitted to the Court. We will therefore disregard the
inconsistent entries reflected in the most recent Form 3623.
                                     8

[*8] to tax, and penalties of zero for each year at issue. Respondent
represents that after the Court enters revised decisions, he will make
the necessary abatements to adjust the existing assessments in
accordance with section 7486.

        Petitioners, now proceeding pro sese, also filed a Response to
Order in which they contend that (1) they never received the “defaulted
AUR notice” described in respondent’s submissions, or any other
document relating to the assessments made in 2007; (2) the assessments
made pursuant to that notice should be excluded from the Rule 155
computation for 2004 because “they were never before the Court in this
proceeding”; (3) in May 2017 respondent fully abated petitioners’
liabilities for 2005 and 2006; and (4) section 7486 and Estate of Smith
permit respondent to apply foreign tax credit (FTC) carryovers from
other taxable years to offset the deficiencies for the years at issue and to
adjust assessments “based on new documents and facts obtained prior
to final adjudication.”

       Additionally, in view of respondent’s filing of further revised
computations, we afforded petitioners an opportunity to file written
objections thereto. See Rule 155(b). In further Responses to Order
setting forth their objections, petitioners largely restate the arguments
we have just outlined. In so doing, petitioners make clear that their
claim that respondent abated their liabilities for 2005 and 2006 is based
on Notices CP21C that respondent issued to them in May 2017.
Petitioners additionally contend that the penalties and additions to tax
for the years at issue should not be sustained, either because they had
sufficient FTCs to satisfy any amount due that otherwise might
constitute an underpayment or late payment upon which any penalty or
addition to tax could be imposed, or because respondent has failed to
satisfy his burden to produce evidence of timely supervisory approval of
the penalties in accordance with sections 6751(b) and 7491(c).

       Petitioners also provide the following figures that they describe
as the “appropriate base liability” for each year at issue, after accounting
for adjustments that they variously attribute to “Sch[edule] A
Deductions,” “Sch[edule] C Deductions,” “Other Income,” and “Other”:
                                      9

[*9]                       Year                Amount
                           2003                $48,254
                           2004                 50,036
                           2005                 59,302
                           2006                103,823

These figures presumably represent petitioners’ proposed deficiencies
for each of the years at issue.

                                  Discussion

       We do not agree with either party’s most recent position. We
conclude, however, that respondent has submitted sufficient
information, in conjunction with his representations that he will abate
any overassessments, to allow us to enter decisions correcting the
“discrete errors” that we must correct in order to comply with the
mandate issued by the court of appeals.

I.     Scope of Proceedings on Remand

      The task presently before us is a narrow one, constrained by the
mandate issued by the court of appeals and by the provisions of
Rule 155.

        The opinion of the court of appeals “is binding in this remand
proceeding under the ‘mandate rule’, which is an aspect of the law-of-
case doctrine.” Romano-Murphy v. Commissioner, 152 T.C. 278, 301
(2019) (quoting Pelletier v. Zweifel, 987 F.2d 716, 718 (11th Cir. 1993)),
supplementing T.C. Memo. 2012-330; see also Cavallaro v.
Commissioner, T.C. Memo. 2019-144, at *13–14, supplementing T.C.
Memo. 2014-189. “The law-of-the-case doctrine generally provides that
‘when a court decides upon a rule of law, that decision should continue
to govern the same issues in subsequent stages in the same case.’”
Musacchio v. United States, 577 U.S. 237, 244–45 (2016) (quoting Pepper
v. United States, 562 U.S. 476, 506 (2011)). The underlying premise of
the doctrine is that “the same issue presented a second time in the same
case in the same court should lead to the same result.” LaShawn A. v.
Barry, 87 F.3d 1389, 1393 (D.C. Cir. 1996) (emphasis omitted).
“Accordingly, a ‘legal decision made at one stage of litigation,
unchallenged in a subsequent appeal when the opportunity to do so
existed, becomes the law of the case for future stages of the same
litigation, and the parties are deemed to have waived the right to
challenge that decision at a later time.’” Kimberlin v. Quinlan, 199 F.3d
                                    10

[*10] 496, 500 (D.C. Cir. 1999) (quoting Williamsburg Wax Museum,
Inc. v. Hist. Figures, Inc., 810 F.2d 243, 250 (D.C. Cir. 1987)).

        A trial court therefore is not “permitted to reconsider its own
rulings made before appeal and not raised on appeal.” 18B Charles Alan
Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and
Procedure § 4478.3 (3d ed. 2019 & Supp. 2022); see also United States v.
Bazemore, 839 F.3d 379, 385 (5th Cir. 2016) (“Moreover, the [mandate]
rule bars litigation of issues decided by the district court but foregone
on appeal or otherwise waived, for example because they were not raised
in the district court.” (alteration in original) (quoting United States v.
Lee, 358 F.3d 315, 321 (5th Cir. 2004))); United States v. Frias, 521 F.3d
229, 234 (2d Cir. 2008) (“And where an issue was ripe for review at the
time of an initial appeal but was nonetheless foregone, it is considered
waived and the law of the case doctrine bars the district court on remand
and an appellate court in a subsequent appeal from reopening such
issues unless the mandate can reasonably be understood as permitting
it to do so.” (quoting United States v. Quintieri, 306 F.3d 1217, 1229 (2d
Cir. 2002))); Schering Corp. v. Ill. Antibiotics Co., 89 F.3d 357, 358 (7th
Cir. 1996) (“Under the doctrine of the law of the case, a ruling by the
trial court, in an earlier stage of the case, that could have been but was
not challenged on appeal is binding in subsequent stages of the case.”);
Laffey v. Nw. Airlines, Inc., 740 F.2d 1071, 1089 (D.C. Cir. 1984)
(“Adherence to the rule that a party waives a ‘contention that could have
been but was not raised on [a] prior appeal,’ is, of course, necessary to
the orderly conduct of litigation.” (alteration in original) (citation
omitted) (quoting Munoz v. Cnty. of Imperial, 667 F.2d 811, 817 (9th Cir.
1982))).

       The scope of this proceeding is further limited by Rule 155, which
establishes a procedural mechanism under which the Court may
withhold entry of a decision for the sole purpose of permitting the parties
to submit computations of the correct deficiencies, liabilities, or
overpayments resulting from the Court’s opinion resolving the issues in
a case. See Rule 155(a); Vento v. Commissioner, 152 T.C. 1, 7 (2019),
supplementing 147 T.C. 198 (2016), aff’d, 836 F. App’x 607 (9th Cir.
2021).

       In the Rule 155 context, “[t]he starting point for the computation
is the statutory notice of deficiency from which the parties compute the
redetermined deficiency based upon matters agreed by the parties or
ruled upon by the Court.” Home Grp., Inc. v. Commissioner, 91 T.C. 265,
269 (1988), supplementing City Investing Co. v. Commissioner, T.C.
                                         11

[*11] Memo. 1987-36, aff’d, 875 F.2d 377 (2d Cir. 1989). Rule 155 “is
not to be regarded as affording an opportunity for retrial or
reconsideration,” Rule 155(c), and “[i]t goes without saying that issues
which have been litigated at the trial of a case may not be relitigated in
connection with the entry of decision under Rule 155,” Cloes v.
Commissioner, 79 T.C. 933, 935 (1982), supplementing T.C. Memo.
1981-726. Nor is Rule 155 to be regarded as affording an opportunity to
raise new issues that the Court has not previously addressed. Id.; see
also Vento, 152 T.C. at 8–9. Thus, “[i]f a matter ‘was neither placed in
issue by the pleadings, addressed as an issue at trial, nor discussed by
this Court in its prior opinion,’ or if it ‘would necessitate retrial or
reconsideration,’ that matter may not be raised in the context of a
Rule 155 computation.” Vento, 152 T.C. at 8 (quoting Molasky v.
Commissioner, 91 T.C. 683, 686 (1988), aff’d on this issue, 897 F.2d 334
(8th Cir. 1990)). We may treat a matter as a new issue for purposes of
Rule 155 “even if it has computational aspects.” Id. at 9 & n.6 (citing
cases treating claims for net operating loss carrybacks as new issues).

       In accordance with the foregoing constraints and as further
discussed below, we decline to consider most of the issues that
petitioners have raised.

II.    Assessments for the 2004 Taxable Year Made in 2007

       We begin our analysis of the parties’ positions with the oldest
disputed assessments involved in these cases, consisting of the $53,961
deficiency and the $10,792 section 6662(a) penalty for the 2004 taxable
year that were assessed in 2007.

       We decline to consider petitioners’ untimely claim that they did
not receive a notice of deficiency in connection with those assessments.
Except to the extent that respondent conceded on appeal that he
erroneously double-counted the $10,792 penalty in the computation of
petitioners’ 2004 liability, the court of appeals did not direct us to
reconsider any issues relating to the assessments made in 2007.
Moreover, petitioners’ assertion that the assessments made in 2007
“were never before the Court in this proceeding” amounts to a concession
that any issues relating to those assessments are new issues that they
did not raise in Larkin I. Any such issues were accordingly conceded in
the earlier proceedings before us. See, e.g., Rule 34(b)(1)(G) 10 (providing

       10 The version of this Rule in effect at the time the Petitions were filed was

designated Rule 34(b)(4).
                                           12

[*12] that any issue not raised in the assignments of error in a petition
is deemed conceded); Bradley v. Commissioner, 100 T.C. 367, 370–71
(1993) (treating issues not raised on brief as abandoned). Therefore, any
such issues—other than the double-counting of the $10,792 penalty—
are outside the scope of the mandate and are new issues that petitioners
may not now raise under Rule 155. 11

       Consequently, as we did in Heasley, 45 T.C. at 457–58, we will
treat the unabated tax assessment made in 2007 as a lawfully assessed
deficiency. It thus constitutes an amount “previously assessed . . . as a
deficiency” that formed no part of the deficiency we previously
determined for 2004, and it forms no part of the deficiency that we must
now determine for purposes of entering our revised decision as to 2004.
See § 6211(a); Heasley, 45 T.C. at 457–58.

III.    Abatement of Remaining Assessments

       As for the other assessments reflected in respondent’s revised
computations, which were all made during the pendency of petitioners’
appeal as authorized by section 7485(a), we reject any suggestion that
those assessments must be abated before we may enter revised
decisions.

        11 In this regard, we emphasize that petitioner Daniel E. Larkin is an
experienced attorney who should have been well aware of petitioners’ obligation to
plead and argue any issues that they wished the Court to consider with respect to the
deficiencies at issue in these cases. See Larkin I, T.C. Memo. 2017-54, at *83; see also
Larkin II, 2020 WL 2301462, at *2; Larkin v. Commissioner (Larkin III), T.C. Memo.
2020-70, at *4, aff’d per curiam, 129 A.F.T.R.2d (RIA) 2022-1360 (D.C. Cir. 2022).
        If petitioners intend to suggest that they previously could not have challenged
the assessments made in 2007 because they lacked notice of the existence of those
assessments, we disagree. The Petition in the case at Docket No. 14886-08, which
petitioners filed pro sese, included a copy of the notice of deficiency for 2003 and 2004,
dated April 24, 2008, on which the Petition was based. The notice of deficiency
indicated that respondent had determined a deficiency that was less than petitioners’
total tax liability for 2004, because $53,961 of the total tax liability represented the
“Total Tax Shown on Return or as Previously Adjusted.” The notice of deficiency itself
thus indicated the existence of a previous adjustment. In addition, as we observed
supra note 4, the assessments made in 2007 were listed in Exhibit 21–R, which we
received into evidence at trial. And as we observed supra note 6, respondent’s prior
Rule 155 computation for 2004, which was incorporated in the Order and Decision from
which petitioners appealed, also listed those assessments. Petitioners thus had ample
notice that the assessments existed, and they could have raised any challenge to those
assessments at multiple stages of the earlier proceedings in this case.
                                   13

[*13] The abatement of such assessments is governed by section 7486,
which provides as follows:

      In cases where assessment or collection has not been
      stayed by the filing of a bond, then if the amount of the
      deficiency determined by the Tax Court is disallowed in
      whole or in part by the court of review, the amount so
      disallowed shall be credited or refunded to the taxpayer,
      without the making of claim therefor, or, if collection has
      not been made, shall be abated.

We have previously explained that section 7486 “simply acts as a
procedural device ensuring that the Commissioner follows a decision of
the court of review in situations where it can be ascertained that all or
a part of the amount of the deficiency determined by this Court was
disallowed.” Estate of Smith, 115 T.C. at 345. Thus, where the court of
review remands a case to the Tax Court without “indicat[ing] that any
ascertainable ‘amount’ of the previously determined deficiency has been
precluded,” no abatement is required unless and until the Tax Court
enters a revised decision finding a decreased deficiency. See id.
at 345–49; see also United States v. Bolt, 375 F.2d 725, 726 (6th Cir.
1967) (per curiam) (explaining that reversal and remand of a Tax Court
decision “did not vitiate the assessment” made pursuant to that decision
in the absence of an appeal bond, and that section 7486 entitled the
taxpayer “only to an abatement on the assessment for the amount
overassessed” in view of the subsequent decision of the Tax Court). And
even where an assessment is ripe for abatement under section 7486, a
representation by the Commissioner that he will make the necessary
abatement is generally sufficient to avoid any need for a court to
mandate that he do so. See Tyne v. Commissioner, No. 16945, 1969 U.S.
App. LEXIS 13495 (7th Cir. May 26, 1969) (denying taxpayer’s request
for mandatory relief under section 7486 in a twice-remanded case,
explaining that the Commissioner had represented that he would abate
assessments and issue a refund pursuant to the Tax Court’s decision
entered after the first remand, and that “[f]urther abatement and refund
w[ould] depend upon further decision by the [T]ax [C]ourt” after the
second remand).

       Respondent has satisfactorily represented in these cases that he
will abate any overassessments that exist after we enter our revised
decisions. As a result, even if we were to assume (without deciding) that
in Larkin II the court of appeals disallowed ascertainable amounts of
                                          14

[*14] the deficiencies we had previously determined, 12 we would not
conclude that an order mandating abatement is necessary or
appropriate at this juncture. See Tyne v. Commissioner, 1969 U.S. App.
LEXIS 13495, at *2–3.

IV.     Alleged Prior Abatement of 2005 and 2006 Liabilities

       Petitioners’ final abatement claim is that respondent issued
Notices CP21C to them in May 2017 indicating that he had fully abated
their federal income tax liabilities for 2005 and 2006. Petitioners
previously raised exactly this argument in connection with the original
Rule 155 proceeding following the issuance of our opinion in Larkin I,
and we rejected it in our prior Order and Decision in the case at Docket
No. 19940-09. The court of appeals did not direct us to reconsider this
issue. It is accordingly outside the scope of the mandate, and we may
not reconsider it in this Rule 155 proceeding.

V.      FTC Carryovers

       Aside from the issues relating to abatements, petitioners now
contend that their deficiencies should be reduced or eliminated by the
application of unspecified FTC carryovers from other taxable years. It
is too late, however, for petitioners to revive any claim that they are
entitled to a carryforward of such credits, because we held in Larkin I,
T.C. Memo. 2017-54, at *70–73, that they had failed to prove the amount
of any FTC that could be carried forward to any of the years at issue.
The court of appeals affirmed that holding, and we may not revisit it.
We also decline to consider whether petitioners are entitled to a
carryback from some other unspecified year. Not only is any such claim
outside the scope of the mandate, but we also generally will not consider
claims for carryback deductions or credits that are raised for the first
time during Rule 155 proceedings. See, e.g., Price v. Commissioner, T.C.

         12 Although we need not decide the question, we note that our holding in Estate

of Smith would likely foreclose such a conclusion. There, we explained that the court
of appeals’ reversal of the Tax Court’s decision finding a deficiency did not amount to
disallowance of an ascertainable “amount” of the deficiency. Estate of Smith, 115 T.C.
at 343–45. Here, although the court of appeals directed in Larkin II that we correct
certain specified errors affecting the amounts set forth in our previous decisions, the
total amounts of the previously determined deficiencies that were disallowed by the
court of appeals depend on the effects of the computational adjustments necessary to
correct those errors. The exact amounts disallowed thus cannot be ascertained directly
from the court of appeals’ holdings.
                                         15

[*15] Memo. 1995-290, 69 T.C.M. (CCH) 3041, 3042, supplementing T.C.
Memo. 1995-187.

       Furthermore, in the unusual circumstances where we will
entertain a new claim for a deduction or credit during a Rule 155
proceeding, amendment of the pleadings to reflect the claim must be
appropriate. See Harris v. Commissioner, 99 T.C. 121, 123–24 (1992),
supplementing T.C. Memo. 1990-80. Under Rule 41(a), a party may
amend a pleading after a responsive pleading has been served only by
written consent of the adverse party or by leave of the Court. In
determining whether to exercise our discretion to grant leave to amend
a pleading, we “examine the particular circumstances in the case before
us” and “consider, among other factors, whether an excuse for the delay
exists and whether the opposing party would suffer unfair surprise,
disadvantage, or prejudice” if we were to grant leave to amend. Estate
of Quick v. Commissioner, 110 T.C. 172, 178 (1998), supplemented by 110
T.C. 440 (1998). In addition, we may refuse to grant leave to amend a
pleading if the amendment would be futile, see Block v. Commissioner,
120 T.C. 62, 64 (2003), or if it would require further trial, see Markwardt
v. Commissioner, 64 T.C. 989, 998 (1975). Because petitioners have not
even specified the year or years in which they claim any carryback arose,
we have no basis by which to evaluate the extent to which amendment
of the pleadings would prejudice respondent, whether such amendment
would be futile, 13 or whether further trial might be required to dispose
of their carryback claims. We consequently will not permit petitioners
to amend their pleadings to raise any FTC carryback issues, and we will
not consider any such issues in this Rule 155 proceeding.

VI.    Penalties

       We also reject petitioners’ contention that our revised decisions
should not sustain the penalties and additions to tax at issue in these
cases. Petitioners’ position rests on their claims that (1) they were
entitled to FTC carryovers that should have eliminated any
underpayment or late payment that could have provided the basis for a
penalty or addition to tax, and (2) respondent failed to produce evidence

        13 We nevertheless note that Larkin III suggests the futility of such an

amendment, insofar as an FTC may be carried back only to the immediately preceding
taxable year, see § 904(c), and we found in that case that petitioners had not
substantiated a claim that they could carry forward an FTC from 2007 or 2008, see
Larkin III, T.C. Memo. 2020-70, at *58–62. Petitioners would have to establish the
existence and amount of an unused FTC for 2007 in order to have a credit to carry back
to 2006, which is the most recent year at issue in these cases.
                                   16

[*16] that the penalties were timely approved by a supervisor pursuant
to section 6751(b).

       To the extent that petitioners’ arguments concerning the impact
of FTC carryovers on the underpayments and late payments at issue in
these cases are distinct from their more general position that they are
entitled to FTC carryovers (which we have rejected, see supra Part V),
their position is foreclosed by the mandate rule and Rule 155. We
sustained the penalties and additions to tax in our prior opinion.
Larkin I, T.C. Memo. 2017-54, at *73–83. As we have already described,
the court of appeals affirmed our determinations of those issues except
to the extent that respondent conceded that $10,792 of the section
6662(a) penalty for 2004 had been double-counted. We thus may not
revisit those determinations beyond the scope of that concession. And
even if we could do so, reconsideration of the penalties and additions to
tax would not be proper under Rule 155.

       We likewise decline to consider petitioners’ section 6751(b)
supervisory approval argument. Following the issuance of our opinion
in Larkin I, we held in Graev v. Commissioner, 149 T.C. 485, 492–93
(2017), supplementing and overruling in part 147 T.C. 460 (2016), that
section 7491(c) generally imposes a burden on the Commissioner to
produce evidence that any penalty determinations made in a notice of
deficiency were approved by a supervisor in accordance with section
6751(b). Relying on Graev, petitioners contend that respondent has
introduced no such evidence in these cases and that our revised
decisions therefore may not sustain respondent’s penalty
determinations.

        Although an intervening change in the law is one of the few
occurrences that might justify a departure from the mandate rule and
the prohibition against raising new issues during a Rule 155 proceeding,
see, e.g., Banks v. United States, 741 F.3d 1268, 1276 (Fed. Cir. 2014)
(noting three circumstances justifying departure from the mandate rule,
including where “controlling authority has since made a contrary and
applicable decision of the law”); DeMartino v. Commissioner, 88 T.C.
583, 584–87 & nn.2 & 9 (1987) (where decision had not yet been entered
under Rule 155 pursuant to the Court’s prior opinion, granting motion
for reconsideration in order to apply subsequently amended version of
statute), supplementing T.C. Memo. 1986-263, aff’d, 862 F.2d 400 (2d
Cir. 1988), no such departure is warranted here.
                                           17

[*17] Petitioners first raised this issue in their briefs before the court
of appeals.      See Final Appellant Opening Brief 23, Larkin v.
Commissioner, No. 17-1252 (D.C. Cir. Oct. 30, 2019); Final Appellant
Reply Brief 26, Larkin v. Commissioner, No. 17-1252 (D.C. Cir. Oct. 30,
2019); see also, e.g., City of N.Y. v. Nat’l R.R. Passenger Corp., 776 F.3d
11, 16 (D.C. Cir. 2015) (noting that arguments presented for the first
time on appeal may be considered in exceptional circumstances,
including where there has been an intervening change in the law). The
court of appeals did not directly discuss petitioners’ supervisory
approval argument, but it did conclude that “the Larkins forfeit many of
their arguments by wholly failing to develop their claims or anchor them
to the record” and that “[t]he few arguments the Larkins have not
forfeited are meritless.” Larkin II, 2020 WL 2301462, at *1–2.
Supervisory approval is not among the issues the court of appeals
directed us to reconsider on remand. The court of appeals accordingly
rejected petitioners’ argument on that issue, and under the mandate
rule we may not consider it.

VII.    Entry of Revised Decisions

       Consequently, to comply with the mandate, our only remaining
task is to enter revised decisions setting forth the correct amounts of the
deficiencies, additions to tax, and penalties due from petitioners. As we
have noted, the amounts of those items as determined in the notices of
deficiency must serve as the starting point for the Rule 155
computations, see Home Grp., Inc., 91 T.C. at 269, and those amounts
must then be adjusted to reflect the resolution of the disputed issues
that we and the court of appeals have reached. For the reasons we have
discussed, we need not take into account any assessments made in
accordance with our previous decisions. See Estate of Smith, 115 T.C. at
345–48. And because our decisions need only redetermine the amounts
set forth in the notices of deficiency, they do not need to reflect
petitioners’ total tax liabilities for the years at issue if the total liabilities
exceed the redetermined deficiencies, additions to tax, and penalties. 14

        14 We note in this regard that whether a taxpayer’s total tax liability for a given

taxable year is equal to the deficiency for that year depends on the amounts of the
variables identified in section 6211(a) at the time the deficiency is calculated. See
Heasley, 45 T.C. at 458. As discussed herein, respondent represents that the total
assessed liabilities for 2003, 2005, and 2006 are equal to the amounts determined in
our previous decisions (i.e., that for each of those years the deficiency we previously
determined is equal to the total tax liability). Respondent’s proposed adjustments to
                                          18

[*18] We therefore reject respondent’s current view that our decisions
must determine deficiencies, additions to tax, and penalties of zero. 15
We also reject the figures that petitioners propose as their “appropriate
base liabilit[ies].” Although we cannot determine with any certainty
from petitioners’ submissions how their proposals relate to the amounts
determined in our previous decisions or the mandate issued by the court
of appeals, we can safely assume that they incorporate petitioners’
positions that we have rejected herein. We consequently cannot accept
either party’s current bottom-line position, and we must scrutinize the
account statements that respondent has submitted in order to
determine the corrected amounts to be included in our revised decisions.

       For 2003 and 2004, respondent’s Supplement sets forth the
amounts that respondent represents he has assessed for each of those
years, along with proposed downward adjustments to those assessments
that respondent contends (and petitioners previously conceded) 16 will
correct the errors respondent acknowledged on appeal. As we have
discussed, the Supplement includes a Form 3623 for 2003 showing that
the total assessments respondent has made for that year are equal to
the deficiency, addition to tax, and penalty that we previously
determined. We thus may calculate the corrected amounts to be set
forth in our revised decision for 2003 by applying the downward
adjustments to petitioners’ assessed liability, as proposed in
respondent’s Form 3623, to the amounts we previously determined for
that year, as follows:

the assessed liabilities for those years are thus equivalent to adjustments to the
amounts of the deficiencies, additions to tax, and penalties set forth in our previous
decisions. For 2004, however, because we did not treat the assessment made in 2007
as part of the deficiency when we entered our prior Order and Decision in the case at
Docket No. 14886-08, see supra note 6, the deficiency we previously determined for
2004 did not constitute petitioners’ total tax liability at that time.
        15 Respondent’s request that we enter decisions determining zero deficiencies

because he has already assessed amounts in excess of petitioners’ correct liabilities for
the years at issue is akin to a request that we enter decisions determining
overassessments. We have no jurisdiction to do so. See Gisholt Mach. Co. v.
Commissioner, 4 T.C. 699, 707–08 (1945); Farner v. Commissioner, T.C. Memo. 2012-
111, 103 T.C.M. (CCH) 1616, 1617.
        16 Petitioners conceded as much in the Response that they filed, through

counsel, to respondent’s Supplement and Revised Computation. They have not
disavowed that concession except to the extent that their subsequent positions, which
we reject herein, are inconsistent therewith.
                                          19

[*19]                          Sept. 14, 2017
                                                  Adjustment
                                                                  Corrected
                             Order and Decision                   Amount
        Deficiency                $81,698.00      ($16,308.00)    $65,390.00
   Addition to Tax,
                                   20,424.50         (4,077.00)    16,347.50
     § 6651(a)(1)

  Penalty, § 6662(a)               16,339.60         (3,261.60)    13,078.00

       Respondent’s computation of petitioners’ total tax liability for
2004 is more complex, since it includes assessments of tax and a section
6662(a) penalty that were made before respondent issued the notice of
deficiency underlying the case at Docket No. 14886-08. However, as
described supra notes 4, 6, and 7, those prior assessments affected the
amounts of the deficiency and penalty we previously determined for
2004 only to the extent that, as respondent acknowledged on appeal, the
amount of the section 6662(a) penalty we determined for that year
included an excess $10,792. Petitioners previously conceded 17 that
respondent’s Supplement now correctly adjusts for all of the errors that
respondent has acknowledged with respect to 2004.

       As we have also discussed, respondent represents that the total
assessments he has made for 2004 include the full amounts of the
deficiency and the section 6662(a) penalty that we previously
determined. To correct the errors he acknowledged on appeal with
respect to 2004, respondent proposes downward adjustments to the
assessed amounts. The proposed adjustments represent less than the
full amounts of the deficiency and the section 6662(a) penalty we
previously determined. We thus may calculate the corrected amounts
to be set forth in our revised decision for 2004 by applying the downward
adjustments to petitioners’ assessed liability, as proposed in
respondent’s Supplement, to the amounts we previously determined for
that year, as follows:

                               Sept. 14, 2017                     Corrected
                                                  Adjustment
                             Order and Decision                   Amount
     Deficiency                   $63,619.00      ($18,181.00)    $45,438.00
  Penalty, § 6662(a)               23,515.80       (14,428.20)       9,087.60

      For 2005 and 2006, respondent represents in the Forms 3623
attached to his Revised Computation that he has made total
assessments for 2005 equal to the deficiency, addition to tax, and

         17 See supra note 16.
                                        20

[*20] penalty that we previously determined, and that he has likewise
made total assessments for 2006 equal to the deficiency and penalty that
we previously determined. To correct the errors he acknowledged on
appeal with respect to those years, respondent’s Revised Computation
proposes downward adjustments, the accuracy of which petitioners
previously conceded, 18 to the assessed liabilities. We thus may calculate
the corrected amounts to be set forth in our revised decision for 2005 by
applying respondent’s proposed adjustments to petitioners’ assessed
liability for that year to the amounts we previously determined for that
year, as follows:

                             Sept. 14, 2017                     Corrected
                                                Adjustment
                           Order and Decision                   Amount
      Deficiency                 $114,870       ($18,875.00)    $95,995.00
   Addition to Tax,
                                   11,487          (1,887.50)     9,599.50
     § 6651(a)(1)
  Penalty, § 6662(a)               22,974          (3,775.00)    19,199.00

We may similarly calculate the corrected amounts to be set forth in our
revised decision for 2006, as follows:

                             Sept. 14, 2017                     Corrected
                                                Adjustment
                           Order and Decision                   Amount
     Deficiency                 $118,259.00       ($18,725)     $99,534.00
  Penalty, § 6662(a)              23,651.80         (3,745)      19,906.80

VIII. Conclusion

       Because petitioners’ objections to respondent’s revised
computations are without merit, and because we are satisfied that
respondent has adequately represented that he will properly abate any
existing overassessments for the years at issue, we will enter a revised
decision in each of these cases in accordance with the adjustments
proposed in respondent’s revised computations.

       To reflect the foregoing,

     Decisions will be entered in accordance with respondent’s revised
computations.

       18 See supra note 16.